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Art World Entitlements

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The Portland Art Gallery on Middle Street in Portland is a recently established gallery and an out growth from the website Art Collector Maine. Art Collector Maine charges artists a fee for publishing their work on the website but does not charge a commission on the sale. The Portland Art Gallery does not charge an exhibition fee but it takes the standard Art Gallery commission of 50% on the sales of the work. There is a loud protest arising from the Maine art world aimed at demeaning The Portland Art Gallery, portraying it as a gallery that does not curate the art and is only interested in sales although sales is something that everyone in the art world is very interested in achieving. Selling one's work legitimizes it as well as enabling an artist to spend more time working on their art work.
The Portland Art Gallery is the most recent evolution of the Maine publishing empire which delivers several glossy art magazines, Maine Home + Design, Old Port Magazine and the Maine magazine. These publications have long been praised by the art world as they present a slick image of Maine filled with pictures of art and expensive art homes and its associated life style. The publishing empire has been a main stay for art world advertising for Maine's most preeminent galleries. Once the successful dealers and artists of Maine welcomed Thomas's website, Art Collector Maine, but now their tune has changed, suggesting that The Portland Art Gallery will be prominently visible to summer visitors but may not present the best of Maine art, that it will not nurture that artists career and cares only about sales. I haven't seen the Portland Art Gallery but the pictures look typical of a space that is attractively presented with perhaps too many pictures on the wall. I can't testify to the quality of the the art but I am taken aback at the hostile outcry from the art world and the intensity of the will to demean the gallery and belittle artists who show there. I participated in a discussion on the Maine Artists Facebook page and blogs. There exists an overwhelming view shared by the majority of the posters to which I played the devil's advocate, not only because I believe in the validity of the opposing view but because I believe that there should be more than one view aired in any debate.

One typical interaction goes like this:
  • Gayle Fitzpatrick I think that the issue is that if an artist agrees for the fee to post on the website and then is shown in the gallery, the artist pays the posting fee, the costs of framing plus a gallery commission. In my experience, I have paid commissions, either to a brick and mortar gallery OR to a web based gallery, but not both. (And it's simply my decision not to for two reasons 1) It's a substantial amount of money on my (the artist's part) and 2) the gallery cost for my art (posting fee for web, plus gallery commission, plus framing costs) becomes prohibitive (or absurd) to buyers. too many middle man costs.
    6 hrs · Like · 3
  • Caren-Marie Michel There actually was an uproar in the artists community before they opened their galleries, now the general public is aware as well.
    6 hrs · Like · 2
  • Mackenzie Andersen Gayle- According to the article, the fee hasn't increased. The fee is still for the website- not both. If you are already paying the fee to the website and your work is selected for representation in the gallery- then that is just an added plus for which you do not pay unless your work is sold and you are entitled to include all your costs in the sales price, including the cost of framing. It makes sense for the artist to cover the cost of framing since there is no guarantee that the work will be sold in any particular show. If it is not sold you have the framed piece ready to be displayed in some other venue.- And the gallery is covering it's own upfront costs of providing the exhibition space in a pricey location.
    It seems from what I am reading that the art world approved of the website- fee and all- until the company opened the gallery and then suddenly the fee is being portrayed as unethical. The company is offering an additional sales venue - affordable to the artists since he does not pay anything unless the work is sold and if the work is sold he has the income to cover the sales commission.
    If you want to discuss an injustice consider the other discussion on this page which is lobbying for artists to get a tax deduction for what is essentially the exact same sales cost if their work is sold in a non-profit auction. You cannot get a tax deduction for your sales commission to a free enterprise gallery and so such a tax deduction would give an unfair advantage to the non-profit sector over the private enterprise sector. How would you like it if the free enterprise art market disappears and all we have is a non-profit-government hegemony in the art world?

    Caren if the general public is aware -give credit to the Portland Art Gallery for being so upfront and open about how they are operating! They are not trying to conceal anything. They are boldly telling it like it is!
    5 hrs · Like · 

