Photo by Liam McGarry on Unsplash
Art collections are complicated assets to manage and maintain, in addition to (typically) being sources of sentimental value.
Establishing a clear plan for your collection, such as donating it to a museum, is a central part of being a responsible—and ethical—art collector. Still, the process can be daunting and highly complex, and definitely requires legal expertise. To help demystify the process, Artwork Archive recently hosted the free webinar “Estate Planning for Art Collectors” with expert panelist Melissa Passman, Esq., an attorney with an art world pedigree specializing in taxation and estate planning.
Donating art to a museum usually requires substantial negotiations and—unsurprisingly—a lot of paperwork. As outlined in this UBS report from 2017 entitled Negotiating Charitable Gifts, “Ideally, a donor and charity will openly discuss their objectives and priorities in order to understand the parameters and expectations surrounding the gift and come up with a mutually satisfactory gift agreement.”
Sounds simple, right?
“Often, collectors looking to donate artworks—for cultural prestige and, of course, tax benefits—approach a museum only to find that what they’re offering doesn’t mesh with the museum’s needs,” according to Artnews. “The cost of storage, insurance, and conservation can make a bestowed artwork more trouble than it’s worth.” The transfer of ownership isn’t always straightforward and can require lengthy discussions with multiple stakeholders.
Like any big-ticket transaction, both parties must agree on terms and conditions, timing, and other relevant concerns. Hammering out these details can take time, especially since art and cultural goods may also be subject to various legal ramifications, technical requirements for ongoing maintenance, and a range of other obstacles that can derail negotiations.
Recently, a major donation made international headlines for its unusual distribution of art. Dimitris Daskalopoulos divided his formidable art collection among four museums—Athens’s National Museum of Contemporary Art (EMST), the Tate (London), the Museum of Contemporary Art Chicago, and the Guggenheim Museum (NY)—with certain works essentially being donated to two or more museums at once.
According to Artnews, in this “unusual arrangement, the Guggenheim and the MCA Chicago will share their 100-work gift,” setting a new precedent for US institutions and proving that some art collectors are finding creative ways to make the most out of their donations. As the saying goes: where there’s a will, there’s a way (get it? Estate planning humor).
Artwork Archive allows collectors to create thematic collections within their art portfolios, as well as publish online private viewing rooms (password-protected, of course) to share with their networks, including art executors, estate planners, collection managers, museum curators, appraisers, various (future) beneficiaries, and attorneys. Learn more here.
Here’s a quick overview of important contractual language and terms that art collectors, collection managers, and anyone else involved in charitable art donations should know.
This is the contractual document that art collectors and non-profit beneficiaries both need to sign in order to successfully execute a donation.
Ann Bjerke, a Senior Wealth Strategist at UBS, writes that “Prior to negotiating the terms of a gift agreement, donors should ask the charity if it has a gift acceptance policy.”
The Metropolitan Museum of Art, for example, outlines in their Gift Acceptance Policy that, “A gift agreement is required for all gifts and pledges of $100,000 or more, and may be required for gifts or pledges below that level.”
These agreements will generally vary across institutions, although there will often be some standard clauses: just compare this Deed of Gift example courtesy the National Museum of Women in the Arts vs. this Gift Agreement template via the Library of Congress.
Artwork Archive allows collectors—and collecting institutions—to upload documents and PDFs, such as gift agreements, to each artwork record, contact record, or location record. Learn more here.
A pledge agreement is generally for long-term donations, intended to be gifted over a prolonged period of time or upon the donor’s death. Here is an example pledge form from the Brooklyn Historical Society.
In the past, however, institutions have taken donors to court for their failure to complete a pledge, so only pledge what you can truly afford! Pledging over time can have certain tax benefits, but can also be difficult to fulfill, should the donor’s financial situation change unexpectedly, so it’s recommended to discuss any major pledge with a financial advisor and/or attorney.
Statements of Intent
This informal document, also known as a “letter of intent,” gives the donor the most flexibility, as it theoretically allows them to back-out of the donation should certain circumstances change. It may also be required as part of an initial submission for curatorial consideration. Consider it a “first step” of any charitable artwork donation.
For example, the Smithsonian Museum requires that all unsolicited art donations include a checklist of items, such as an artist CV, press kit, artwork reproductions, and a letter of intent. E-forms has an example letter of intent available for download, and advises that, “All monetary donations should be identified as being either a one-time, monthly, or annual pledge.”
Restricted vs Unrestricted Gifts
Restricted gifts have strings attached—in this case, the museum will agree to certain terms that are favorable to the donor.
Unsurprisingly, museums generally prefer unrestricted gifts, giving them the most control over when and how certain pieces are exhibited, put in storage, or even sold/deaccessioned.
When collectors come to the table with a mile-long list of restrictions, it can be off-putting to museums. However, museums also understand that patrons have their own priorities and are generally interested in getting the most traction of their donation. Some collectors may even put together a “donation offer package” with their preferred terms and try to ignite a bidding war between institutions (not very charitable, but also not uncommon).
It’s been argued that donor intentions could, over time, run counter to their own best interests—such as when a restriction on selling donated art means a museum can’t raise badly-needed operating funds. For this reason, it's important to mitigate your own expectations when beginning the donation process.
If your collection or the artworks you hope to donate are of a certain significance, historically or monetarily speaking, then it’s not uncommon to request certain terms, by which the museum must oblige.
In some cases, these “obligations” will be promises for exhibition of the donated objects, a printed catalogue, donor attribution, and/or public outreach programs related to the donation/exhibition.
In some cases, giving the museum or recipient institution the option to exercise certain rights is advisable when donating your art. Options can include selling off parts of the collection to pay for its conservation or selling reproductions of artworks to facilitate further fundraising.
Naming Rights and Donor Recognition
Gifts generally require a donor attribution line, even if the donor wants to remain anonymous, i.e. Private Collection, US.
For donors who want their names prominently displayed, however, sizable gifts may give the donor enough leverage to permanently name exhibition wings, curatorships, etc. In recent years, widespread attention has been paid to the removal of certain donor names (Sackler, for example) from major museums worldwide, following successful protests by artist-led organizations.
Naming rights may therefore include a morality clause of sorts, which will give the museum the option to rescind naming rights, in the event that the donor’s name is tarnished for any reason. On the flip side, naming rights can also reinforce an institution’s value system by putting their affiliation with a certain individual on display.
In 2020, film-maker, author, artist and countercultural iconoclast John Waters gifted 375 works from his inimitable art collection to his hometown museum, The Baltimore Museum of Art (BMA). As reported by The Art Newspaper, “To honor his generosity, the museum will rename a rotunda in its European art galleries after the film-maker—as well as a pair of restrooms in the East Lobby, ‘per his request’...”
Tongue-in-cheek as always, Waters’ restrooms are much more than just lip service, they are a means for the collector to ensure that his beloved BMA makes space for those same individuals he has spent his life championing. Waters thus used his collection—which includes works by Diane Arbus, Nan Goldin, Richard Prince, Cindy Sherman, and Andy Warhol—to proudly weave his pathos into the very architecture, and utility, of the museum itself.
For collecting Organizations: Artwork Archive includes a field for “donor attribution” in every artwork record, so you can always keep track of important credit information. You can also upload letters of intent in individual artwork records, or to a general contact record, and/or location record. Learn more here.