The Art of Using Gifts of Art

Charities find a wealth of uses for the treasures they receive

Two weeks after John A. D’Elia joined Union Rescue Mission in Los Angeles as a fund raiser,

the homeless shelter received an unusual gift: a painting by the French realist Jules Breton worth about $100,000.

The mission could have sold the painting, but Mr. D’ Elia came up with another idea that promises to pay far more dividends for the shelter.

He used the Breton painting to start a collection that has been exhibited around the city, most recently at Sotheby’s in Beverly Hills. The collection has attracted attention — and gifts — from wealthy donors the mission wouldn’t otherwise likely reach.

“People who wouldn’t be caught dead coming to skid row came to one of our art shows,” says Mr. D’Elia, who found the shows a good setting for talking about the needs of the mission.

Today, six years after the Breton painting was donated, the Union Rescue Mission owns about 400 pieces of art valued at more than $1-million.

Although the art collection has not yet brought in cash donations of equal size, it has gotten the mission on the radar screen of wealthy donors who someday might make a large gift, says Mr. D’Elia, who recently left the mission to take a job at Pasadena’s Fuller Theological Seminary.

Not Just for Museums

Gifts of stock and cash will always top charities’ wish lists, but a number of organizations have found that museums aren’t the only ones that benefit from receiving art donations.

In addition to seeking gifts of art, more and more colleges, hospitals, and other non-profit groups are asking donors to give money that will be used specifically to buy works of art, generally for display in new or refurbished buildings.

As in the case of the homeless mission, many fund raisers say that seeking art gifts is a good way to identify well-heeled donors who have the potential to make large donations of cash or stock. And some charities are beginning to encourage donors to give artworks to set up charitable trusts, which provide special tax and financial benefits for the donor.Art programs often produce benefits that go well beyond money raising.

At the Union Rescue Mission, for instance, the art collection has also helped the shelter’s clients discover their own artistic talents. Pieces from the collection are shown during art classes the mission occasionally holds, part of a comprehensive effort to provide homeless people with skills that will build their self-confidence. And the mission hopes that one day the art by the homeless people will be exhibited alongside the works contributed by donors.

However, soliciting artworks is no simple matter. Fund raisers must understand a tangle of complicated tax laws that are designed to ensure that donors don’t receive undue tax benefits for their gifts.

Most important, and most difficult for many organizations: The artworks must be used as part of charity’s program for at least two years after the donation is made. If it is, the donor can deduct the full market value of the work. But if it is sold, then the donor can deduct only the price he or she originally paid for the item.

Making that even more complex is the fact that the Internal Revenue Service has offered only a handful of clues about just how ambitious an art program a charity needs to run to be able to offer donors a full tax deduction.

Giving to ‘Different Things’

Some charities say the uncertainty makes it a bad idea to accept such gifts at all, because relations with donors could be strained if a contributor loses an expected deduction. In addition to those difficulties, art programs often entail extra staff coverage and other costs, such as obtaining special insurance and taking steps to protect artworks from potential damage.

Even so, the homeless mission certainly isn’t the only organization that has found soliciting art to be worth the effort.

The Hebrew Home for the Aged at Riverdale, in New York, realized that even though its residents could no longer travel to museums there was no reason that art could not come to them.

It has amassed a 4,500-piece collection, with works from artists like Andy Warhol and Henri Matisse, by seeking donations from people connected to the nursing home and artists whose work was featured in an on-site gallery. The nursing home hired a full-time curator to manage the donated works and to arrange on-site exhibits of works borrowed from nearby New York City galleries.

The collection is of high-enough quality and so well-maintained that the nursing home gained membership in the American Association of Museums — which makes it easy for donors to prove to the Internal Revenue Service that they deserve to write off donations for their fair market value.

The quality of the art program also attracts plenty of publicity. The New York Times regularly covers gallery shows and the “Today” show has also featured the collection.

The cost of hiring a full-time curator and maintaining the collection is worthwhile, nursing-home officials say, because the artworks benefit both the residents’ quality of life and the charity’s fund raising.

“Different people give to different things,” says Helene Grossman, director of public affairs and development. “We developed a whole new constituency that will either give art or give to an endowment to maintain or purchase it,” she says. “We try to identify people that could help in that manner that were different than people already part of our donor base.”

Ms. Grossman says some of those donors have also contributed cash and other gifts for programs not associated with art.

Ripple Effects

Other charities that accept art have also found that they get a ripple effect from such donations.

Ralyn and Nate Wolfstein, a California couple, provided six large works by local artists to start a sculpture park at Scripps Memorial Hospital La Jolla, and then encouraged their friends to make gifts to support the park instead of buying the couple presents to celebrate special occasions.

The Wolfsteins said they made the gift because of the power art has to help people deal with illness. “When you drive into a hospital, you are driving under duress,” says Ms. Wolfstein. But when a patient or visitor views the sculptures, she says, “your mind is not on the awful, it is on something else.”

Janie Anderson, vice president and director of development at the Scripps Foundation for Medicine and Science, which raises money for the La Jolla hospital and a group of related charities, says donated artworks like the pieces from the Wolfsteins are appreciated not only for themselves but because the contributions “give us the opportunity to thank them and recognize them and educate them more about what we are doing.”

