Valuation and disclosure

Where a qualifying charity receives, a bidder may generally deduct only the amount paid above an item's fair market value, and the value should be disclosed at the time of the auction. For most categories that is straightforward. Art is not.

The straightforward categories

• Tickets and subscriptions — face value
• Experiences the organization supplies — the cost of providing them, or a comparable rate
• Goods — retail
• Lessons and workshops — the published rate

Record the basis once per category and reuse it.

Art is different, and the organization is not the appraiser

A work's fair market value is a question with technical answers and real consequences, and an arts organization stating one on a catalogue page is offering an opinion it is not qualified to give.

• Use the artist's or gallery's current retail price as the stated value where there is one, and say that is what it is
• Do not invent a value for work with no sales history
• Do not appraise, and do not sign anything that implies agreement with an appraised figure beyond acknowledging receipt
• Point donors and buyers to their own advisers — a qualified appraisal is their responsibility, not the organization's

Where a piece has no established price, state the medium, dimensions and year, describe it accurately, and leave the valuation question to the parties who have to answer it.

Acknowledge, do not value

The acknowledgement an organization sends a donating artist should describe what was received — the work, the artist, the date — and should not state what it is worth.

This is standard practice for charitable acknowledgements generally and it is particularly important here, because artists frequently expect the organization to supply a figure and it should not.

Say what a bidder is buying

Accurate description does most of the disclosure work and it is also what makes art sell:

• Artist, title, year
• Medium and support — oil on canvas, monotype, stoneware, bronze
• Dimensions, and whether framed
• Edition number and size, for prints
• Provenance where relevant, and condition where it is not perfect
• Whether the artist or a collector donated it, which is a genuine difference to a buyer

Experiences need scoping, not valuing

A studio visit, a rehearsal, a backstage tour or a lesson is easier to value and harder to scope. State the duration, the number of people, the date window, what is included and who delivers it.

Write it down once

Arts organizations run auctions annually with similar catalogues. A one-page note recording the valuation basis per category, and the rule that the organization does not appraise art, saves the next committee from re-deriving it.

General information, not legal or tax advice. The treatment of an artist's donation of their own work differs from a collector's donation of the same piece, and appraisal and substantiation rules are technical — artists and donors should take their own advice.