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Last September, 35 graduate students and two professors drove from New York City to Potomac, Md., to see some art. The excursion was worth the ride, given the exclusivity of the destination. The group had been invited to view the private collection of Mitchell P. Rales, a billionaire industrialist who opened a museum to house his art collection in 2006. Reservations are required, and not easy to obtain.
Hidden among the rolling hills of Rales’ 125-acre estate, the Glenstone Museum couldn’t be seen from the street. The students checked in at the gatehouse, a stone-and-glass station guarded round-the-clock by off-duty police, then drove down a maple-lined road, between sculptures by Richard Serra and Tony Smith, and into a cobblestone courtyard with a totem by Ellsworth Kelly and another Serra sculpture, a giant curve of red metal. The museum itself was a sleek, modern structure of rectangles and curving walls constructed from gray limestone blocks and silvery zinc panels. Narrow banks of windows lined up like observation decks on a space ship. Across a man-made lake, the students could see Rales’ residence and a guest house.
Inside the museum, three guards explained the rules: no food, no drinks, no gum. And definitely no photography. The students came prepared with questions about their host, who did not arrive to greet them. Who was Mitchell Rales? What did he do? “We will not discuss Mr. Rales’ private life,” the guards said. The students persisted. Did he live at the estate? Why did he collect? Again, the guards refused to respond.
The art on display only magnified the students’ curiosity. In seven high-ceilinged galleries, they found sculptures by Calder, Matisse, and Koons, Warhol silk screens, paintings by Pollock and Rauschenberg, a series of blue shelves by Donald Judd. As they wandered, closely watched by the guards, the students whispered. The heightened security made one so nervous, he commented that he felt like they were on an art safari, as if a lion might attack at any moment. Gisela Gueiros, who wrote about the trip on her blog, described Glenstone as “inhospitable and brilliant,” a “magical, incredible and sinister place.”
Gueiros’ account was written in Portuguese, which may be the reason it escaped Rales’ knack for discouraging published descriptions of his collection. Over e-mail, Gueiros said she was disappointed by the restrictions and lack of information at Glenstone. It wasn’t like most museums.
Then again, most museums these days can’t afford to compete with collectors like Rales. Even old, well-endowed institutions get outbid at the major auctions. That’s because the boom in the ranks of the super-rich has fueled an unprecedented escalation of prices in the art market over the past decade. The inflation in fine art has sent curators scrambling to court wealthy benefactors.
Rales is a prize catch for any museum. He’s relatively young, just 50, and has plenty of disposable income, with a net worth estimated at $3 billion. Since he began collecting 15 years ago, he has become a fixture at New York auctions, at first bidding on big-name modernists like de Kooning and Rothko. More recently, he has invested in the contemporary market. ARTnews named him one of the Top 10 art collectors in the world in 2006, the same year Glenstone opened. He has also demonstrated a commitment to give directly to museums. Through the Glenstone Foundation, a charity that predates the Glenstone Museum Foundation, Rales has given tens of millions of dollars to arts institutions.
When rich men like Rales give to museums, they get a lot in return. They get respect and gain clout, even power. Rales’ generosity has earned him positions on the boards of both the Hirshhorn and the National Gallery of Art. It has also won him license to do what he wants with his money and his art and cast any doubters as cynics.
The Glenstone Museum Foundation was registered in 2006 as a private, nonprofit charity, and thus pays no taxes on its assets. But the legal definition of the museum is far from clear, making it hard to say for certain whether Rales has violated any laws by restricting public access. When I requested a tour, curatorial assistant Cicie Sattarnilasskorn thanked me for understanding that they did not grant visits to members of the media. “As a private museum, it is necessary for us to maintain the privacy of the owners,” she wrote. According to several people familiar with the museum, invitations aren’t often extended to members of the general public, either.
Those who do get the chance to tour the place generally emerge with a jumble of emotions.
