ArtsATL > Art+Design > Report: Benefit art auctions a boon to nonprofit groups . . . but what about the artists?

Report: Benefit art auctions a boon to nonprofit groups . . . but what about the artists?

A patron makes a bid at the Hambidge Center's recent silent auction. (Photo by Dayna Thacker)
Hambidge Center silent auction.
A patron makes a bid at the Hambidge Center’s recent silent auction. (Photo by Dayna Thacker)

Benefit art auctions are fun, boozy-schmoozy affairs where cocktail-sipping artists, collectors, dealers, museum professionals and window-shoppers mingle and the scent of money and friendly competition is in the air. Whether large or small, live or silent, all are intended to raise money for good causes.

If only all benefit auctions were like last month’s star-studded fund-raiser for the Leonardo DiCaprio Foundation at Christie’s in New York. That event brought spectacular results for the environmental and endangered-species charity. The 33 mostly artist-donated works raised $38.8 million, and auction records were set for 13 artists (though whether they would’ve earned as much in a regular auction is debatable). Christie’s owner François Pinault pitched in “The Tiger” by Zeng Fanzhi, which sold for $5 million, well above its $2.5 million high estimate. 

In Georgia the stakes are lower, the art less illustrious, the collectors fewer and less competitive, the profit smaller. But, as Dayna Thacker, Atlanta artist and communications director for the Hambidge Center for Creative Arts and Sciences in North Georgia, points out, few events attract the same number and variety of viewers as do these flashy social gatherings. And they work. Jamie Badoud, executive director of the Hambidge Center, reports that this year’s auction garnered $130,500, about 30 percent of its $425,000 budget.

The Museum of Contemporary Art of Georgia’s benefit, another high-profile auction, featured more than 100 artists this year. Annette Cone-Skelton, president and director of the museum and an artist herself, declined to release figures from its auction, because “pledges are still coming in.” The information will be available in MOCA GA’s annual report in August.

Cone-Skelton did say that she saw an increase of 35 percent, which she attributes to the introduction of mobile and online bidding via 501 Auctions. “It created excitement and a sense of immediacy,” she said of the online service, which allows bidders to stay in the game even if they leave the event.

(Technology has also been a boon for online auction house Paddle8, which is making big money with its ongoing fund-raisers.)

The recent Art Papers auction raised $255,000 for the magazine, according to its executive director, Saskia Benjamin. A little more than half of that came from artwork; the rest was from ticket sales, sponsors and in-kind donations. Almost half the magazine’s annual budget of $580,000 comes from the auction; Benjamin would like to reduce its dependence on the auction by diversifying funding sources.

Benefit auctions may be good for the organizations involved, but they’re not so salutary for the artists who are asked to donate work for them. Atlanta’s cozy art scene means that many artists are repeatedly called upon for donations. Nonprofit arts groups even keep lists that they revisit every year, which can mean bleeding artists dry. 

Making matters worse, art is seen as a cash cow in non-art circles as well. In addition to the numerous art groups that hit artists up, there are also many charities with palms extended: medical, environmental, educational, etc.

“They’re all good causes, and you don’t want to be the asshole who says no,” says Savannah-based Marcus Kenney, who tries to err on the side of generosity. He calculates that his donations of artworks last year were worth $50,000.

Art Papers auction
Buyers line up to pay for their purchases at the last Art Papers auction. (Photo by Terry Kearns)

Given that the Internal Revenue Service does not allow artists to deduct the market value of donated artwork, it’s no wonder that many artists have decided to just say no, or to support only organizations that support artists.

Proponents of benefit auctions often argue that they provide valuable exposure for participating artists. But whether that exposure is worth the price of a work, says Atlanta artist Nathan Sharratt, “really depends on where you are in your career.”

Thacker says the organizations provide an imprimatur that makes artists more attractive to dealers and their clients. “Galleries and nonprofits have a symbiotic relationship,” Thacker says, though she agrees that the auctions are a bit lopsided in that regard.

Auctions are also billed as “gateway collecting”: uninitiated attendees get the bug and start frequenting galleries and supporting the scene in other ways. It can happen. After Atlanta artist Scott Ingram donated a $1,400 piece to an auction at Paideia School, two people who had been outbid at that event went to the gallery that represented him, the now-defunct Solomon Projects, and bought three works, netting the gallery and the artist about $4,500. 

More often, say dealers and artists, benefit-goers opt for bargains. Particularly irksome to many artists and dealers are serious collectors who are well-positioned to buy work at market prices from galleries but hold out for “steals” at benefit auctions. A favorite strategy at silent auctions is “hovering”: not actively bidding but lingering near the bid sheet before swooping in just before the final bell.

Works often sell for a song. Of the 251 works available at the Art Papers auction, for example, only 28 went for at or above their appraised value.

Some collectors who have purchased work at benefit auctions “flip” them in private sales or at regular auctions — buy low, sell high — a practice that is considered unethical but is not illegal. To combat it, some dealers and artists attach resale riders to works, stipulating that if the work is resold at a profit within a certain time frame, the proceeds are to be split between the artist and the charity. Or they may assert the right of first refusal no matter when the work is next sold.

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Ingram, who is married to Art Papers’ Benjamin, calculates that his donations last year had a market value of about $16,000 but sold for roughly 60 percent of that. One year during the recent down market, Ingram donated more work than he sold. To little avail, apparently, he often posts rallying cries on Facebook, such as this one that preceded the Hambidge event: “Ok people, we have another art auction tonight. Remember, this isn’t about what you get, it’s about what you give. Artists don’t give to nonprofits to pass the savings along to you. Do us all a favor and bid things up . . . and we can all go home feeling like winners.”

