IRS Seeks to Govern Corporate Sponsorship
by Daniel Grant
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Cheese Museum
Kathleen Migliore-Newton
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This has been a season of ethical quandaries for the museum world, occasioned in no small part by the Brooklyn Museum's hosting of the exhibition of young British artists called Sensation. The museum aggressively recruited donors and sponsors who stood to gain financially from the event, including dealers who represented the artists, Charles Saatchi, the owner of the artwork, and even Christie's auction house.
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Additionally, a number of major museums have acknowledged that, at present or in the recent past, their loan agreements with lenders of artworks shown at these institutions included commissions of an average of five percent if the piece was sold within a year.
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Blue with Stripes II E.V.
Inga-Britta Mills
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Country Museum USA, NY
Gregory Baydiuk
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Coincidentally, the Internal Revenue Service has proposed an extension of its 1993 unrelated business income tax to cover activities between museums and private companies that seem less like charitable donations than commercial enterprises. Unrelated business income for nonprofit institutions is a commercial activity that is not related to the institution's mission, such as a health club at a college.
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The IRS specifically sought to determine when sponsorship of a nonprofit by a corporation crosses the line into a "substantial return benefit"--that is, the charitable gift creates opportunities for the donor to reap a financial reward. One specific example cited by the IRS is a dinner held at a museum to honor a particular corporation that donates a sizeable amount of money.
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Salon
Roxa Smith
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"You have to wonder if part of the deal in receiving a donation is putting on a corporate dinner for executives," said Barry Szczesny, assistant director in the government and public affairs department of the American Association of Museums. "If so, it's not really a gift but a quid pro quo."
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