Give and Take | Maine Antique Digest

Beneath the Surface

You can set your watch by it. The days begin to lengthen, Daylight Saving Time kicks off, daffodils poke up, buds pop out, and the real March Madness begins—last-minute donation appraisals.

A flurry of phone calls starts to come in from people who donated items to museums last year and now need those donated items appraised to take advantage of the tax deduction. If you donate objects to museums (or any nonprofit organization), you are generally entitled to a tax deduction equal to the fair market value of the object in question.

Before we wade in (or before you see a paragraph about tax forms and start to nod off), we should include two quick notes. First of all, by all means, please keep donating, because museums thrive on the generosity of their communities. Donating objects they can use is a wonderful way to support them! And second, perhaps read this in all caps, we are not tax professionals! Always, always, consult your tax professionals with questions and for a review of your donation plans!

Now, with that out of the way....

We are often surprised by the number of people who call for donation appraisals who have not yet donated anything and do not yet have a museum that has agreed to take possession of the objects in question. You absolutely must check with the museum you would like to donate to and ensure that they want what you are offering. The vast majority of object donation offers we hear about from our clients are turned down, and people are often shocked, not just by the rejection but by the scuttling of their tax plans.

Why, people ask, would museums do this? Because, and this comes as a surprise if you see only the public spaces in museums, every single museum we have ever visited is stuffed to the gills behind the scenes. They often do not have much storage space to begin with, and the storage space they do have is often woefully inadequate in terms of modern climate control standards. Many of them have had decades to accumulate heaps of things that probably should never have been accepted but that they now have no easy or direct path to getting rid of.

Everyone wants to donate money for their name to be in gilt letters over a gallery. Fewer people are interested in donating funds for a big industrial space with warehouse shelving and “glamorous” things like heating, ventilation, and air-conditioning (HVAC) units.

If museums do have some space available, it is because they are doing their best to make hard-line decisions about accepting only that which supports their mission. Local historical societies do not want things just because they are old. Old books written by people with no connection to their community, old photographs not taken locally by people who are not identified, old tools with no particular family provenance—these objects do not help tell the local story of their community. (And it is unfair of us to expect them to do the emotional work of taking things that we would feel bad about throwing away, like those old photographs of unidentified people, so they can hold onto them for 50 years before deaccessioning them, just so no one’s feelings are hurt.)

So, check first. Call or email the museum, preferably with a few photographs and the relevant information about whatever you have available, and see if they are interested. If not, you might ask if they know of another institution that might be. A note of caution born of years of experience: you are probably not going to have much luck finding a museum that wants your spinning wheel, your room-size loom, Great-Aunt Tilly’s wedding dress from the 1950s, or your family Bible. These are wonderful bits of history within a family, but unless they are exceptional in some larger way, most museums already have more of these types of things than they can actively use.

A side note: even if a museum cannot keep something you would like to give them, either because of space concerns or because it does not dovetail well with their mission, some museums will still accept items as a donation but will simply not accession them. Instead they will sell the objects and use the funds to add to or to preserve their existing collection. This is still a great way to support institutions, but it can change the tax calculations, so—you know the words, sing along!—always consult your tax professional.

Planning ahead is also important because even once you have found a museum that wants what you have, it still might not be a simple matter of just dropping it off. Most museums, even small ones, will have an acquisitions process that all objects considered for accession must go through. This process typically involves approval from a collections committee, perhaps even from a board of trustees, and until this process is completed, there are no guarantees. Sometimes, even when a collector sees something they think a museum should have and purchases it specifically to gift it, the object might not meet all the necessary hurdles for acceptance. The only way to deal with a steady flow of offers from the highly desirable to the useful-if-not-exciting to the this-really-should-be-tossed is to have an organized, systematized process that everything has to go through.

Once you make an offer of a donation and it has been formally accepted, the museum will acknowledge this with a deed of gift, which is exactly what it sounds like: an agreement that transfers ownership of the item or items in question to the museum. Deeds of gift typically include language indicating that the gift is unrestricted, meaning that the museum is unrestricted in how it uses the object—it can conserve it, store it out of sight for 30 years, sell it, etc.

This language does two things. First, it ensures that if, somewhere down the road in the future, the museum’s mission or focus changes or if they get offered another example of a similar object that is a better fit for them, they can deaccession the donated object. Second, this language ensures that you get the highest appraised value for your tax deduction, as any restrictions on a gift could potentially change the fair market value, usually by reducing it. For instance, if you donate something to a museum but plan to keep it until you die, then it might be said that it has no immediate value—and thus no deductible value—for the upcoming tax year, the argument being that you are not actually “out” anything. Similarly, in some instances, a gift given that cannot be sold could be seen as having no value. If the museum cannot turn it into cash, then one might ask what “value” is offered. (See, this is why we are not tax professionals. There is a lot of “could be argued.” We do not want to have these arguments with people. We prefer arguments that can be resolved with black lights.)

Of course, if you are a glutton for tedium, you don’t have to take our word for it. You can always read IRS Publications 526 and 561, which discuss charitable contributions and determining the value of those contributions, respectively, but here is what the kids call the TL;DR (too long; didn’t read): objects or groups of related objects donated to a single museum that have a value of at least $5000 require an appraisal by a qualified appraiser (which Publication 561 also defines, just to layer on the tedium). Basically, you should look for someone who is a professional, who has knowledge and experience, and who works in compliance with the Uniform Standards of Professional Appraisal Practice (USPAP—pronounced USE-PAP by appraisers and those who care about tedium). Short version: don’t get a guy at the antiques mall who says he’ll do it for $30, and avoid anyone who blinks in a confused way if you say USPAP. Here’s the kicker: under $5000, you can basically self-report the value, but you’ll need to explain how you arrived at it. Over $20,000, and the appraisal must be submitted with the tax return. In the middle, an appraisal is required, but it does not have to be submitted (only supplied upon demand).

Don’t come at us. It is not about market knowledge for widgets. This is where the whole “professional” aspect can come into play. If it comes down to being audited, the IRS can chuck your informal appraisal, no matter how accurate the actual value is, and require you to get another one. Call it a tedious hoop to jump through. You and your tax preparer have to decide if you want to take a chance by skipping that hoop.

While we’re talking forms, donations require that you file with your tax return Form 8283 (“Noncash Charitable Contributions”), which is where you report what you gave, to whom, and how it is valued. If you give to more than one museum, each donation needs a separate Form 8283. (And in some cases, here’s where we come around to the chorus again, a multi-object donation to the same museum might require more than one Form 8283. Shockingly, the instructions with Form 8283 are not the most helpful or illuminating.)

All of this can be daunting, but for many things, self-reporting is usually fine. Many donated objects are not high in value, and on our end, those are easily handled with a friendly response to the donor, thanking them for their generosity, and saying that the likely value is not high enough to warrant a formal appraisal. Sometimes donations hover in that midrange just above $5000, and this is where your old friend the tax professional can help. Is the increased deduction worth the money spent on a formal appraisal, the cost of which will vary depending on the time involved? More objects can mean more expensive appraisals, even if they do not necessarily mean more value, because of the time involved.

If you think this sounds overly complicated, just take a look at Form 8283. In it, a donor is attempting to facilitate a three-way conversation with an accountant, a curator, and an appraiser—three people with very different priorities and areas of expertise. Making a plan is crucial, but it’s also easy, certainly easier than the alternative. It truly is better to give than it is to receive...a letter from the IRS.