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Why Black Art Should Be Part Of Your Investment Portfolio

With the increasing knowledge that art is a viable alternative asset, the rising interest in art by Black artists, coupled with the number of ways we can now invest in art, “Black art”, or African & Diaspora art should be considered as part of your investment portfolio.

A huge advocate of this asset class is art collector and entrepreneur, Freda Isingoma. Freda is the founder of KIISA, an investment & advisory firm focused on developing investment solutions for the Contemporary African & Diaspora Art market and ecosystem.

We caught up with her to learn more about investing in art and why she is so passionate about supporting the work of Black artists around the world.

What inspired you to start KIISA?

KIISA started as a response to a need and a gap that I identified in the African and Diaspora art market. Although my background is in investment banking and entrepreneurship, I have always loved art and have been collecting African & Diaspora art for 20 years. My collecting journey gave me an insight into the market and its dynamics.

black art
Alexis Peskine – Paris

This then prompted me to do a course on “Curating Contemporary Art” and the University of the Arts London, which gave me a bit of background on the more research element of the art world. It’s then that I started to further investigate the African and Diaspora art ecosystem as a whole and really understand what the gaps were.

Keyezua – Angola

After many conversations with mentors, I am glad I got to where I am now, where our focus is on developing a new “story” around African & Diaspora art investments and ecosystem development, and I get to leverage my skills and experience in finance, art collecting, and economic analysis.

KIISA is a pioneer in the Art Investments sector, providing investors with the opportunity to participate in Alternative Asset Funds that are intentionally designed to not only provide long term returns, but also develop impact solutions that drive the growth, visibility, knowledge, and sustainability of the Contemporary African and Diaspora art market.

Amy Sherald – America

Why do you prefer the term “African & Diaspora Art” over “Black Art”?

Many in the art world use either or. I specifically use African & Diaspora Art as it suggests the global footprint and impact of the Black artistic community, history, culture, identity, language, and much more. Ultimately, art made by Black artists is simply art.

Why is there a growing interest in African & Diaspora art? 

The interest in African & Diaspora art has always been there and that’s evident by the fact Classic African art influenced Early European and American Art movements including Cubism, Fauvism, German Expressionism, and American Modernism. We see this in the works of Picasso, Matisse, and Gaugin to name a few.

Furthermore, there has been interest in Modern and Contemporary art by Black artists over the years, but the main issue is that the interest has largely been shallow and inconsistent. The current spotlight on art by Black artists has mainly been generated by a wider interest from the Black community to collect art and be part of cultural economic growth, particularly the younger generation of collectors.

black art
Victor Ehikhamenor – Nigeria

While we have always had collectors within the Black community globally, there has been this misconception that art by Black artists is in main collected by Europeans and other non-Black communities. This is simply not true. The current wave of new collectors that are framing the new dynamic, is being driven by the acknowledgment of art collecting as a way of building cultural equity, preserving heritage, and also participating in an alternative investment growth story.  

Saying that, there has been a rising focus on Black artists by Western art museums and institutions post the protests in the US and globally last Summer. This is due to the fact that many of them were forced to finally face the racial disparities in their collections and programming and at the same time address this bias within the Western art cannon overall. If you ask me how much impact this will make, the jury is still out. There has been more virtue signaling to date, than measurable action. 

Lina Iris Viktor – United Kingdom

Why is it important to increase the number of Black people investing in African & Diaspora?

Any community needs to be the bedrock and foundation of their art ecosystem and cultural expression. I often draw similarities to the Chinese Art market emergence during the last global economic downturn 12 years ago and the intentional build of what is now a dominant art market player.

Although we are dealing with 54 countries and a global diaspora base, Black collectors are realizing that they are an essential part of the art ecosystem as a whole. If we look at art as a language and a way of telling the stories that document our cultural history and current social and political dynamics, it makes sense that these pieces of cultural documentation (and pride), inherent to your own cultural background, are collated and kept. In doing so, it builds a legacy of cultural heritage preservation, that will be shared with, and inform generations to come. 

black art
Goncalo Mabunda Maputo – Mozambique

The other significance in Black collectors taking a greater interest in building cultural equity ownership through collecting art, is that its organically spearheading this wave of new initiatives, collaborations, and technology focused on facilitating growth within the art economy.

