The Cost of Donating Artwork: Can Artists Afford to Donate Their Own Artwork?

By Emma Kleiner

At the Tucson Medical Center in Tucson, Arizona, the Healing Art Program’s mission is to fill the hospital with art that lifts the spirits of the patients and creates a serene environment. Lauren Rabb, the Curator of the Healing Art Program, manages that task, which includes arranging works from the hospital’s private collection and searching for new donations. It may seem curious, then, that when Rabb began her work at the Hospital she would not consider asking an artist to donate his or her own work. To professionals in the art world this hesitance makes sense: unlike art collectors, who are incentivized to donate artwork because they may deduct the fair market value of the work from their taxable income, artists may only deduct the value of their supplies – which likely amounts to the negligible cost of paper, brushes, and paint. In an interview for Center for Art Law, Lauren Rabb, who once also owned a gallery and worked as a museum curator, stated: “Everyone in the art world has come into contact with this [tax provision].”

Under § 170 of the Internal Revenue Code of 1986 and § 1.170-1(c)(1) of the Code of Federal Regulations, when a taxpayer makes a charitable contribution of tangible property, including artwork, he or she may deduct the fair market value of that tangible property from his or her taxable income. The law is designed to provide an incentive to collectors to donate artworks to nonprofit educational institutions such as museums and libraries. However, as a result of the passage of the Tax Reform Act of 1969, “creators,” such as artists, writers, and choreographers, are excluded from this tax provision. Instead, creators may only deduct the cost of their supplies from their taxable income. Thus, while collectors may be motivated to donate artwork due to the favorable tax benefits, artists are asked to give away their artwork essentially for free.