The Vagaries of the IRS and Art Donations

March 24th, 2015 | Posted by Karel Minor in Uncategorized

Each year, when we come asking for art for our art auction, we end up having the same conversation with a few artists. It can be summed up as “Too many organizations ask me for art and I can’t deduct the value of my art so you don’t appreciate it.” Yes and Yes. Wait.  Yes and No.  Yes and sort of? That second part is confusing.

On the first charge of too many places asking artists for art, that is, hands down, true. There are a bazillion charities out there asking artists for art for their various auctions. They also ask everyone else for money, so the artists aren’t any different from any one else in that regard. The only difference is the currency being requested of us.

Yeah, I've got an artistic streak, too.

Yeah, I’ve got an artistic streak, too.  That’s right, that’s a guitar made out of noodles.

In my case, since I’m not an artist, a charity might ask me for $500. If I choose to give it, that comes out of the proceeds of my work. If an artist is asked for a $500 painting, that is also coming out of the proceeds- at least potential proceeds- of their work. A donation is a donation and $500 is ultimately $500 whether it is cash, a painting, or gold.

The question then becomes whether it is a $500 donation well invested. Poorly run charities, or poorly run auctions, don’t deserve the donation whether it is cash or art. If the value of my donation is going out the window, I’ll give elsewhere. In the case of Humane Pennsylvania our Art for Arf’s Sake Auction, we have a well-run and effective organization and auction. Humane Pennsylvania is a leader in its field, helping animals far and wide, and is widely emulated. With confidence I say we think we make the best use of your hard earned donation. Arf’s Art is equally high performing. In fact, it raises on average $100,000 each year, most art sells for market value or vastly higher, and it beats the returns of art auctions held by actual arts organizations in the region. With equal confidence I say we think we make the best use of your hard created artwork.

So, if too many people are asking for donations, just decide whose mission you wish to support. If it’s us and the work we do for animals and people, wonderful. If it’s some other mission, that’s fantastic, too. No more hard feelings  for the cash donors who have to choose between the myriad of deserving charities and we’re just glad you give to someone.

They second part of the argument above, that the art is not “valued” because it can’t be deducted, is a little more complicated. That’s thanks to, shocker, the government and the IRS, not us. According to IRS regulations*, an artist, or lawyer or architect, can only deduct the cost of materials, not their time or the value of the “product” they supply. They are considered “volunteers” in the same way as a dog walker at our shelters is, even if that dog walker is a professional dog walker who charges the public for the same service. If it was up to me, I’d give all y’all a big ‘ol tax credit for your time and “product” because it does a world of good for us. But I can’t. Because the IRS won’t let me.

Here’s the crazy thing: If the artist gives their painting to their best friend and their friend donates the painting to us, the friend can most likely deduct the market value of the painting, not the materials cost. I know, crazy, right? But them’s the rules. So Picasso paints a masterpiece and he can deduct $12 for the paint. He gives it to friend who donates it to us or a museum, and the friend deducts $1 million because that’s the market value. Go figure.

That’s not saying the art isn’t valued. It’s not saying we don’t value the donor just as much. It’s just how the IRS works and if the tax deduction is the incentive for the donation of art, because all your artists are all so rolling in dough you need the deduction, right?, then giving your art might not be the best tax move. But we aren’t your tax advisor, we’re a charity who needs help doing good work in the community.

Your donation or your art to our art auction does make a difference to our success and our mission because it helps us with our financial bottom line in a way that no one donation could on its own. Can you write us a check for $100,000? Nope, me either. But by donating one piece or art to join 99 other artists who created one piece of art to be joined by 350 non-artists who write a check to attend the auction and bid on the art, we combine to generate $100,000 for our mission. All those pieces of art and all those donors come together to create one of those mosaic images that spells out: “Hey! We just raised $100,000 for the animals!” (Yes, I paint my pictures with words and that masterpiece of a sentence is yours for free.)

Not only do we appreciate and value the art, we arguably actually appreciate and value the artist a little more than other donors. All the donors have to buy a ticket to the auction and the preview reception with cold hard cash they earned doing their job, whether it’s a creative one or not. If one of them gives us a painting they bought, we gladly accept it and, yes, they can maybe deduct the full market value, but we don’t give them tickets. They still need to buy tickets. Originating artists get comp tickets. That’s because we recognize that our artists are what makes our art auctions unique and special and not just some Holiday Inn starving artist art sale.

Our artists are our patrons, not the other way around, and that’s why we welcome them with an invitation to join us at both the auction and the patron preview, along with the big dollar donors. They have both chosen to support our mission. With different currency, yes. In different ways, yes. But we value and appreciate their support equally, and we are glad that from among the many, too many, charities out there, they chose to support ours.

Even if the IRS has stupid rules about deductions. Blame Uncle Sam (and Richard Nixon), don’t blame us and the animals. Please support us in any way you can, whether it’s time, art, or loot. And if you don’t support us, support some other great organization.

But I’d rather you support us.


*I am so not a tax professional and you’d have to be an idiot to do your taxes based on whatever I say or something you read on some animal shelter blog. Do yourself a favor and Google your way to a real tax pro when it comes to filing your taxes.


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