Not only will this intensify the much needed demand for art by Black artists, but it will also transform the number of ways in which we invest in it. Furthermore, collectors are not only custodians of art, many are also patrons. Greater patronage makes sure that art/educational institutions and cultural centers continue to serve the local community adequately.

black art
Ndidi Emefiele – Nigeria

What roles can Black owned galleries and museums play in strengthening the market for African & Diaspora?

Black owned galleries and museums on the Continent and Black communities globally, play a vital and critical role in the growth of the African & Diaspora market. We are at a pivotal time in Africa’s artistic history where the repatriation debate is gaining momentum, and additionally where the demand for Modern and Contemporary African & Diaspora art has caught the attention of the art world.

Fundamentally, art museums are shared public spaces dedicated to promoting and educating on artistic and cultural knowledge, while preserving the heritage and artistic integrity of the local community. As a result, they form the foundational pillar of any cultural ecosystem. Therefore, it’s imperative that the community from which the art, the practice, and narrative originate, are also the primary validators of that art. This should not in any way stop the art from being shown, celebrated, engaged within other regions and nations.

Black owned galleries also play an important function too. They not only serve as a powerful portal to communicate the narrative of the artistic production from the community, they cultivate and reinforce a dynamic arts culture and economy that promotes the local artistic talent. This is essential, as it supports the growth, and investment of, artists within the Black community.

Additionally, they in turn nurture the development of collectors and art practitioners (e.g. curators and secondary market advisors), which is a critical component of the ecosystem development. Furthermore, galleries naturally then become procurers of ancillary services in adjacent and complementary businesses/industries in their local communities, as well as attracting “art” tourism, which can be catalysts for economic growth and infrastructural development within that community.

Underplaying the importance of Black owned museums and galleries hinders the empowerment of home-grown narratives and talent, while subsequently weakening the advancement of the domestic artistic community. 

black art
Fahamu Pecou -America

What are the first steps to becoming an art investor?

There a few ways in which you can invest in the art market. The obvious way is through building a collection. My advice is always to just start. Once you start, you get to sharpen your eye and taste, while at the same time learning more about the industry, its nuances, peculiarities ad possibilities.

I am a fan of “burning shoe leather”, whether it’s in person or virtual, through attending Art Fairs, studio visits, galleries, auctions, Art School final year shows, and even residencies. Routinely doing this helps to build relationships with artists, curators, dealers, and other collectors, that help to inform how to build your collection. Building a collection of significance can be fun, but it does take time to really define your taste, demystify the dynamics of the market and build relationships.

There’s no cheat sheet for this. The key is to buy what you love, that way you won’t look back and have any regrets. Do your research, then buy with your eyes and heart, not your ears, because trends in this market come and go just like any other industry.

The other ways to invest in the market are through art investment vehicles, which include art funds and syndicates. The last 12 years has seen a significant increase in the number of art investment vehicles launched because art typically produces returns that have little or no correlation to traditional stock and bond investments.

There was a recent study done by Morgan Stanley that showed that HNWIs have between 5-10% of their net worth invested in art. This is not surprising as alternative assets tend to be seen as a safer way of diversifying the overall risk of your investment portfolio, particularly when stock markets are overheated or/and volatile.

Furthermore, investing in art offers tax advantages, potential hedging against inflation/currency risk, and tends to hold its value over time irrespective of economic sentiment. Structured art investment vehicles offer an opportunity for investors to pool their investment with others, thereby diversifying their exposure to individual art holdings while increasing their exposure to a wider variety of art. Furthermore, they present an opportunity to benefit from the expertise of art investment specialists who understand how to operate in what is generally regarded as a potentially lucrative, but non-transparent market. 

The other channel is through Bitcoin. I am quite excited to see what impact Bitcoin will make in the market, and how it can democratize investment in art. Although the impact is still too small to measure, I believe it has the potential to be revolutionary, particularly for Black artists and Black investors in art. Currently, there are platforms being created to address this. We wait and see!

 

Tony O. Lawson


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Growing and Maintaining Black Wealth: Watch your Ass-ets

This is the second installment in our series around the topic of “Growing and Maintaining Black wealth through sound legal strategies and problem solving.” Let’s continue with a discussion about Assets.

