Years ago, I donated a painted chair to Artwork for AIDS, here in Seattle. The chair sold for over $700, so I was excited to donate another chair the next year. This time the bidding didn’t go so well. Not wanting my chair to sell for less than the retail value, I bid on it myself. This was a mistake, since it ended up being the high bid. I figured, “Oh, well, at least it’s tax deductible”. Sadly, the tax deductible amount is the amount that you pay OVER THE STATED VALUE OF THE ITEM. So basically, I donated a chair valued at $365 and paid $365 to get it back to assuage my bruised ego, so I personally ended up $365 in the hole for a tax donation I didn’t qualify for, and I still have the chair. What did I learn from this experience?
Do not donate a favorite artwork without a reserve price, because if it sells for less than you think it is worth, you will feel resentful. If they have a reserve price, you can GET THE PIECE BACK in the event that it doesn’t meet a minimum price.
Do not donate to auctions unless they give you a percentage of the sales cost to cover your expenses, such as materials, framing and TIME. Artists are not known for having lots of extra income, whereas auction attendees and art collectors are. So, in addition to getting great artwork, they get a tax deduction. The artist, on the other hand, can deduct only the cost of materials, not their time. So for one of my monotype prints, I could legitimately deduct about $2 for ink, and maybe $6 for a large sheet of Rives BFK paper. My large prints SELL for $1300 – 2000. Which leads me to my next point:
Do not underprice artwork that you donate to auctions. This just encourages discount buying by people who can afford to pay full price for your work. Keeping in mind that the tax deduction is the amount over the stated value of the item, it makes the most sense for people to bid on artists with whom they are familiar, especially if they know that the artwork is undervalued so that it will sell at the event.
Under what conditions would I donate to another auction? See the following link, which has a sample contract at the end.
Please consider forwarding this to other artists you know. Artists work hard and deserve to be compensated for it. Charity art auctions are pervasive, and it seems that everyone except for the artist benefits.