“That’s the only sad part of the collection,” Gueiros wrote. “You can’t chew gums (they really stop you and walk with you to the nearest trash can), there’s always someone around, I would say one or two people for every room.” Gueiros, who did not reveal the name of her school, said her professors wanted to keep the university out of any article on Glenstone, so that they might be able to visit again. Still, Gueiros wanted to know the story behind Rales’ interest in art. “Usually collectors love to explain and talk about their collections, how they started collecting and why,” she wrote. “He is clearly a very mysterious personality, which makes everybody even more curious.”
Rales graduated from Walt Whitman High School in Bethesda in 1974. The broad-shouldered football star with a real-estate tycoon dad (his mom owned Jolie Antiques) left the nest for Miami of Ohio, where he majored in business administration and graduated in 1978. Six years later, he and brother Steven took a real-estate trust left by their father and launched a leveraged buyout firm called Danaher, named after a fishing stream in Montana.
Loaded with debt, they staged risky corporate takeovers, getting tagged as “Raiders in Short Pants” by Forbes in 1985. When the managers of one company resisted the Rales’ court-approved invasion in 1986, Mitchell Rales walked into the president’s office and sat down at his desk.
While scoring several impressive grabs, the brothers got burned as well, losing bids to bigger competitors like Warren Buffet and agreeing to pay $850,000 to the Federal Trade Commisison after an investigation into pre-merger stock purchases. But by the mid-1990s, to Wall Street’s surprise, they had straightened out, paid down their debts, and transformed Danaher into a manufacturing and technology conglomerate with more than 100 subsidiaries. By 1999, both brothers were billionaires. They began ceding more day-to-day control of Danaher to their managers.
By then 42, Mitchell Rales had spent his 30s plotting the many acquisitions of a voracious conglomerate. He was a master of the spreadsheet and an expert on trimming excess spending. But he hadn’t had much time to enjoy his wealth. In 1999, he divorced his wife, Lyn, the mother of his two children, and began, very quietly, to reinvent himself. Still stung from some of the public hits he’d taken a decade earlier, he became an astute deflector of media attention. He gave no interviews and kept his private life out of the press. (His brother was less successful dodging headlines when his wife filed divorce papers accusing him of swerving his car into her lane in front of a posh girls school.)
A few months after Mitchell Rales’ divorce, a friend set him up with Rebecca Black, a blond, 30-year-old fundraiser at one of D.C.’s most prominent charities, Fight for Children. Black, a former animal behaviorist for the Barnum and Bailey Circus, seems to have inspired Rales’ inner naturalist. The couple began raising alpacas on the pastures of Rales’ estate.
In 2002, Rales started buying real estate in Tampa, Fla., Black’s hometown. The local girl and her billionaire boyfriend ignited a minor media circus there in 2003, when Rales paid $5.9 million for two luxurious bay-side properties: an Italian-style villa and a smaller mansion next door. He bulldozed both homes to make way for a new, giant estate for himself and Black, now his fiancée. His architect told the local paper it would be “the opposite of a McMansion.”
The months passed and construction never began. In 2004, Rales abruptly sold the lot to a developer for $6.2 million.
Black moved to Colorado, where she now raises alpacas on her own farm with her husband and two children. Rales, meanwhile, had torn down several buildings on his property and began planning construction on Glenstone, which opened in September 2006.
The newest legal resident of 12002 Glen Road is Emily Wei, 32, Rales’ former curator, who previously organized shows at contemporary galleries in New York and Miami. She is listed as the president of Glenstone on tax documents and museum letterhead. Gifts from the Glenstone Museum and Foundation now list Rales and Wei as the benefactors. In rare photos of Rales at recent arts events, a svelte Wei is on his arm. A Web site for Glenstone Farm still lists alpacas for sale, many with names like Kelly and Calder. “Visitors are always welcome,” the site says. But no one answers the phone.