Growing and Maintaining Black Wealth: Watch your Ass-ets

“Gator Boots, with the pimped out Gucci suit

Ain’t got no job, but I stay sharp

Can’t pay my rent, cause all my money’s spent

but thats OK, cause I’m still fly

Got a quarter tank gas in my new E-class

but that’s alright cause I’m gon’ ride

got everything in my mama’s name

but I’m hood rich da dada dada da”

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Still Fly by Big Tymers

Even though this song came out in 2002, it’s still a club banger that many of us get excited about as soon as the first beat drops. And most of us will shout the lyrics at the top of our lungs because it’s just one of those songs that brings joy to our dancing hearts. Raise your hand if you started bobbing your head a little while reading the lyrics above. Some of us relate to those lyrics a lot. My friend, in a bid to save money, decided to change his car insurance to get the cheapest car insurance quote possible. Money Expert helped him out tremendously. But getting car insurance can be really expensive for people though, there are some deals out there which have been designed to help people when it comes to getting car insurance. For example, you could check out this cheap monthly car insurance with no deposit.

Black Wealth

Big Tymers and many other rap artists brag about their wealth over hypnotic beats, easily impressing listeners with what they have. Chains that cost a condo. Expensive cars with even more expensive add-ons. Couture fashion. And there is some validity to what they’re doing. We all should be able to list out what we have, how much it is worth, and whether it is in line with our life goals and beyond.

Black Wealth

Have you ever stopped to wonder what your list of assets would be if, per chance, you decided to rap about it or brag a little? Have you ever wondered while listening to the rappers bragging about their purported wealth, “how liquid is [insert bragging rapper’s name]” and, more importantly “how liquid am I”?

Knowing what you have and what it is worth could possibly impress others. However, in the context of growing your wealth and estate planning, it is critical that you are actually able to list your assets as fluidly as Lil Wayne, Jay-Z, and the rest. At a minimum, you should:

  • be able to list everything that make up your assets;
  • know the individual and total value of your assets and the type of ownership; and
  • know what will happen to each asset when you pass away.

If you know all of these things about your assets, you are positioned to maximize the power to make your assets do the most for you and for those you plan to give them to when you pass away. If you do not know what you have, what it is worth, and what will happen to it when you pass away, then you just might be wasting a lot of hard work and hard earned money.

Black-family-lying-on-grass

The focus of this article is on creating an inventory that identifies the assets that make up your estate, their value, and whether you need to make some adjustments or additions to your assets in order for you to develop an estate that meets your needs during your lifetime and meets your goals for when you pass away. Although there is basic discussion on the different types of assets that can make up your estate, you should make the time to do additional research to get a full understanding of each of these. This includes doing research online but also meeting with professionals who have solid, reliable knowledge about different financial instruments and financial planning. One feature of financial planning that many people do not quite realise the importance of is equity release. Equity release is a financial product for people aged 55 to 95 which allows you to release some of the cash (equity) tied up in the value of your home. To release equity from your home, you need to get expert advice from a qualified equity release adviser. You can actually calculate your equity by using something like this equity release calculator, just to make sure your finances are in the state they should be.

Black Wealth

You first want to list everything you own, how much each item is worth, and the beneficiaries of each item. Again, an estate is everything you own from real property (house) and personal property (cash, accounts, deejay collection, and etc.). To get you started on your inventory, we provide a worksheet you can download. Link

Most people’s estates also include a combination of some or all of the following:

  • Cash
  • Savings Accounts
  • Checking Account
  • Term Deposit Account
  • Life Insurance
  • Retirement Plans
  • Investments
  • Securities
  • Business Interests
  • Notes Receivable

Let’s take a more in-depth look at some of the financial vehicles above, because it is important to be clear on what you have and how it operates.

Term Deposit Account— This is a cash investment with a financial institution such as a bank that gives you an agreed rate of interest over a fixed period of time. A common term deposit account is a CD (certificate of deposit).

Life Insurance— Life insurance can be a significant part of an estate plan. Life insurance policies come in a variety of forms (e.g. term, whole, and universal), but the basic function of a life insurance policy is to provide a cash payment at the death of the life insured. This payment is known as a death benefit.

