talking with the taxman about oil paintings

Tyler responded to Lee Rosenbaum's (and "a few other bloggers") criticisms of the "Friends" groups that various non-U. S. museums have set up here to gather tax-deductible contributions.  Lee has her own reply,  but since I was one of those who agreed with her (I'm not actually aware of others posting on the issue who did so, but I probably missed some), and that I did so through a mere flip remark, I'll take a little time to elaborate why here.  I should note, for those who don't know, missed my other disclosures of it, or haven't figured it out from reading other posts, that I work for a U. S. arts organization, which undeniably may color my opinion.  That said, let's dispose of a rhetorical gesture Tyler uses, one which never fails to grate on my nerves when I see it deployed.  He asks:

Surely the writers who argue that Americans should not receive tax deductions for giving to a charity in The Hague (say, the Mauritshuis) must believe that Americans should not be incentivized to help to victims of the 2004 tsunami?

The answer is no, and don't call me Shirley.  The whole point of arguing about donations to international cultural institutions (or their Friends groups) is to distinguish them from other types of giving, which is why no one mentioned those other options or made the kind of argument that Tyler imputes.  The point is, activities can have some elements in common while also being different, and I have no problem with treating different things differently when warranted.  Lives are more important than art, this is an important difference between the two, so I don't see why one has to treat them the same.

Tyler 's main argument is that art represents an international, interrelated affair, a global inheritance and global concern, so incentives to give shouldn't be limited.  It's a very pretty plea, in no small measure because it contains a good deal of truth.  But it doesn't tell the whole story.  First, to be precise, we are not talking about art itself but funding art institutions.  What's the difference?  Because museums are often intensely national, not to mention local, entities.  Not only in the trivial sense of existing in a definite place, but in their origins, their presentation of art, their collections, and often their funding.  Collections may feature work from across the globe, and visitors from every nation may walk through the doors, but the audience and artwork that museums primarily host is of and for their own.  This is already recognized in other uses of U. S. tax money, where the main federal agency dispensing grants to museums does not consider institutions outside the nation and its territories to be eligible for funding.

I think the case grows more compelling when we move away from the general and get to the specifics of what's happening.  The institutes mentioned as having American Friends groups include (list from Culturegrrl) the Royal Academy, National Gallery, London,  British Museum,  Pompidou Center, Shanghai Museum,  Louvre,  Israel Museum, and the Hermitage.  To the best of my knowledge, all of these institutions, except the Royal Academy, receive a significant amount of government funding when they are not outright state museums (and while the Royal Academy hosts exhibitions of all sorts of art, its history and collections mark it as very much a national institution as well.)  The British Museum may have holdings from all over the world, but it's the British Museum through and through (ask the Greeks.)  Ed Winkleman, in his post agreeing with Tyler, missed the full force of Guggenheim director Lisa Dennison's complaint reported in The Art Newspaper, "What could we tell our supporters in comparison? You’re going to go to the White House and have lunch with Laura Bush?"  Ed saw it as a comment on the unpopularity of the current residents of the White House, which Dennison probably meant in part.  But even if we had different leadership, it's very hard to imagine any museum save perhaps the National Gallery (update: or the Smithsonian, or other government-based institution) getting the opportunity to have a sitting President and First Lady host a cocktail party fundraiser, as Tony and Cherie Blair are  scheduled to do for the Tate's American friends.  Many museums in other countries are tied into the state in ways that American museums simply are not.  Supporting private philanthropy for cultural activities in the U. S. through tax deductions represents the way we deal with that fact.  So I agree with Lee when she writes

"these [Friends] organizations, while well intentioned, are contorted contrivances that allow foreign charitable purposes to masquerade as American ones. I have no quarrel with Americans' donating to good causes in other countries; I'm just not sure that should trigger American tax benefits."

