Donating Art - The Smithsonian
Like many institutions, the Smithsonian Institution’s National Museum of African Art cannot guarantee that objects donated will be placed on exhibition or that they will be exhibited or stored intact as a single collection.

Donating art to an art museum should be a no-brainer, but, in fact, many museums reject far more proposed donations than they accept. Here’s why, and alternative options.

Giving It Away

By Daniel Grant

By most measures, giving to charity is a good thing. Donating cash to nonprofit organizations, books to libraries, clothes to the Salvation Army, child care items to homeless shelters, or artworks to museums helps the public in general and those in need particularly. Moreover, donors receive a tax deduction equal to the value of the donation. Win-win.

Yet there frequently are times when prospective recipient organizations do not want your gift. Cash is rarely a problem unless the donor’s money is ill-gotten (e.g., the Sackler family’s name has been removed from numerous institutions in light of their role in the opioid epidemic). But libraries increasingly turn down book donations (they have too many already), the Salvation Army only wants items that are “gently used” and in full working order, and pre-owned cribs, plush toys, and car seats are now refused by all child-related organizations regardless of their condition.

Giving art to an art museum should be a no-brainer, but, in fact, many museums reject far more proposed donations than they accept. “Ninety to ninety-five percent of material that is offered to museums is declined,” says Michael Duffy, national head of art and collectibles planning in the private banking division at Bank of America. (He acknowledges these numbers are anecdotal, since no one has formally tallied the objects offered to, then accepted or rejected by, U.S. museums, but they correlate with his experience working with art collectors.)

This reality often comes as a surprise to collectors or their heirs who, in Duffy’s words, “think of their objects as assets.” Museums, by contrast, often view new accessions to their permanent collections as “liabilities.” (After all, every item a museum owns takes up valuable “real estate” and needs to be secured, insured, catalogued, and stored in a suitable environment.)

Art collector Joseph Shapiro
Collector Joseph Shapiro (1905–1996) with Enrico Baj’s “Punching General” (1969), which Shapiro and his wife, Jory, donated to Chicago’s Museum of Contemporary Art in 1992; photo © MCA Chicago

Reasons To Say No

Let’s start with the most basic reason a museum might turn down an artwork: the piece is not in line with the institution’s mission. For instance, a venue devoted to contemporary art has no need for an impressionist painting, regardless of the work’s quality or importance. Even if the institution does collect and display artworks consistent with what a prospective donor is offering, it may still demur if it already has pieces just like the one being proffered. Or the proposed donation may not be as good — in condition or aesthetic quality — as others already in the collection. Moreover, proposed artworks that will need substantial conservation are a red flag.

Then there are the more subtle problems that museum directors do not want to take on. For example, the attribution may be questionable. Is this painting by  Rembrandt or just attributed to Rembrandt? Perhaps it can only be designated as Studio of Rembrandt or School of Rembrandt. In each case, the determination moves further and further away from something definitive, requiring costly research by the museum that accepts the painting and then a diminution of value for the donor whose charitable tax deduction drops accordingly.

Other issues are title (does the collector have full ownership of the piece, unencumbered by liens or claims of theft by former owners or foreign governments?) and provenance, the chain of ownership that is ideally an unbroken line from the artist’s studio to the current owner’s home. In cases where these matters are unclear, the institution needs to devote staff time and money to research. Gaps in the chain of ownership, or the possibility of future claims that the artwork was looted or connected to money laundering (using ill-gotten gains to purchase artworks then sold on to produce “clean” money), also might result in expensive legal challenges to the museum.

Prospective donors may also have expectations about what a museum will do for them that the institution cannot meet. For instance, a collector may stipulate that all of his donations must be exhibited together (reflecting his own vision of the entirety), that some or all must be displayed regularly, or that none can ever be sold. Some even insist upon all of these conditions. “Almost every museum has established accession policies that bar conditions on gifts,” says New York City art adviser Todd Levin. This is in large part because curators and directors don’t want to tie their successors’ hands with binding agreements.

Some institutions make this quite clear from the outset when communicating with prospective donors. The Smithsonian Institution’s National Museum of African Art, for example, solicits gifts of objects, but its website states, “All acquisitions should be outright, unconditional, and irrevocable upon transfer to the museum. The museum cannot guarantee that objects donated will be placed on exhibition or that they will be exhibited or stored intact as a single collection.”

On a more informal basis, professionals representing collectors urge their clients who are looking to donate to “be realistic,” says Boston-based lawyer Nicholas O’Donnell. “If I represent a donor who wants everything to stay together, and for nothing to ever be sold, I tell that person, ‘No one will agree to that.’”

In general, museum officials are more interested in “cherry-picking” — selecting from a private collection only those individual works that complement or differ from pieces already in the permanent collection — than in accepting many works, some of which may be ill-suited for the institution. “With very few exceptions, most collections are not donatable,” O’Donnell says.

Quite understandably, collectors may be in love with what they have purchased over the years, but they’ll probably discover that museum professionals have other priorities and interests. Levin recalls a couple of collectors of American craft who had built their collection over 25–30 years. At a party they met the director of a local museum, who “was very excited to hear they were interested in donating their collection. Not long afterward, he visited their home, took one look and saw that it wasn’t of the right caliber for the museum. He was very gracious to them, but wasn’t interested. The collectors were crestfallen.”