Black Wealth

The death benefit from a life insurance policy has numerous advantages and it takes careful planning to ensure that your life insurance is doing for you what it is intended to do. A major benefit of life insurance is to provide liquidity for your beneficiaries. In other words, it gives your beneficiaries cash and often it is soon after your death, which can be very useful, if not essential, to a surviving spouse and children. The death benefit is typically not taxable as income to the beneficiaries and it is paid directly to the beneficiaries rather than being paid to the estate of the deceased, so long as beneficiaries are listed.

Black Wealth

Other than a will, life insurance may be the best and only financial tool a person of modest means needs in their estate plan. Regardless of the policy owner’s means, it is critical to have a comprehensive understanding and strategy with your life insurance or the benefit can be lost.

Retirement Plans— As with life insurance, there are various types of retirement plans that you may have or that you will consider getting. Baby boomers and older generations often rely on Social Security, which is a government mandated plan, and pensions (an employer-sponsored plan profit sharing plan). Nowadays there are new, more robust retirement plans. For example, a 401(k) is an employer-sponsored retirement plan and most employers will match a percentage of what you contribute to your plan. Each year you can contribute up to $18,000 of your income before taxes are taken out, per federal law. Nonprofit and government employees usually have a 403(b) or 457 plan, respectively. You can also establish an Individual Retirement Plan (IRA or Roth IRA) on your own and there is a maximum amount that you can contribute each year. And if you leave your employer, you can roll your employer sponsored plan into your IRA.

Black WealthBusiness Interests— Whether you have a side hustle as a deejay or your main gig is your own business, know what your business is worth. More specifically, know what your share of the business is worth. Also, have clear instructions for what happens to your business or share of the business when you pass away. Should it be dissolved? Do you want to leave it to someone? Ideally, any business interest should not be compromised by your death undermining the effort and money invested in it. If you have a business partner(s), you should maintain life insurance policies on each other’s life and have a buy-sell agreement, so your interest in the business is not compromised when your partner passes away.

Black Wealth

Notes Receivable— This is a written promise to receive money from another person on or by a set date. The note formalizes a loan you make to someone and it is an asset. It is important to have any loan you make to someone put in writing and to use an attorney to draft this agreement to ensure your interests should the debtor file for bankruptcy, die, or disagree with the terms at a later date. Notes receivable can also be passed on to your heirs.

Black Wealth

Next Steps

After you have listed and determined the value of your assets, add them up to see the total value. You might find yourself impressed with what you have or you might realize that you need to make some changes to either grow your estate or to make sure what you leave behind is suitable for the loved ones you leave behind. Liquidity comes to mind again. Liquidity is an important and often overlooked characteristic of one’s assets. A basic way to determine your liquidity is to find out how much easily accessible money you have in the form of cash and equivalents, which you can do on your own or you may to speak to financial professionals to get the number.

Also, take a look at your debt and ask similar questions about your debt obligations as you do for your assets. How much is each debt? What happens to the debt when I die? How does it affect my potential heirs and beneficiaries? Keep in mind the assets that will go directly to the beneficiaries you named such as life insurance. Also, certain student loan debt is forgiven when you pass away, i.e. it does not become a debt of your estate.

Black Wealth

TIPS

Nominate beneficiaries. Many of the assets discussed in this article are set up so that you can nominate beneficiaries and alternate beneficiaries to receive the assets directly when you pass away. It is critical that you nominate beneficiaries, plus alternate beneficiaries, on any account that you allow you to do so. Not nominating beneficiaries plus alternate beneficiaries can and will likely undermine your entire estate plan. In most states, if you fail to or intentionally do not nominate beneficiaries, the asset will go to your estate and be used first to pay the costs of administering your estate and then your debts. Only after those obligations are paid for will the money be received by your loved ones.

Do not rely solely on employer-provided life insurance and retirement plans. These may not be sufficient for your family’s needs and they often do not continue after you leave a place of employment.

Do regular check-ups. Regularly check in on your assets to ensure that you have the coverage you need; that they are growing to meet your goals; and that the beneficiaries are who you need or want them to be. Annual check-ups and life milestones, such as family changes, retirement or changes in health, are good times to do a check-up too.

