Planned Giving, Art and the Art of Unusual Gifts

When it comes to fundraising and planned giving, be open to the possibilities!

The following news piece is about a very generous couple donating not only their extensive art collection, but also the money to build a space to house it!

Of course, if you are wondering about tax consequences, it is important to note that museums are clearly the best place for donations of art.  If you don’t know or have forgotten, there are different rules for donations of art when it comes to taxes.

For a donor to take a full fair market value income tax deduction, the donated art has to be used in a way that is related to the mission of the recipient organization.  Museums show art, so the donor can reasonably expect that their art gift will be used in a manner related to the mission.   And, if your institution sells a donated work of art within three years of the gift, your organization needs to report the sale and the gift is retroactively considered non-related use and your donor needs to hire tax counsel!  Actually, your organization might need counsel at that point!

Conveniently, I can guarantee that many museums just happen to have a three-year rule when it comes to art donations.  Hint, hint.

Lastly, and the most challenging aspect of gifts of art or other tangible personal property: the qualified appraisal.  I have heard one of the top nonprofit attorneys in country say many times that not once in his 30+ year career has he ever seen an appraisal for gifting purposes that meets all of the rules.  Yes, there are cases that confirm deductions based on an appraisal substantially complying with the qualified appraisal rules but the last thing any charity wants is for their donors to have to go to court to defend their deductions!

Seriously, the appraisal might just be the most tricky part of these gifts.  Who pays for it? The timing of the appraisal? Finding a qualified appraiser who knows how to do a qualified appraisal for gifting purposes?

In other words, be open to unusual gifts – especially art – but don’t try it alone.  Get knowledgeable counsel involved as early as possible in any such discussions!  Trust me, it will be worth it.

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