With dwindling membership and $515,000 in the bank, Friends of Auckland Art Gallery is flying under the radar with an un-advertised de facto winding up of its charitable trust while retaining control over what will be its final bequest to Auckland’s art gallery.
A charity called the Friends of Auckland Art Gallery Acquisitions Trust is the current incarnation of an art appreciation society formed in 1954 to raise funds for the city art gallery. In 2005, a new kid appeared on the block: the Auckland Art Gallery Foundation; another charity with similar aims. Foundation membership now exceeds 6700; Friends has dwindled to about 500.
The High Court was told Friends decided in 2015 to wind up. There was near unanimous support. Only two per cent of membership voted against. There was a legal complication. Friends trust deed does not allow trustees to spend trust capital; art work can be purchased only out of income. Most recent financial statements show annual income of some $19,400. Friends applied to the High Court for a Trustee Act variation to its trust deed allowing trustees to spend trust capital on art work. The Attorney-General, who has legal responsibility for the operation of charitable trusts, said Friends should instead be restructuring with an advertised proposal to hand over its capital investments untouched to a charity with a similar purpose, such as the Foundation. This would require public notice of Friends winding up. Letting Friends spend its capital, contrary to the terms of its trust deed, offended against the public interest, said the Attorney General. It lacked transparency. There would be no public advertisement of Friends proposed changes to the perpetual nature of its existence and no opportunity for objections.
Justice Toogood approved changes to Friends trust deed. It was an expedient way to wind up the Friends trust, he said. Friends and the Foundation had already integrated their activities to a large extent. Friends’ trustees can now spend the trust capital of $515,000, deciding what art work goes to the Auckland art gallery rather than having Foundation trustees decide. The Foundation’s endowment presently stands at $1.58 million, according to its most recent financial statements.
Friends of Auckland Art Gallery Acquisitions Trust v. Auckland Art Gallery Foundation – High Court (17.07.18)
18.142