Yours are all valid points, and I don't dispute any of them.

Of course museums do not set FMV, and of course it is the obligation of the taxpayer to justify any deduction.

Note that my comments relate to the IRS's expanding scope of regulation over governance issues.  The publication of the information contained on 8283s (though presumably not the forms themselves) wouldn't do much vis a vis outright fraud.  It may, however, do a lot to ensure that boards of exempt organizations exercise their duty of care by scrutinizing gifts.  The valuation question is just one question, but is the benefit of the exemption that opens up the transaction to federal oversight.  The service is also, as you know, getting more on the ball about the "related use issue," inter-alia changing the holding period to three from two years. 

However, the case of allegedly stolen antiquities last year involving the Los Angeles County Museum of Art, the Bowers Museum in Santa Ana and the Mingei International Museum in San Diego presents some interesting issues.  Were these institutions complicit in a fraud?  Did these institutions fail to exercise a duty of care?  These are entirely different legal questions, with entirely different standards, and entirely different ramifications.  I certainly don't think any of these institutions knowingly perpetuated a fraud.

Actually, the value of items has a lot to do with provenance concerns.  Consider this: the value of an item with clear title is clearly greater than an item with clouded title.  The IRS doesn't care about provenance, but the FMV question colors the provenance question.  Several federal agencies are investigating the above case, including the IRS, Customs, and the FBI. All of these overlapping agencies have different jurisdictional mandates, but the cases clearly help inform one another.

All exempt organizations are subject to some regulations whether they're any one of the many 501(c) organizations.  But the relationships between many are under heightened scrutiny.  Review the Pension Protection Act of 2006, and see how the service is cracking down on support organizations.  The "bad guys" can hijack 501(c)(3)s as easily as any other entity.  I appreciate your comments about the Kochs with respect to ethics and fraud, and these terms mean very different things in the context of legal rights and duties.

Whaddya think, Tracie, should we put together a conference session?

Yours truly,
Robert Vosburgh, Jr., Esq.
Associate Professor
Museum Communication Program
University of the Arts





-----Original Message-----
From: Tracie Evans <[log in to unmask]>
To: [log in to unmask]
Sent: Tue, Aug 31, 2010 9:43 am
Subject: Re: Confidentiality of Accession and Loan Files

I am not sure how a donor’s 8283 becoming public record will make a non-profit more transparent and increase government oversight since the IRS already has access to this information.  These are individual tax records that have nothing to do with governance or operation of the non-profit museum who received the donation.  Those tax forms are the responsibility of the donor. They must be filled out by the donor including setting the value of the item and acquiring an appraiser if needed.  The only action a museum has in regard to the form is to agree that they received the donation for a related or unrelated purpose to the museum’s mission.  They do not agree to the value or the deduction and may not even see the amount when they sign the form since that is not required. 
 
Museums are not supposed to be setting the value of an object or acting as the appraiser according to both Ethical standards and IRS guidelines because of the conflict of interest.  Over the years, I have rarely known if a donor even takes the allowable tax deduction unless our signature is required on the form and would have no way to know if they have inflated the value to just below our signature levels or if the appraisal they received was false. 
 
I think most museum’s would protest revealing the value of objects within their collection for several reasons; the largest being security issues.  Additionally, I am not sure how revealing the value of the object will make an organization more transparent.   I could see perhaps revealing whom you acquired objects from due to issues about provenance and illegal importation, etc. but how did the value of the item help with that?  
 
The article you mentioned about the Koch brothers specifically deals with non-profits that have a political agenda or 501(c)4 organizations. (Smithsonian Exhibit issue aside)  Museums are 501(c)3, which are not allowed to campaign and are highly limited in regards to lobbying. The article was very interesting reading about what is happening in the 501(c)4 world, but I am not sure how that applies to the donation of tangible objects. 
 
Monetary gifts are perhaps a different story, the real issue with the Koch brothers is not that their donations are illegal but rather that their control and manipulation of these non-profits are highly unethical and perhaps fraudulent.  . 
 
Mismanagement issues and oversight of governance of non-profits may need addressing, but I am not sure how revealing donor information as you suggest will have any impact on these problems.
 
 
Tracie Evans
Curator of Collections
Sauder Village
22611 St. Rt. 2
Archbold OH 43502
Phone: 419/446-2541
FAX: 419/445-5251
 

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