Rales has outdone his Potomac neighbors in fortifying the entire Glenstone estate, including farm, museum, and two homes. Black wooden fencing surrounds the perimeter, with entrances at two gates on Glen Road. The brushed steel intercom boxes connect to a guard station at the first gate. When I buzzed, I was greeted by an officer in a golf shirt emblazoned with the Glenstone logo, a white “G” against a dark-gray square. I told him I wanted to visit the museum. While he made a call back in his booth, two more guards drove up in a little van. (County records show five off-duty police officers on his payroll.) One of the men introduced himself as Rales’ head of security. As we talked, I heard several clicks from the intercom box. “Who’s listening?” I asked. “No one,” he said. I requested a copy of Glenstone’s letter of exemption from the IRS, which the tax code requires nonprofits keep on hand at all locations for public review. The guard took my phone number and sent me away.
The following Monday, I received certified mail containing the letter of exemption.
Rales gets nothing but praise from the curators who depend upon his donations. His monetary contributions, which began a decade before his museum opened, are part of an old, well-choreographed exchange in which museums decide what they want to buy and then go hunting for the donor most likely to pony up for the purchase. Rales’ greatest impact may lie in the fact that he likes modern and contemporary art. So the museums who count him as a friend may be more likely to buy a de Kooning than ancient Chinese textiles.
“He’s one of these truly different kinds of collectors that mostly don’t exist today,” says Kerry Brougher, a curator at the Hirshhorn Museum. “He is someone like a Count Giuseppe Panza [an Italian industrialist and art collector] who truly believes in the transformative power of art and wants to build a truly great collection filled with the very best art he can manage to acquire.”
One of Rales’ first major gifts to the Hirshhorn was a set of four early works by John Baldessari purchased in 2005. “Mitch was very interested in Baldessari,” Brougher says. At the time, the museum didn’t own any of the contemporary painter’s work, a fact Rales was well aware of, “because I always mentioned that,” Brougher says.
As for the limited access to Glenstone, Brougher says he isn’t concerned. He doesn’t mention the rumors that Rales has plans to turn his hidden collection into a full-blown, self-sustaining museum or art school.
“I’m not completely sure of what the policy is,” Brougher says. “I know that it is possible to see the collection. It doesn’t bother me because I think there’s more access to Glenstone than there is to most private collections around the world. Even though the access might not be 100 percent.”
Judging by the paucity of published descriptions of the museum, Glenstone is actually far less accessible than many private collections. Other über-wealthy art collectors with their own museums—including real-estate tycoon Eli Broad, cosmetics heir Ronald Lauder, and Wal-Mart heiress Alice Walton, whose Crystal Bridges is scheduled to open in 2010—allow unconditional public access, with an admission fee.
One travelogue on Rales’ museum, written on a blog called Miscellany Inc., took note of the controlled environment.
The author, who went with a small group, described Rales’ collection as “what you might expect” from a relative newcomer with the funds to spend millions on “canonical, if hardly daring, work.” The author provided a detailed catalog of the art on display: a Giacometti thin man (those deathly looking bronzes of spindly walkers), two Cornell boxes (glass-fronted frames with surrealist collections of bric-a-brac), a complete series of Matisse’s sculpted heads of Jeanette, three Calder mobiles, a room of de Kooning drawings and paintings from his 1950s Woman series; a huge horizontal 1958 Rothko; two late Gorky drawings; six Pollocks; six Kellys. The list went on and on: Kline, Still, Twombly, Johns, Rauschenberg, Baldessari, Andre, Judd, Martin, Richter, Kiefer, Marden, Klein, Chamberlain, and Gonzalez-Torres.
Once again, guards followed close behind the visitors, “forcing us to look at a certain pace and under a certain level of anxiety.” Someone was controlling their experience, and it didn’t leave a good impression. The author wrote that Glenstone “felt obsessively micro-managed, down to the carefully manicured lawn which we were not permitted to walk on.” He left the museum with doubts about Rales’ intentions, writing, “The cynic in me wondered if Rales had created the foundation as an elaborate tax write-off.”
The author’s suspicions recently disappeared from his blog.
Indeed, creating a foundation to assume ownership of your art offers several opportunities to save on taxes: The initial donation may be deductible; the cost of housing and insuring the art can be covered by a tax-deductible cash donation; when the original owner dies, no estate tax will be due; if the art appreciates and is sold, a private owner would pay the 28 percent tax on capital gains for collectibles while a nonprofit foundation pays nothing; and, if the foundation purchases art on its own, it pays no sales tax in most states. Despite these hefty potential savings, establishing an institution that demonstrates your dedication to the arts can deliver a nonmonetary benefit for the ego.
