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  • 1.  Donations Questions

    Posted 03-15-2024 06:57 AM
    Edited by Leslie Wagner 03-15-2024 06:59 AM

    1) My museum's Development department has maintained an in-kind gift form for all gifts to the organization. The form requires a fair market value attached to every gift, including donations to the historical collection. I believe this to be a conflict of interest and unethical to apply a dollar value to a historic object. 

    2) The fair market value determines who makes the final decision for the gift; it's me as the curator if it's valued at $250 but if it's over $250 Development must have approval. I also feel this is inappropriate to give Development the final approval of any object coming into the historic collection, no matter what the dollar amount is.

    I would love to get your feedback on this, thanks!



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    Leslie Wagner
    Historian
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  • 2.  RE: Donations Questions

    Posted 03-18-2024 08:11 AM
    Leslie - determining FMV can be complicated especially for high value items and requirements for this pertain to tax deductibility for the donor. See IRS publication 561:  https://www.irs.gov/publications/p561

    I am not a tax specialist so am speaking from my understanding of what my organizations and others did. Looking at the IRS publications that govern this is recommended. 

    Every organization I've worked for puts the responsibility to determine FMV with the donor. Development has to be informed so they can record and acknowledge non-cash gifts. The IRS requires written gift receipts for gifts of or valued at $250 or more (and perhaps this is the origin of the language you are questioning in your policy). See publication 1771 for details on gift substantiation. https://www.irs.gov/pub/irs-pdf/p1771.pdf 
    The receipt does not have to specify the value of non-cash contributions so a it is clean and simple to leave that duty to the donor and receipt all non-cash gifts without a value.

    Development having a say over whether to accept a gift in kind  is not standard. Development being notified of and receipting all non-cash contributions would be expected.





  • 3.  RE: Donations Questions

    Posted 03-18-2024 09:14 AM
    Dear Leslie - First, let me state that I am not an attorney, accountant, or representative of the federal government.  However, these are the standards and practices to which I adhered during my 40-year career as a museum director, both in the context of a free-standing, independent 501(c)(3) institution and a museum within a parent (academic) institution.

    Not only is it inappropriate for you (as an employee of the recipient institution) to determine the "fair market value" of an object, but it's illegal, according to the U.S. I.R.S. regulations.

    For what should be obvious reasons, in many cases a third party, licensed appraiser must assign material value.  If an object is worth $4,999 or less, the donor can declare a value and it's his or her problem to defend that to the I.R.S.  If the value is $5,000 or greater, a professional appraisal must support that.  It is the donors responsibility to engage and PAY for the appraisal.  The furthest the recipient can go in assisting with valuation is to refer the donor to, for example, the Appraisers Association of America.  Another "duty" of staff of the recipient could be to research and express the INTRINSIC value of an object (or collection) as it pertains to the institution and the community that institution serves.  The job of the recipient is to use the gift(s) to further its mission of education.

    Another note to consider is that a group of objects can be valued at a single amount (as in a collection of dolls) to meet the $5,000 break point.

    On the issue of "Development [giving] the final approval" for accepting an object into the collection, this is, indeed, inappropriate.  In my opinion, your institution needs a collections or acquisitions committee.  This should be a group of colleagues, scholars from within and without your institution.  It is also for this committee that your research and defense of the intrinsic value of the objects (pro and con) should be carried out.  The committee will also protect you (and the institution) from possible repercussions from potentially well-meant, but misguided "gifts."

    Happy to talk further off line if you need back up!  Vivian





  • 4.  RE: Donations Questions

    Posted 03-20-2024 12:26 PM

    Hi,

     

    The threshold value is up to $5,000.  If the value exceeds $5,000 by one cent, a written report by a USPAP qualified appraiser is needed:

     

    "In order to claim a tax deduction for a non-cash donation like art, donors must come up with a value for that deduction. If the value of the deduction exceeds $5,000, the IRS requires a qualified appraisal of the donated item, which should be initiated by the donor.

    Rules of Deduction: Fine Art and Other Non-Cash Donations

    www.aprio.com/rules-of-deduction-fine-art-and-other-non-cash-donations/

     

    Best wishes,


    Martha Henry

    Certified Member, Appraisers Association of America

     

    Martha Henry, Inc. Fine Art

    400 East 57 Street, Suite 7L

    New York, NY 10022

     

    (917) 699 7894 Mobile

    (212) 308-2759 Office

    mh@marthahenry.com email

     




    Original Message


  • 5.  RE: Donations Questions

    Posted 03-18-2024 06:26 PM

    Leslie,

    No. 2 first: I cannot imagine any situation where the Development Office decides what is accepted into the museum's collections. If there is not a collections staff (and there should be at least one), then the Director and/or a board committee should make the decisions. Your Collections Policy should outline this.

    No. 1: Off the top of my head, I can only think of 2 - 2 1/2 reasons to put individual values on objects. 1) if the donor wishes to take a tax deduction, they must have the item appraised by a certified appraiser. As a rule of thumb, this is only necessary if the item or group of items meet the $5,000 threshold. 2) if the museum carries the value of collections on its balance sheet (not recommended). And even in this case, museum staff can provide an estimated value through professional awareness -- unless an appraisal is provided. And really, many historical objects are very difficult to evaluate and the process for doing it for every piece takes a ridiculous amount of time. This estimate also covers the 1/2 reason for having a monetary values and that is for collections insurance.

    I'll be interested to see any other responses however.

    Good luck with the decision-making issue.



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    Betty Brewer, Museum Consultant
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