The Art of Donating Art
New York, NY — 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 an enthusiasm for art with the world. But what steps should a collector take before donating artwork?
Andy Schoelkopf, President of the Art Dealers Association of America (ADAA), and Michael Findlay, President of the ADAA Foundation Board and a member of the Art Advisory Panel for the Internal Revenue Service, discussed best practices for making impactful gifts at a Goldman Sachs Convenes event held at the Park Avenue Armory in conjunction with the 2020 ADAA Art Show. Monica Heslington, head of the Goldman Sachs Family Office Art Advisory, moderated the discussion.
“Collectors are soliciting advice from art experts much earlier in the donation process,” Findlay said.
Findlay suggested paying an appraiser instead of soliciting free advice from an auction house, as the IRS will review all documentation and deploy a team of experts when assessing the artwork’s value for tax purposes. Donations to public charities, such as museums and universities, or to private foundations that operate museums, can be deducted at fair market value if certain requirements are met. However, donations to any charitable entity (public or private) that will not use the artwork to further their exempt purposes are limited to a deduction at cost basis. For these purposes, even if the charitable entity sells the donated artwork and uses the proceeds for exempt purposes, it will still result in a cost basis deduction.
Seed grants can lead to great artistic transformation-Andy Schoelkopf
The long-term capital gains tax rate on art is 28 percent compared to 20 percent on other assets.
Beyond donating art, Andy Schoelkopf says gifts of all sizes can impact the art world, especially at smaller museums that are not as well-funded.
“Seed grants can lead to great artistic transformation,” he said. “Review the museum’s operating budget by reading their 990 form, and speak to the curator about what is needed.”
Schoelkopf added that many smaller museums are buying exhibitions to fill their walls because their collections are lacking. If a donation of art is rejected at a major institution, he says that same piece of art could have a positive effect at a regional museum.
About Convenes
Leaders. Entrepreneurs. Thinkers. Philanthropists. Icons. Goldman Sachs has cultivated a network for 150 years that includes some of the world’s most interesting people. Convenes is a new series that brings our clients together in an intimate forum to engage over shared passions, challenges and ideas. Everyone brings something to the table, and we invite you to join the conversation. Come to talk, share, and listen. Leave with a stronger connection to this network, which spans geographies and generations.
GS does not recommend art and collectibles as an investment strategy. This material is intended for educational purposes only and is provided solely on the basis that it will not constitute investment advice and will not form a primary basis for any personal or plan’s investment decisions. While it is based on information believed to be reliable, no warranty is given as to its accuracy or completeness and it should not be relied upon as such. Information and opinions provided herein are as of the date of this material only and are subject to change without notice. Goldman Sachs is not a fiduciary with respect to any person or plan by reason of providing the material herein. Information and opinions expressed by individuals other than Goldman Sachs employees do not necessarily reflect the view of Goldman Sachs. Information and opinions are as of the date of the event and are subject to change without notice. Goldman Sachs does not provide legal, tax or accounting advice. You should obtain your own independent tax advice based on your particular circumstances.
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