Charles Shepard, FWMoA President & CEO
I’m forever grateful that an increasing number of people offer to give the Museum artwork of various types from their personal collections to help us build up our institutional collection. In just the past several months, we have added close to one million dollars of art in the form of paintings, prints, and contemporary glass sculpture. Depending upon each donor’s situation with regard to the IRS, most of these gifts of art were or could have been used as deductions on that individual’s taxes. It’s truly a win-win: the Museum’s Collection keeps growing and our generous donors are rewarded with a lower tax bill. That said, getting that tax deduction necessitates having the donated work of art appraised by a qualified independent appraiser who is not employed by the Museum. Why is that? Wouldn’t someone at the Museum have this kind of knowledge?
By way of an answer, let’s start with this: while a museum’s curatorial staff knows a great deal about art, most museum folks know very little about the actual art market which is where an object’s market value is established. I’m something of an anomaly here because I pay considerable attention to both primary and secondary market value for the objects I am trying to acquire for the Museum. So, in that respect, I might actually be able to give someone a fair estimate of their object’s value, if I were allowed to do so by the IRS. In fact, back in the late 1980’s and early 1990’s I, as a museum director, appraised objects that were being offered to the museum. At the time, art appraisals by directors and curators were the norm, and routinely accepted by, the IRS. By the mid-1990’s, triggered by an uptick in the size and number of deductions for gifts of art, the IRS began to suspect that letting a museum employee set the value on a gift of art that was coming to that museum was opening the door to serious potential for a conflict of interest.
I can give you a great personal example: while directing a university museum in the early 1990’s, I got a call from a wealthy alum, who had always been a strong supporter of the school, about a gift he might want to give the museum. We arranged a meeting to discuss this and he agreed to bring the gift along for my inspection. He was a jovial soul who shared stories of his support for various university departments and praised me for the good job he thought I was doing for the university museum. He told me that he’d like to help the museum grow with both gifts of cash and art. Naturally, I was thrilled! At the time, I was running the museum on a shoe-string operating budget with almost no alumni support. Suppressing my glee, I asked him what he might have in mind. With enthusiasm and no small amount of pride, he told me that he’d like to begin with a check for $1,000 and a gift of archeological specimens worth $25,000. The check was large enough, in those days, to underwrite both the annual faculty and senior thesis exhibits. How terrific! But I was baffled by the offer of this shoe box full of specimens, especially to a fine art museum. I told him I was very grateful for the financial support, but that I was thinking that his archeological pieces might find a better fit in another department. “No, no, young man,” he countered, “I have great faith in you, and this museum is the best home for my collection. All you have to do is sign this appraisal form and the money and my fine specimens are yours.” From the pocket of his rich tweed jacket he produced both the form and a pen. I read the form carefully. It was a simple thing stating that I, as a museum director, was certifying that this box of rocks was valued at $25,000. I was desperate for the $1,000 cash donation, but wary about signing off on that $25,000 appraisal. I wondered why hadn’t he stopped first at the archeology department? And why had he arrived at my office door with a pre-written check and donation form? I was still wet behind the ears, but I had a strong sense that he just knew that I wouldn’t be able resist his offer. I had to think quick! I finished reading the form and looked up at him. “Your generosity is wonderful and I want you to know how much I appreciate this”, I told him. In my mind’s eye, I saw an exit strategy. With feigned confidence, I reached to firmly shake his hand, announcing that I would bring this offer to the collection committee’s attention immediately for a vote. I gambled that he wouldn’t know that, at the time, there was no collection committee. I told him that, for security reasons, he should take the check and his archeological specimens home until the committee’s approval was sought and secured. This caught him totally off guard, having not imagined any process that involved a committee decision. He was clearly at a loss for words, but as I stood to end the meeting, he shook my hand and said he looked forward to hearing from me in the coming week. As soon as he was out the door, I phoned the archeology department and found that they, in a previous year, had refused his over-valued specimens due to their inferiority. So I had, indeed, ducked a bullet. Days later, I wrote him a lovely note to let him know how disappointed I was that the “committee’s opinion was that, as an art museum, we shouldn’t accept objects that more appropriately should be given to another university department.” My note was perfectly logical, but of course, after its receipt, he never reappeared to leave the $1,000 check. Which was understandable and quite alright with me. But until the IRS forbid museum personnel from appraising (or signing off on appraisals) situations like this cropped up more often than you would think.
So, to turn back to the current day, the Museum is absolutely thrilled to be offered gifts of art and ever ready to help donors find a good, independent appraiser that can do this work. It’s neither difficult nor expensive to get a certified appraisal and, often, the appraiser can work from your photos. Because the Museum is not allowed to employ the appraiser, the donor always has to bear the cost of the appraiser’s fee, but that expense is but a fraction of the amount most donors save in taxes.
Here’s another interesting aspect of down-sizing your art collection: generally, those who pursue an appraised donation of art enjoy a considerably larger return on their investment than those who choose to sell their cherished objects at auction. And not only is their return usually greater but, in donating their objects to a public collection, they keep the overall value of their favorite artists higher by keeping that art off the private market and putting it into the public’s viewing eye.