Once collectors reach a certain age, most begin considering what they should do with their collections. I have corresponded with many collectors, but I don’t know of many whose beneficiaries had much interest in their collections other than potential valuations.
Thankfully, most of my correspondents have been fairly realistic about current values. Some chose to sell to dealers and some donated. If there were any common theme, it was the personal pain they felt from parting with their long-time collections.
Along the way we’ve discussed questions about donating entire collections to universities, colleges, libraries, museums and historical societies. “Does it make sense?” Unless collectors have served on the boards of such organizations, the idea of donating is alluring. Donating to a deserving institution seems like it should be quick, easy, beneficial from a tax perspective and, of course, should leave a legacy. Everyone wins, right?
All potential recipient organizations should have written mission statements. Those mission statements should outline what they intend to collect and why. Well-run organizations should keep only those artifacts and documents pertinent to their missions. It only seems logical that they should deaccession or trade everything that is off-topic. Would it make any sense for a steamboat museum to keep a donated collection of mining certificates?
Sadly, many organizations have weak mission statements, if they have any at all. Many lack deaccessioning policies. Those that do have policies are often lax in communicating those policies to donors. Consequently, many organizations incur debilitating costs and worries trying to preserve, store, secure, organize and insure donations that they neither need nor want.
For that reason, I suggest potential donors research their intended institutions thoroughly and dispassionately. Is a donated collection going to help them?
At this point, many would-be donors ask about placing restrictions on their donated gifts. For instance, “Should I put a provision in my bequest to keep my collection intact?” To which I normally ask, “What is the problem with letting recipients do what is most beneficial to them?” About this time, I usually tell a story about recommending one institution not accept certain gifts because donor restrictions were too limiting.
What about donating collections for research? Most non-profit recipient organizations have clear and forceful pro-research mission statements. So why do so many researchers encounter onerous obstacles when trying to access donated collections? Why have several correspondents confessed horror stories about institutions that were downright antagonistic to researchers? Is it because librarians and custodians don’t want to help? Or is it because almost every institution has been burned by thefts and mysterious losses?
Do collectors know what kinds of collectibles get stolen the most? Photographs and paper documents!
Okay, what about tax benefits?
Qualifying donation receive Federal tax deductions equal to the current value of collections times their donors’ effective tax rates. A $10,000 donation will return $3,700 in tax write-offs to a collector in the highest 2018 tax bracket. State taxes may add a few percent more.
Whoop dee doo! Unless the collection is full of low-value junk, why not ask professional dealers what they would be willing to pay?
Besides, there are certain IRS hurdles such as “current value.” IRS Publication 561 requires that a recent appraisal must accompany the filing for a tax deduction. The taxpayer must pay for the appraisal and the appraisal must include supporting valuations. In short, it does not matter what collectors pay for something, nor does it matter when they acquired their collectibles. Current appraised values of donations are all that matters. Collectors considering donating anything of significant value should consult competent tax professionals for advice.
One final consideration when donating collectibles. Collectors need to make sure they are donating for the right reasons. Are their donations going to help the hobbies that brought them so much pleasure? All of us – collectors, dealers, catalogers – stand on the shoulders of people who preceded us. It is their knowledge and willingness to share that helped us get where we are today. How much pleasure would collectors have today if predecessors had locked their collectibles away so we couldn’t enjoy them?