What to Know When Donating Art
Museum Exchange was born out of frustration with a system of giving that had remained largely unchanged since the first museums were founded in the 19th century. Having worked as curators at museums like the MCA Chicago, Art Gallery of Ontario, Seattle Art Museum, and Birmingham Museum of Art; we were all too familiar with the challenges that institutions faced in soliciting gifts of art. At those museums, we generally relied on the repeated largesse of a group of local collectors who were deeply involved with our institutions as board members, committee members, and patrons. Although those individuals were incredibly generous in their support, their collecting interests did not always align with that of our institution, which led to gaps in our collection and sometimes the difficult task of saying “no” to their gift offers. So we founded Museum Exchange to solve this fundamental mismatch in the arts ecosystem and to help donors and institutions achieve the greatest impact with their collections. In the nearly five years that we’ve been doing this, we’ve come away with some key considerations for donors as they begin to think about donating art.
Where To Donate Your Art
It goes without saying that selecting the right institution is the most important part of the entire donation process. With Museum Exchange, donors are no longer restricted to the handful of museums in their region with whom they may have developed a relationship. With a network of over 375 museums and more than 75 hospitals and universities, we give donors the ability to identify where their art donations can be the most meaningful.
We always encourage donors to be open-minded and to assess which priorities are most important to them. Oftentimes donors are drawn to big name museums that already have extensive collections, while a less prominent institution might actually put donated art to better use. The fundamental question to ask yourself is would you prefer that your work sit in storage or be on view? Other factors to consider include:
Does the institution have a genuine interest or need for the work?
Does the institution have the resources to properly care for and study the work?
Does the institution have the wallspace and context to adequately display the work?
Does the institution’s mission align with your own values?
There are many different types of institutions to choose from. Encyclopedic or contemporary art museums in major metropolitan areas are often perceived as the most prestigious, but lesser known regional or university museums have unique advantages. University museums, for example, often partner with faculty to incorporate works from the museum’s collection into the teaching curriculum, inviting students to engage deeply with the works. Whereas regional museums can feature works more prominently in their galleries, given that they may have fewer works to choose from.
But museums aren’t the only suitable destinations for art donations. A number of healthcare organizations and academic institutions present works across their campuses, uplifting patients as they undergo treatment and inspiring students as they go about their studies. A great benefit of giving to these types of organizations is that the works are generally on view year-round, as they do not collect for the sake of collecting for posterity. As long as the organization uses the work in a way that is related to their exempt purpose or function—like care or study in the case of a hospital or university—then the donation qualifies for the full fair market value deduction under the IRS’s “related use” requirement. That means that giving to a hospital or university can generate the same tax benefit as giving to a museum. This is the case for all institutions in Museum Exchange’s network.
Left: Jonathan Borofsky, Untitled, Man with Blue Tungsten Light Bulb, 1981. Oil on canvas with blue Tungsten light bulb, 131 x 101 inches. Sheldon Museum of Art, Sheldon Art Association, Lincoln, NE; Gift of Foster Goldstrom, S-1184.2021. Right: Leslie Wayne, Burning Down the House, 2018. Oil on wood, 85 ½ x 40 inches. Sheldon Museum of Art, Sheldon Art Association, Lincoln, NE; Gift of anonymous donor.
How to Offer Your Art
Before Museum Exchange, donors didn’t have an easy way to offer works to multiple institutions and so they typically defaulted to giving all their works to the same one. Though generous, this behavior was often actually to the detriment of many of the works in collection and the institution that received them. Museums took the good with the bad and were straddled with works from donors who they didn’t want to offend. The “bad” weren’t necessarily bad works, but rather just not a good fit for that particular institution. This could be for a host of reasons, such as if they already had numerous works by that artist or, inversely, didn’t collect that area. Neither the donor or the museum had a viable alternative, but with Museum Exchange individuals have the ability to distribute their collections across multiple institutions and ensure that each work goes where it is really wanted and can be put to use.
For these reasons, we recommend only offering works together if they are best understood as a group, such as with related works (like a painting and a corresponding study) or a portfolio of works on paper (like a print series). Likewise, we recommend that donors don’t place restrictions on a gift, such as display requirements or naming requirements, as these provisions can discourage institutions who might otherwise have been a great custodian of the work.
