The Art of Donating Art
- Donating art to a museum, gallery, foundation, or other organization is one way to share your passion for art and support cultural institutions.
- Consult with specialists early in the donation process, such as art appraisers and tax professionals.
- Funding seed grants and supporting smaller art institutions are two powerful ways to make an impact.
Years of patience, persistence, and passion go into acquiring art. Collectors are inspired by artists who make them feel and think differently. Philanthropy is one way of sharing your enthusiasm for art with the world while also building a legacy. A donation can be a part of your larger philanthropic strategy, but what steps should you take before donating artwork to a museum, gallery, foundation, or other organization?
To help collectors navigate an art donation, Andy Schoelkopf, former president of the Art Dealers Association of America (ADAA), and Michael Findlay, former president of the ADAA Foundation Board and a member of the Art Advisory Panel for the Internal Revenue Service, discuss best practices for making impactful gifts.
1. Consider an art appraiser
“Collectors are soliciting advice from art experts much earlier in the donation process,” Michael Findlay says.
He suggests paying an appraiser instead of soliciting free advice from an auction house. An appraiser can often provide more thorough and accurate appraisals, which may be important for tax documentation. When it’s time to claim the donation on your tax return, the IRS will review all documentation and may deploy a team of experts to assess the artwork’s value for tax purposes. A tax professional can help determine if an appraisal is needed, what needs to be included in the appraisal, and who is qualified to appraise your collection, as requirements can vary.
2. Understand tax deductions
Donations to charities can often be deducted at fair market value if certain requirements are met, but limitations may apply. For instance, donations to any charitable entity that will not use the artwork to further their exempt purposes are limited to a deduction at cost basis, which is generally the original purchase price. Consult with a tax professional before making a donation to determine if this or other limitations may apply to reduce the amount of the deduction.
3. Target smaller institutions
Andy Schoelkopf says that many smaller museums are buying exhibitions to expand their collections, so if a major institution is not interested in a donation, that same piece of art could have a positive effect at a regional museum.
4. Fund a grant
Beyond art donations, grants can impact the art world, especially at smaller museums that are not as well-funded, Schoelkopf adds. Seed grants are one way to make a difference. They are smaller amounts of funding—a seed—that support innovative projects or programs that have the potential to grow into larger initiatives.
“Seed grants can lead to great artistic transformation,” Schoelkopf says. Seed grants enable museums to take on innovative or ambitious projects that may otherwise be out of reach. “Review the museum’s operating budget by reading their 990 form and speak to the curator about what is needed," he adds.
If you’re interested in donating your art in a way that can best achieve your tax and philanthropic goals, please contact your Private Wealth advisor.
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