The Doernbecher Children’s Hospital Foundation, in Portland, Ore., also got more than it sought when it asked a donor for $600,000 to commission artworks for its new building. The donor agreed to do so, and continues to make other significant gifts for hospital projects.

J.S. May, who was the foundation’s executive director when the gift was made, says that gift led another contributor to want to find a way to make the children’s hospital a more enjoyable place to stay. He contributed the money for an outdoor playground.

“People understand the nurturing of the spirit and soul,” says Doris Feinberg, president of the Rhode Island Hospital Foundation, which raises money for Rhode Island Hospital and Hasbro Children’s Hospital.

She says donors who might not otherwise have supported the hospital have responded positively to her institution’s solicitations for money to provide art classes for patients and other cultural programs. Giving to those art programs allows donors to provide something tangible, something they see people using to feel better.

Still, she says, the amounts donated to underwrite art programs are far smaller than those used to support programs that treat patients and support research. The largest donation received for arts programs so far is $18,000, which the donor earmarked for an artist-in -residence program.

Names on a Wall

Putting art gifts within reach of people who have relatively modest amounts to give can turn out to be a winning approach. At Dana-Farber Cancer Institute, in Boston, donors are asked to give $1,000 to $5,000 to help pay for pieces to be displayed at the medical center. Each donor gets his or her name on a plaque near the artwork — the kind of prominent recognition that usually accompanies significantly larger gifts.

The solicitations have been successful, with one donor contributing enough to pay for five works.

Jane Mayer, a longtime volunteer for the hospital who helped formalize the art-donation program, observes that “there are donors who really like to have their name up on the wall and this is a really inexpensive way of doing it.”

The donations have helped the hospital buy nearly 100 works, including pieces by the glass sculptor Dale Chihuly and the painter Wolf Kahn. Ms. Mayer says she has received inquiries from other health-care institutions that want to mount a similar program.

Planned Gifts

Not every charity goes to the trouble of setting up art classes or regular art exhibits. Some benefit from simpler approaches to soliciting artworks.

The U.J.A.-Federation of New York has begun exploring the potential of encouraging art gifts after noticing that some donors used artworks or other collectibles to set up planned gifts. The organization realized that many donors in the metropolitan area were likely to have valuable art that they might be just as willing to part with as cash or other resources that can be used to make a planned gift.

For instance, one donor set up a charitable remainder trust in conjunction with the federation and contributed, among other assets, two modern paintings worth about $500,000 to the trust, which then sold the paintings. Because a trust is required to sell the works immediately, the donor was only able to write off the amount he paid for the paintings — considerably less than their fair market value, which the donor could have deducted had he contributed the works to a charity that used the items for at least two years as part of its programs.

But other benefits made the donation worthwhile: The donor avoided capital-gains taxes he would have owed if he had sold the paintings, he removed a taxable asset from his estate, and he eliminated costly insurance payments. What’s more, he receives regular payments from the trust — something the paintings could never provide. (The trust will dissolve and its remaining assets revert to the charity when the donor dies).

While some donors who have art to give away start by searching for a museum to be the beneficiary, they sometimes change their minds in the process. Many museums have limited space or specific areas of interest, and therefore offer little encouragement to donors who don’t have masterpieces to give.

Carol Hillman, a Boston marketing and communications consultant, had trouble fulfilling her late mother’s request to donate to a charity an oil painting by the contemporary artist Paul Resika. After the work was rejected by several museums, Ms. Hillman sought help from Laurence C. Zale, a New York consultant who specializes in matching art donations with charities. Recently the painting was accepted by the City University of New York, where it will hang in the chancellor’s office.

Ms. Hillman, who says similar works by Mr. Resika are valued at around $55,000, is pleased that her mother’s wish is being fulfilled. In addition to paring the taxes owed on her mother’s estate, the painting will be “visible to a great many people versus being stored in some basement somewhere,” says Ms. Hillman.

Refusing Art Gifts

Despite the benefits some charities have received by soliciting art, many other groups refuse to accept such gifts. Some say they don’t want to have to worry about holding on to an artwork for two years to help the donor get maximum tax benefits. And they say that, even after two years, they know that some donors would be upset to see their treasured works put up for sale, even if it benefits a good cause.

“We want cash or gifts in kind that we can really use, like canoes for camp,” says Diane Pike, director of development at the Girl Scouts of America. “A two-ton Calder isn’t really going to help us deliver to a group of girls.”

Even at California’s Scripps Foundation, where art donations and fund raising have been a successful pair, officials say they would never argue that soliciting art is an essential part of their development operation. There are “other things you could do to build your fund-raising program with less effort and less hassle,” says the foundation’s Ms. Anderson.

Philip T. Temple, a New York lawyer who has numerous charity clients, says he understands that point of view, but thinks that charities should at least be open to accepting art donations.

“It isn’t as easy as taking a gift of cash but it’s no more of a hassle than taking gifts of real estate,” he says. “Most charities send out materials to prospective donors. Why wouldn’t they add a paragraph about discussing works of art? Why foreclose that way of raising additional gifts of assets?”