Because museums look at gifted objects as liabilities, officials regularly seek to offset their conservation, insurance, research, and storage costs by requesting cash donations to accompany the objects. Duffy says he once advised “a client who wanted to donate a small Monet painting to [Atlanta’s] High Museum, which considered it secondary or tertiary to Monet’s masterworks,” though it would have been more willing to accept it were the gift accompanied by some cash. But “the donor did not want to also contribute $50,000.” Another Bank of America client had “an early Van Gogh, painted before this artist’s work became more colorful.” The first museum he approached would only take it if it came with $100,000. “The donor was offended,” Duffy explains, “and ultimately found another museum that wanted only $50,000.”

Strategies to Consider When Donating Art

Collectors may spend a lifetime assembling artworks that represent a certain theme or are particularly meaningful to them. But then the process of estate planning, or the finality of death itself, can result in these pieces flying off in different directions — some donated to museums, others taken by heirs, others sold commercially.

Generally, there are three things collectors can do with artworks, antiques, or other collectibles as part of their estate planning.

Option 1 is to bequeath everything to your heirs and let them worry about it; no inheritance tax is due as long as the entire estate falls below the Internal Revenue Service’s current $12.06 million threshold. (If the estate is worth more than that, the federal tax on inherited items ranges from 18 to 40 percent, and state taxes may also be due.)

Option 2 is to have the pieces sold off upon your death; this can incur a capital gains tax of 28 percent, or even 39.6 percent, depending on how long the objects were in your collection.

Option 3 is to have the pieces donated to a museum or other charitable institution upon your death, thus reducing your estate’s overall value while obtaining a charitable deduction. Understandably, quite a few collectors prefer this third option.

In order for a donor to receive a full “fair market value” income tax deduction, the recipient organization must prove that its use of the artwork will further its own tax-exempt purpose, referred to by the IRS as “related use.” If there is no related use, the donors’ charitable deduction will be limited to their “cost basis” in the work — what they originally paid for it. In this case, a painting purchased for $50,000 that is now worth $500,000 would provide the donor with only a $50,000 deduction.

Additionally, if a charity — art museum or otherwise — sells the donated work within three years of receiving it, that sale must be reported to the IRS and the donor’s fair market value deduction may be retroactively lowered to his or her original purchase price, plus certain expenses. As a practical matter, donors should clarify with the recipient institution that the gift must be kept for at least three years. This is especially relevant with charities that solicit artworks they intend to sell off during benefit auctions that generate operating funds.

For some owners of large, valuable collections, there is one more possibility: establishing their own foundation or museum, which will keep the art together long-term. You get all the benefits of the charitable deduction, control over how and which objects are displayed, and the gratification of seeing your own taste memorialized by an institution with your name on the door. Examples created fairly recently include the (Peter) Brant Foundation Art Study Center in Manhattan and Greenwich, Connecticut; the Linda Pace Foundation in San Antonio; The Broad (established by Eli and Edythe Broad) in Los Angeles; and the (Mera and Don) Rubell Family Collection in Miami and Washington, D.C.

For some of these donors, it is control that may matter most. “It’s really not tax-driven,” says Diana Wierbicki, a partner at the law firm of Withers LLP, where numerous clients have set up such museums. Usually these entail collections worth more than $100 million: “You need enough value and volume to make it worth doing,” Wierbicki explains.

Donating art to art museums
Museum Exchange coordinated collector Sue Stoffel’s gift of this photograph by James Casebere (b. 1953) to the Sheldon Museum of Art at the University of Nebraska, Lincoln: Monticello #3, 2001, digital C-print mounted on aluminum. 48 x 60 in.

Other Options for Donating Art

For those not quite as well-heeled, finding a home for your artworks is a task that many professional art advisers can undertake for you, charging either by the hour (usually in excess of $200 per hour) or on a negotiated per-project basis. Lela Hersh, a Chicago-based adviser for whom collection management is as much a part of her work as helping clients buy and sell pieces, is proud to have helped Joseph and Jory Shapiro. Ultimately, they donated a group of paintings to Chicago’s Museum of Contemporary Art (MCA), works on paper to the Art Institute of Chicago, and other works to Rosary College, Spertus College, and the University of Notre Dame. “Eclectic collections can’t go to just one place,” Hersh notes.

A firm launched in 2021, Museum Exchange, specializes in placing artworks in museums, hospitals, universities, and libraries, helping collectors determine where and when to donate their objects. Chief growth officer Michael Darling (formerly MCA’s chief curator) says, “We have 160-plus museums and over 300 donors participating throughout North America and as such have a great chance of finding a good fit.”

Its process is straightforward. Museum Exchange publishes quarterly catalogues of artworks being offered by collectors, viewable by museum staff who submit proposals to receive the artworks as gifts. Donors then select one museum from those various expressions of interest. After a match is made, Museum Exchange manages the donation process through its digital interface, streamlining the potentially complex and cumbersome logistics of a charitable gift.

With or without an adviser’s help, it makes sense for collectors planning their estates to contact museum curators and directors now to indicate what they own and to ascertain if the institutions would be interested in receiving those objects as donations. Too often, Michael Duffy says, collectors just indicate in their wills that their objects should go to a specific museum, leaving their heirs to discover that the objects are actually unwanted and thus require disposition in some other way. The harsh reality that museums reject so many proposed gifts is not limited to the largest and most prestigious institutions; it happens at smaller, regional ones, too. “Collectors shouldn’t mistake their local museum for Goodwill, donating unwanted tangible personal property without first speaking with the museum’s curator or other staff,” Duffy concludes.

About the Author: Daniel Grant is a contributing writer to Fine Art Connoisseur and author of The Business of Being an Artist (Allworth Press).

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