Who benefits most from tax breaks on private art museums: patrons or the public?
The US government is scrutinising the tax-exempt status of private museums and questioning whether some institutions benefit their wealthy founders more than the general public. The Senate Finance Committee sent a letter to 11 single-donor museums in November requesting information about attendance, opening hours, trustees and grant-making activities.

The inquiry follows a New York Times report last year about the proliferation of private museums, several of which are only a short stroll from their founders’ homes and are difficult for the public to access.

In the letter to the museums, the finance committee’s chairman, Senator Orrin Hatch, expresses concern that certain institutions “offer minimal benefit to the public” while “enabling donors to reap substantial tax advantages”. The letter, a copy of which was provided to The Art Newspaper, also asks the museums about their policies on accepting restricted gifts and whether donors have physical access to the institution when it is closed to the public.

The inquiry is part of a broader effort by the government “to re-examine what tax-exempt status means and who gets it”, says Elizabeth Merritt, the director of the Center for the Future of Museums at the American Alliance of Museums.

Under US law, collectors can deduct the fair-market value of art from their taxes when they donate it to certain charitable entities that have art-related missions. But donors cannot benefit directly from their own organisations’ activities. For example, they “cannot have greater access [to their museum] than the general public unless it’s in the context of the work [they are] doing for the foundation”, says Stephen Urice, a professor at the University of Miami School of Law.

Read full article at The Art Newspaper

Also of likely interest on this topic: “Rubells Welcome Senate Finance Questions” published by The Art Market Monitor