Endowment funds: discussion with Philippe Gaboriau, Director of the Louvre Endowment Fund
Our expert Laurent Issaurat, Head of Art Banking at Societe Generale Private Banking, met with Philippe Gaboriau, Director of the Louvre Endowment Fund. We learn what an endowment fund is, how it works, how it is used, the tax regime it falls under, and the specificities of the Louvre’s own endowment fund.
What are the origins and objectives of the Louvre Endowment Fund?
Philippe Gaboriau: The Louvre Endowment Fund was created in 2009 initially as part of a partnership with the United Arab Emirates for the creation of the Louvre Abu Dhabi. It is a legal structure directly inspired by endowments in the US — a virtuous model for sustainably financing museums and universities. Since 2011, this system of capitalised patronage has been open to the generosity of corporate and individual donors.
What kinds of assets can be donated to an endowment fund, and how does it work exactly?
Philippe Gaboriau: The purpose of the endowment fund is to receive donations and bequests, generate capital and use the income to support the Louvre's diverse projects of general interest. The projects cover the museum’s three core missions: international recognition of the national collections (through acquisitions, conservation treatment of artworks, art history research grants, etc.), cultural democratisation and the Louvre’s educational programme, and lastly, the conservation and presentation of the palace of the Louvre and the Tuileries Garden. The Louvre Endowment Fund is a sheltered structure for donors who wish to create named funds. They are dedicated funds with long-lasting effects, and are generally matched over many years by one donor or a group of donors. The Fund accepts all kinds of gifts, be they monetary, or in the form of securities, bequests, real estate(1), and even royalties. It also possible to give life insurance policies. The fund also accepts gifts of temporary usufruct of buildings. Donors can therefore exclude the asset’s bare ownership value (that temporary usufruct would generate) from their tax base liable to French wealth tax on real estate.
What tax regime applies to donations? Do you need to be a French tax resident to take advantage of any tax benefits?
Philippe Gaboriau: By donating to the Louvre Endowment Fund, individuals enjoy an income tax benefit of 66%(2). It is also possible to reduce your French wealth tax on real estate with a 75%(3) tax benefit through a gift to the Fondation pour les musées de France, within the Fondation de France.. For companies and holding companies liable to corporate tax, gifts (in cash or in kind) made to the Louvre Endowment Fund entitles them to a corporate tax reduction of up to 60%(4) as well certain privileges in return (privatisation of venues, functions, private tours) for a value of up to 25% of the donation. Lastly, for testators the Louvre Endowment Fund accepts universal or specific bequests net of fees and duties. There are also very efficient tax agreements in place to allow donors living outside France to enjoy tax benefits in their country of residence.
What kinds of donors are eligible? How much can they donate? What profile do they have?
Philippe Gaboriau: The Louvre Endowment Fund accepts all kinds of gifts, ranging from a few thousand euros to several million euros. For overall pledges above €200,000 (which can be spread out over several years), the Louvre Endowment Fund would propose creating a dedicated fund, the income of which would be invested in projects of the donor’s choice. These are dedicated and personal funds with a lasting effect. Some of our donors lend us their support because of their interest in art and history, while others give because of what this centuries-old institution symbolises in France. Many of our donors are French (living in France or abroad), but Americans also make up a large part of our donors.
Can you give us an example of how an endowment fund can be used as an intergenerational structure?
Philippe Gaboriau: The highly flexible and enduring nature of dedicated funds makes them particularly well suited to families. Many of our donors have in fact created a family fund to get their children (or grandchildren) interested in art by supporting projects that they can choose together. These funds bring the family together and become a means of intergenerational transfer.
Can you tell us more about the Louvre Endowment’s patronage programme?
Philippe Gaboriau: Aside from the friendly atmosphere of gatherings between donors and testators, the real appeal for donors of the Louvre Endowment Fund is having privileged and exclusive access to the museum’s collections (invitations to vernissages, private tours when the museum is closed to the public), and to the people who bring it to life (curators, restorers, etc.).
What is your state of mind ahead of the reopening of the Louvre, post-Covid?
Philippe Gaboriau: The Louvre has been hard hit by the standstill in international tourism (75% to 80% of visitors) and by the closing of museums. We hope to see as many visitors as possible when we reopen — they can expect exceptional conditions for visiting the collections!
(1) Rental income through the donation of temporary usufruct.
(2) Income tax reduction of 66% of the amount up to a limit of 20% of net taxable income, and the surplus can be deferred the next five years
(3) Tax reduction of 75% of the donation amount up to an annual limit of €50,000; only gifts of cash and fully-owned listed securities entitle the donor to this reduction of the French wealth tax on real estate. In case of surplus, this tax may not be deferred over subsequent years.
(4) For the fraction of gifts above or equal to €2,000, thereafter 40% and within the limit of €20,000 per year or 5‰ of annual revenue (if annual revenue is higher).
Main picture: (c) Fonds de dotation du Louvre
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