Perhaps benefit auctions would not raise as much money if attendees weren’t getting good deals. The costs to the art community, however, diminish the good they do for the groups involved. Because artists know that artworks tend to go for less than market value, they often donate lesser works — what is disdainfully called “benefit art.” Because artists aren’t putting up their best work, the scene is not represented at its best. The bar is lowered.

Some gallerists also worry that those inferior works might muddy an artist’s market, and that the auctions negatively impact their bottom line, though whether benefit auction shoppers would buy otherwise is uncertain.

“Benefits send the message that art is valuable but also that artists don’t need to be paid for their work,” says one dealer who wishes to remain anonymous. “The disconnect is in appreciating that artists and dealers have to make a living.”

Recognizing the onus put on artists, some nonprofit groups have begun splitting the proceeds with them. Hambidge lets artists choose whether to make an outright donation or take a cut of 10 to 40 percent. From the $130,500 it raised, Badoud says that $18,511 went back to 136 artists who requested commissions, most at 40 percent, while 66 artists gave 100 percent. Art Papers sets donations at either 100 or 65 percent, and it returned about $40,000 in commissions. 

Offering “experiences” instead of artworks has proven a successful, and suitably creative, alternative. The Burnaway website’s raucous live auction included an afternoon on the shooting range with Andy Moon Wilson and a guided tour of New Orleans with curator Amy Mackie and artist William Downs. According to Susannah Darrow, Burnaway’s executive director, the event netted about $20,000 for the site, which has an annual budget of $148,000. 

Stuart Horodner, artistic director of the Atlanta Contemporary Art Center, says his institution doesn’t want to contribute to the “culture of discounting” and event-driven collecting that these fund-raisers create. Similarly, ArtsATL has a no-art-auction policy.

Auction lots at the Contemporary’s Fall Art Benefit included drawing and cooking lessons, a portrait session and travel, as well as four artworks made for the event by national artists who had recently shown at the center. When the center reopens this October following its renovation, it will also bring back its popular Art Party fund-raiser.

“The goal is to turn people on to the scene throughout the year,” Horodner says. Never mind, he adds, that “auctions and fairs are the worst way to view art.”

The Contemporary, which has a budget of $627,495 for 2013, declined to release its Fall Art Benefit figures, but its tax return for 2011 reported a total of $113,525 for fund-raising events, which Horodner says includes proceeds from individual donors, the annual fund, the Fall Art Benefit and the Nexus Award.

New York art dealer Ed Winkleman thinks it’s smart for artists to have some “benefit-type” work in their inventory: prints, smaller pieces, etc. “If they’re going to donate something, they should consider it another opportunity to gain an audience and make the work shine in that context,” he says.

Atlanta artist Katherine Taylor, who has experimented with different ways to manage the numerous donation requests she receives, has adopted a strategy along the lines Winkleman suggests. In addition to capping her donations at three a year, she produces editions and works on paper that don’t compete with her gallery work. “I always donate 100 percent, and I always give something good,” Taylor says.

Artist Olive47 at Sam Flax for "30 Artists in 30 Days."
Artist Olive47 at Sam Flax for “30 Artists in 30 Days.”

Another promising model might be the 30 Artists in 30 Days event to benefit One Love Generation, which empowers young people through art. Every day for a month, an artist was given supplies by the Sam Flax art supply store and created a work live in the store. The 30 pieces were sold in a silent auction at Kai Lin Gallery.

One thing that would significantly improve the benefit auction system would be to change the tax code to allow artists to take a fair-market-value deduction for their donations.

When collectors donate artwork to a benefit or a museum, they get a tax deduction. If they have owned the piece for a year or more, they may deduct its fair market value: not what they paid but the appraised, usually appreciated value. (If it’s less than a year, only the purchase price is deductible.) But if the artist who created that same piece wanted to donate it to the same organization, he would be allowed to deduct only the cost of materials, under a tax code section enacted in 1969 to prevent abuse and tax evasion.

For example, if John Currin decided to donate one of his paintings, which typically go for six figures, he would be able to deduct only the cost of the paint and canvas, perhaps $100. (His notorious “Bea Arthur Naked” recently sold at auction for $1.9 million, and he receives nothing from that sale, but that’s another story.)

Although the IRS’s position has been most deleterious for artists, the public has suffered as well. Works that artists might have donated to museums before 1969 now stay in the private realm. According to the advocacy group Americans for the Arts, artists made 321 gifts to New York’s Museum of Modern Art in the three years preceding the code section’s enactment, and in the three years that followed, MOMA received 28.

Congressman John Lewis stands before a painting by Thornton Dial, one of his favorite artists.
Congressman John Lewis stands before a painting by Thornton Dial, one of his favorite artists.

Efforts to change the code have been made unsuccessfully for years. An Artist-Museum Partnership Act and similar measures have been introduced in every congressional session since 1999. The measures have passed the Senate five times, but the House version has always died in committee. Sen. Patrick Leahy (D-Vermont) has been a tireless champion of the bills. In the House, Rep. John Lewis (D-Georgia), a folk art collector himself, has consistently co-sponsored the bills.

But the current economic climate and opposition to tax breaks do not bode well. In the current session, Lewis has not introduced the bill because he has no Republican co-sponsor, says his communications director, Brenda Jones. In the present acrimonious political environment, bipartisan support is crucial. (You can take action here and here.) Jones says that change happens when coalitions put pressure on politicians: “Legislation doesn’t happen in a vacuum.”

Despite their challenges, benefit art auctions are here to stay. They’re successful, and they galvanize the art community in a way that few other events do. But the nonprofit groups that benefit from them can make them more successful, and spread the wealth more fairly, by developing more equitable ways to treat the artists — who are, after all, the backbone of these fund-raisers and the people many of the groups are meant to serve. 

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