The question is about accepting loaned items from businesses, exhibiting
them, and then returning them to the businesses which put them up for
sale.

From the standpoint of the Internal Revenue Service, the questions would
be first, whether the museum is providing an advertising service for the
businesses; and second, whether the businesses are in a position to
influence the museum's decisions.

If the museum is providing an advertising service, and if it is a large
part of the museum's activities -- for instance, if most of the items on
exhibition are from businesses -- then it's at least conceivable that the
IRS would raise questions as to whether the institution should be
tax-exempt.

If a business is in a position to control the museum's decisions -- for
example, if the antique store owner is the chairman of the museum's board
-- then the IRS might be able to maintain that the museum is improperly
operating for the benefit of the business owner, because the exhibitions
raise the value of the owner's goods.  This is called "private inurement"
and it is incompatible with 501(c)(3) status.

I assume that there are ethical issues involved as well, but will leave
it to others to explore them.

Andy Finch
AAM Government Affairs
[log in to unmask]