Develop a plan unique to your needs. It is not uncommon for people to follow the financial advice of their parents or friends. Although they can provide helpful advice, you must pay attention to your unique circumstances. Many baby boomers would advise putting your assets in a trust. Trusts are complicated and expensive. One of the greatest benefits of a trust is avoiding estate taxes and you currently need to have an estate close to $5 million to be concerned about estate taxes. Likewise, if you are single and have no children, your financial goals can be very different. Life insurance may not play a major role and the money you would use for life insurance premiums can be targeted to financial vehicles with greater growth potential than life insurance. You can also consider leaving your assets to your alma mater or a non-profit.

Black Wealth

Don’t let debt undermine the value of your estate. Many people prioritize paying off their debt paid during their lifetime and when they pass away. Having no debt or keeping debt low certainly gives you more financial freedom. However, this is not a reality for most Americans, especially for people with student loan or mortgage debt. It is possible, though, to grow wealth in spite of debt. In order to do this, you need a plan and this plan involves a good estate planning attorney, a good CPA specializing in taxes, and good financial professionals. These professionals will help you build a strategy to grow wealth and sufficiently address debt to meet your individual needs.

A good estate planning attorney will assist you with creating an asset protecting estate plan. The cost for this is minimal compared to what you could lose to paying off your debt. A good CPA can assist you with tax planning strategies that allow you to put more of your income towards growth and reducing your tax obligations based on your debt repayment. Then financial professionals can address your specific circumstances and provide advice on financial vehicles that work for you.

Black WealthDeveloping a team of professionals to aid you will likely require a lot of work on your part in getting referrals, interviewing people, and doing research. This effort is needed and in the long run, benefits are priceless. Just remember: your ultimate goal should be growing enough wealth to take care of yourself while you are living and to take care of you any loved ones you leave behind or building a legacy.

Consider inexpensive life insurance policies to cover some debt. Inexpensive life insurance policies can cover some of your debt at your death or the death of a co-borrower. Your car loan lender may offer a policy that pays off your vehicle loans. If you have student loan debt, find out what happens to your student loan debt when you die. It may make sense to get an inexpensive policy to pay off the debt if you have a co-borrower. For example, it may make sense for you and a co-borrower on student loans to get policies each other’s life to pay off the loans when one of you dies. The same holds true for business loans and home loans. With student loans, though, you and your co-borrower should also seek removal of the non-student co-borrower as soon as possible, which is usually a few years into repayment of the loans. Many lenders will not tell you that you can do that. You have to be proactive.

Balance your funeral wishes with transferring your wealth regardless of its size. Historically and presently, many people have “funeral insurance” which is either a standard life insurance policy for which the policy owner wants the death benefit used to pay for their funeral or it is a policy very similar to a life insurance policy that will direct the death benefit to the funeral service provider to pay for funeral expenses. The difference is that with the standard life insurance policy, the beneficiary is legally under no obligation to use the money to pay the funeral expenses. It is merely a promise. In either case, if you have or plan to have a life insurance policy to pay for your funeral expenses and even your debts, consider whether doing so is really helpful to those you leave behind. Traditional funerals are expensive. The average funeral is in the ballpark of $6,000. Could $6,000 make a difference in the lives of your loved ones if it could be used for something other than your funeral? There are many options less expensive than a traditional funeral. Some options are better for the wallet and the earth. Go green!

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Conclusion

Hopefully by now you feel encouraged to take an in-depth look at your assets. The goal is not to be able to brag like the rappers or even to see if you have something to be proud about. Regardless of your asset level, whether it is modest or very high, it is important to know what you have, how it operates, how it will transfer on your death, who it will go to, and the various scenarios of what can happen with all that you have worked hard to earn.
At the very least, you need to have a basic understanding of the financial assets you may have. Then, try to take it one step further and find out if what you have meets your needs and goals. Do you have the right type of assets? Also, find out if your assets are set up to meet your goals (i.e., have you nominated beneficiaries and alternate beneficiaries on accounts that allow it?). And once you have taken a good look at your assets, work with your loved ones to do the same by sharing this article and even sharing what has worked for you.

– Contributed by Mavis Gragg

Mavis Gragg is an attorney at the Gragg Law Firm, PLLC in Durham, North Carolina where she specializes in estate planning and estate administration. She is very passionate about maintaining and growing Black wealth through sound legal strategies and problem solving. When she is not being a justice girl, she can be found at an art gallery, trotting the globe, or on the dance floor.

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