For that reason, federal law places limits on the extent to which private benefators can profit from tax-exempt art collections. The tax code prohibits charities from “self-dealing,” tax speak for using your own nonprofit for your own benefit. The question is whether Rales’ museum is actually a nonprofit.
This is where it gets a little confusing.
There are actually two distinct Glenstone Museums. One is the physical structure, the Gwathmey Siegel museum on the same property as Rales’ home, a building owned, according to tax records, by Rales himself. It’s the one with seven galleries full of de Koonings and Calders and Matisses. The one where reservations are mandatory and hard to get. The one with a curator and a paid staff of security guards.
The second Glenstone Museum exists in the ether of IRS documents. Its assets consist of 10 paintings, valued at $76.5 million (Device Circle, 1960, by Jasper Johns; eight paintings by Brice Marden; Number 19, 1948, by Jackson Pollack). This IRS-blessed Glenstone pays no wages to staff and owns no real estate. Members of the board of directors receive no compensation. Tax documents state its purpose as promoting “the study, improvement and advancement of the arts,” mainly by lending art to other museums.
The legality of Rales’ private museum rests in how much the two Glenstones overlap. The extreme example of “self-dealing” would be if Rales listed a painting as property of the Glenstone Museum but kept it in his house. More plausibly, he could arouse suspicion by simply keeping art owned by the tax-exempt museum in the real museum on his property—legally, not much different from his house.
According to tax documents, the 10 paintings owned by the Glenstone Museum are sometimes stored at the “museum’s location” when they aren’t on loan. Letterhead included in the tax packets lists that location as 12002 Glen Road in Potomac—the same address as Rales’ estate. (To further complicate matters, the mailing address for the Glenstone Museum is 2099 Pennsylvania Ave. NW, D.C., the headquarters of Danaher.)
Rales could also be in murky legal territory if he keeps art owned by the Glenstone Foundation—his long-standing general charity—in his home or in the galleries of his private museum. According to tax documents, the foundation has previously invested in art. Since only 2006 tax documents are available, it’s unclear whether Rales plans to donate art currently on display at his private museum to either of his official, tax-exempt charities.
“He is right up on the edge of the law,” says Janne Gallagher, an attorney with the Counsel on Foundations, which advises nonprofits. “I’m sure he’s well-advised,” she says. Nonetheless, she says, Rales’ unusual arrangement could raise questions from the IRS.
Another potential legal question comes from how Rales uses the museum on his property. His architects’ online portfolio, which includes rare photos of the building, describes the gallery as a space for gatherings and receptions. If Rales uses a gallery hung with tax-exempt art to entertain guests for a Memorial Day picnic, that could also be considered self-dealing.
I attempted to get Rales or his museum to comment on these matters for several months. Finally, this week, the foundation released a statement vowing that Glenstone has “fully complied with the rules and regulations governing private operating foundations.” Regarding the specific location of art owned by Rales’ charities, spokeswoman Anna Cordasco says, “to the best of our knowledge, all of the art is on loan or in separate storage.” She says more than 2,000 people have visited Glenstone since it opened.
Cordasco also arranged a phone call from a visitor who had only good things to say about the museum. Kamala Subramanian, an art teacher at the SEED Public Charter School in Southeast, has visited Glenstone three times with groups of students. She described the experience as “very pleasurable, very unhuried….Our students have just been in awe of the work,” she says.
Arranged visits for charter schools aside, Glenstone is still far from public. The fine points of nonprofit law may matter less than the ethical questions posed by Rales building a house for his stuff, calling it a museum, and keeping the public out. The rich already control the market for buying art—should they also control who gets to see it?
Ford Bell, president of the American Association of Museums, says private museums aren’t good for the art world. And at a basic level, he says, they go against the whole point.
“It’s not a museum if you can’t get in,” he says.