When Giving it Away Could Be to Artists' Advantage

Under current federal law, artists who donate their work to a museum get a tax deduction — a pitiful one, for the value of materials used to make the piece (i.e. canvas, paint, formaldehyde, etc.)

A new bill proposes that artists receive deductions for the fair-market value of works they donate to museums (the Artist-Museum Partnership Act of 2007). Patrick Leahy introduced it in the Senate in February, and John Lewis and Jim Ramstad in the house one month later. The bill is being championed by the new president of the Association of Art Museum Directors, Gail Andrews, who is also the director of the Birmingham Museum of Art in Alabama.

It would be a boon to artists, but also a potentially corrective measure following the recent tightening of rules governing partial gifts made to museums that has resulted in a "pronounced reduction" in donations, according to a letter written by Andrews to Lewis.

Under the old law, donors could give a percentage of an artwork to a museum each year, getting an equivalent tax deduction. The museum got to exhibit the piece for a number of days corresponding to the percentage gifted, and the donor kept the work for the rest of the year. And, if the piece appreciated in value, the donor got a bigger tax break. Iowa Senator Charles Grassley, who told the New York Times that the law was a "subsidy for millionaires to buy art," pushed through legislation that put the brakes on partial gifts, mandating that a donation be turned over in full within 10 years and keeping donors from benefiting from upswings in the market. Museum directors and art lawyers were sure it would send donations plummeting.

And according to Andrews' letter, it has. She cites a number of negotiations between collectors and museums gone awry since the new law went into effect, among them a West Coast contemporary art museum that missed out on a collection of 40 contemporary works and an East Coast museum that lost 13 contemporary drawings.

The Artist-Museum Partnership act could make up for this loss by enticing artists to make donations. Artnet.com points out that in the three years after Congress repealed a law similar to the one being set forth now, the Museum of Modern Art was hit with a 90 percent drop in donations, according to the nonprofit Americans for the Arts. It's likely, then, that a reinstatement of the tax break would reverse this action.