Let's also look at some of the consequences of the rise of American Friends groups.  Ed sees an upside, in that a significant portion of at least some of the funds are used to buy American art: "in general, any organization that's spending almost one-quarter of its funds to bring American art to Europe is GOOD for American art."  Fair enough, but if what's good for American art is the criterion, I can't help but feel that supporting American arts institutions, which will likely spend even more on American art and much more on its preservation, is even better and should be favored.  Also, if supporting through tax benefits the purchase of American art by museums halfway across the world is such a good thing, I don't want to hear any more complaints about Alice Walton ever.

More to the point, while there may be some foreign museums who have not started their own American Friends group and still might do so, for the most part, it will be done by museums at the level in the list above: major institutions who have the connections, fundraising apparatus, and likelihood of attracting large scale support from abroad.  We live in a world in which the divide between rich and poor already looms too large.  The glamor and incentives that the top international museums offer wealthy American donors (practically the only kind who will participate in these groups) reinforces the divide between bigger and smaller arts institutions by encouraging resources to flow to an international elite while the needs of institutions closer to home go unmet.  You can see that happening in another of Dennison's quotes: "my board members come to me in deep conflict, ‘I want to be part of this group, I want to be a friend to the Tate, to the Centre Pompidou, to the Hermitage, to the Pushkin.’"  And remember, she's speaking on behalf of what is in many ways an elite institution itself, if one overshadowed in its hometown by others.

All of this is moot, of course, as no one I know of except Lee, myself, and perhaps a few others are actually making the argument.  I don't think the tax code will change on account of us.  And I can see that some foreign museums, particular in Russia and other countries facing significant problems, are in need of help from American (and other) donors.  I can imagine ways in which that could be done, whether through international organizations or some other mechanism.  And there are other ways in which government support can be used to encourage international interaction in the arts, through loan insurance indemnities, for example.   But I do think that there's a sort of a shell game going on here, and I'm very skeptical about it.

(Related question: The Art Newspaper has Sir Nicholas Serota responding to Dennison's complaint by saying, "Lisa, I’m flattered you feel so threatened by an institution that has a fraction of your resources."  Is this actually true?  Does the Tate really have a fraction of the Guggenheim's resources?  I looked at the numbers for both in their annual reports, and it didn't appear that way to me, but then, I'm not exactly a numbers person, and neither report was a model of clarity.  I always thought the Guggenheim, while certainly possessing a great collection and a decent endowment, mostly benefited from an unbeatable home location and convincing foreign governments to support its various overseas adventures--a fact that has its ironies considering the current topic.  I'd be curious to know in what sense Sir Nicholas' comment was accurate, if it in fact was so.)

(I'm also sort of surprised that no one has yet raised the best argument against the positions that Lee and I are taking; but since no one has, I'll just keep quiet about it.)

Comments

[richard]

I'd be concerned about the potential for tax evasion. Foreign charities may not be as regulated as American. I can see donors essentially laundering money through foreign charities back to themselves while gaining a tax benefit along the way.

[JL]

Thanks for your comment, richard. As far as I understand it (and I warn you, that's not much), that shouldn't be a problem. To get tax deductions any donation must go to a group registered in this country as a 501(c)(3) and is subject to all the relevant regulations that apply. So the various friends groups are registered here, but the money they raise is then released to the museum elsewhere. I suppose something funny can happen along the way (how these friends groups are in ensuring the money they raise go to the projects or funds that they ostensibly were gathered for is a potential question, given that in reality, the friends group isn't likely to pressure the museum on the point.) But the oversight here, at least, shouldn't be any more lax than it would be for a purely domestic charity. The Art Law Blog has more on the technical questions.

[lisa hunter]

I'm pretty sure the major U.S. tsunami relief was funnelled through licensed U.S. charities.

[JL]

Hi lisa,

I'm sure it was, too. That seems to be the way it works. The question is, what types of overseas charitable activities do we want the U.S. government to subsidize through the tax system, for what reason, and at what cost.