While it is true that some organizations bring in art donations with the intention of selling them and using those proceeds to fund other aspects of their operations (this is generally only done with the approval of the donor at the time of making the gift), that is not the case with any of the institutions in Museum Exchange’s network. All our members pursue donations with the intention of putting them on display and/or studying them. Further, as a condition of their participation on our platform, all our members are required to keep any donations for at least three years, ensuring that any tax benefits that the donor receives remain intact.
What Happens to Your Art After Selecting an Institution
Once a donor has identified a recipient and both parties confirm their mutual interest in proceeding with the gift, preparations are made to transport the work to the institution. Most museums require an artwork to be on site before they can formally add the work to their collection (a process known as accessioning). This usually entails a series of approval meetings with curators, patrons, and board members. These meetings happen at set intervals, generally three to four times per year, so it is imperative that donors confirm shipping arrangements with the institution in a timely fashion so they can deliver the work in time.
If a museum is bringing a work in for donation consideration, from our experience it goes through 99.9% of the time. The only reason why gift offers are declined at that stage is due to condition issues that weren't previously disclosed. This underscores the importance of providing accurate photography and a condition report, if available. This makes the institution’s job easier and leads to a better chance of matching and a successful donation.
Once a work arrives at the museum, the registrar will complete a condition check and notify the donor that it has been received. After the work has gone through the various approval meetings, the institution will issue a deed of gift for you to sign and they will then countersign it after the board has ratified the work. At that point, full title is passed to the institution. However, your generosity is recognized in perpetuity through the credit line that you specify on the gift paperwork. If you prefer to remain anonymous, you can do so.
Costs of Donating Art
It may come as a surprise that even donations come with costs. The biggest expense is shipping, which can cost $1,000-$2,000 for a single work and sometimes much more. Fortunately for the donors, museums typically cover this cost and make all the arrangements. These costs add up when you take into account that number of works that museums receive each year, which can be upwards of 200. Some smaller museums with limited budgets will request that the donor contribute to the shipping costs. This can be done as a charitable contribution, for which the donor receives an additional tax benefit, and is always greatly appreciated by the institution and can increase your chances of matching.
The second expense is the cost of completing an appraisal. These must be completed by a qualified appraiser and typically range in cost from $1,000-$2,000. Per the IRS regulations, this must be paid by the donor. Whereas in Canada, the museum pays for the appraisal (and generally requests that the donor make a matching cash gift to cover the cost).
Valuing Your Art and Tax Considerations
In addition to the many philanthropic and cultural benefits of donating your art, there are also real financial benefits in the form of tax savings. If gifted to a “related use” charity, the donor is generally eligible for tax savings equal to the fair market value of the artwork. This is determined by a qualified appraiser after assessing a number of factors pertaining to the artwork and how it compares to comparable works that have transacted on the open market. Their findings will be summarized in an appraisal report that includes all the relevant information about the work and its monetary value. The Fair Market Value amount is reported on a Form 8283, which is signed by the appraiser, receiving institution, and donor and then submitted with the donor’s tax return.
The monetary value of a work can fluctuate significantly over time as there can be changes to its rarity or to the overall market for that artist’s work, so the IRS requires an art appraisal for any artwork, or group of artworks, that is valued over $5,000. The report must be effective no earlier than 60 days before the date of contribution (either the date of the physical transfer of the artwork to the institution or the date that Deed of Gift was executed by the museum), and anytime up to the donor’s tax filing deadline.
It is important to plan ahead and contact an appraiser as soon as you have decided what you would like to do with your art. Art appraisals can take as little as two weeks but some artworks require considerable additional time to research and obtain comparable values from galleries, especially for artists with less active markets.
We recommend that all donors consult with a tax expert to understand their specific tax situation and the financial implications of donating a work. Furthermore, it is important to time your donation properly to maximize the benefit as annual limits for charitable giving may apply. The most recent legislation in the One Big Beautiful Bill establishes a 0.5% floor for income tax charitable contribution deductions claimed by individual taxpayers who itemize their deductions. Under the amended Code Section 170(b)(1), these deductions are allowed only to the extent that an individual taxpayer’s total contributions exceed 0.5% of the individual’s adjusted gross income (AGI). However, if a charitable deduction is not claimed for one year, it can be forward up to five years.