I was essentially the only one defending the galleries right to operate as it sees fit as long as they are not breaking any laws and for the artists to make their own decisions about whether the venue was a good one for their situation. The idea that anyone would express an alternate view to the overwhelming consensus of Maine artists (or at least ones not working with the venue under discussion) was not well taken. Eventually the voice of collectivism resorted to personal insult:
Erin Duquette Mackenzie, on all these threads.... You are coming after people and posts that arent even harsh and i think you are over criticizing….well…..theres TOO MUCH here from you than can't be tackled without having a 10 hour university forum… which i would find boring and a silly waste of time….i get the impression you like hearing yourself more than anything rather than really having a valuable back and forth about different opinions that could educate others.
31 mins · Edited · Like · 2
and again- without a break for my own response: Erin Duquette Mackenzie Andersen it's not that i don't respect your opinion and points….but please….for Facebook reasons….simplify your opinion, i can't even figure out, after reading for an hour, what you are trying to say (and yes, i would LIKE to know what you are saying here.) because all i'm seeing is that "everyone else in the world is wrong with their words and points" To my point of view the posts coming from the collective Maine art world view are extremely harsh- not toward myself (up until the posts above), but to the gallery and the artists and, as in the example given, it was a back and forth exchange in which I was giving a counter argument to the statements being made by others and in fact I was attempting to educate. I find it astounding that the artists do not see that there are two sides to the relationship and that both sides are investing something. These are standard rules of the free enterprise system. The artists accounted only for their own expenses and not that it takes a large amount of capital investment to establish and maintain an attractive gallery in a high profile location. They seemed to have a sense of entitlement that they had a right to display their work in the gallery and that the gallery owner was depriving them of that right by charging them a fee. On the other hand there was a second conversation in which the Maine Artist Union was lobbying for a rewrite of the tax code for artists donating work to non-profit auctions. I confess that I do not know the full details of all aspects of this discussion but it centered around an injustice being levied against the artists due to the fact that a person donating a painting which he owned but had not created can get a larger tax deduction for donating to a non-profit than an artist donating a painting that he has made.

Below is a draft of a bit of policy that for now is being called the "50/50 Artist Auction Raised Revenue Deduction Act."The goal is to gain a tax benefit for artists whose work sells at a fundraising auction for a non-profit.
“What I see here is an opportunity. After all, we have Chellie Pingree right here supporting the local art community; and unless someone hands her a problem and a suggestion how to fix it, we can hardly expect her to do anything this problem.Senator Pat Leahy has tried to pass fixes to the tax code to help artists donate to museums. He's even gotten that legislation through the Senate and Obama has made it clear he would sign it. But they couldn't get it through the House. Moreover, from what I am hearing, the issue isn't that you Maine artists are trying to donate directly to museums. Instead, what is far more common - and therefore far more important in terms of seeking relief - is the question of donating to auctions. (Seriously, I would guess it's about 100-1 in terms of how many works you guys donate for sale rather than as items to be entered into a collection.)
The presentation given by Mr Kant fails to take into account the upcoming changing of the guards in the US Congress. Mr Kany is talking about a bill that passed the Senate controlled by Democrats and which could not get passed the House controlled by Republicans. In about two weeks that will change as Republicans take control of the Senate and increase their numbers in the House. Even if the House did pass such a bill, it is unlikely that they would do so without any changes  and then the bill would once more have to meet the approval of the Senate- now controlled by Republicans. His argument that the bill is almost passed makes no sense unless one believes that Obama can pass it with a stroke of his pen, bypassing all of Congress.
While some members of Congress have bristled against Leahy's "Artist-Museum Partnership Act" because artists could potentially take advantage of the tax benefits of claiming Fair Value (FV) for items on which they will not have paid income tax. But the vast majority of people who want relief are artists and the non-profits who can sell their work at fundraising auctions. (If artists could get tax benefits, more would donate to the Bakery's Photo-a-Go-Go, for example.) So what we can do is create a white paper that explains the broader problem for thousands of Maine artists and proposes a solution. The policy solution would work because it is quite simple (and modeled by car donations, for example: it's different if you donate a vehicle for a non-profit's use as opposed for it to sell at auction--where it's the auction price that you can deduct):”

The Policy“Artists should be able to write off the sale price at a non-profit's fundraising auction of a work they created up the fair market value (FV) of that work. That would benefit hundreds or even thousands of Maine artists (as opposed to a bill geared towards the donation of art by major living artists to museums - which would benefit a much smaller group of Maine artists). And because it's based on a financial transaction that is open and on the record, it can't be gamed.Moreover, if we design legislation with a clear illustration of the benefits, it should be easy to understand. For example, we could call it the "50/50 Artist Auction Raised Revenue Deduction Act."

And the example could be: "Jeff wants to donate a painting he made to a charity auction of a local 501(c)3 non-profit organization. Currently, Jeff could not deduct anything for making such a donation, since as a professional artist he already deducts his materials as a professional expense. This is because his art is common income property which would count as taxable common income only when he sells itMoreover, if Dan buys Jeff's painting for $1,000, Dan can only deduct the portion of the price he paid that is over FV. So, if Jeff's painting has a FV of $1,500, Dan can deduct nothing as a donation. If Dan pays $2,000, however, he could deduct $500. There is a simple fix in this policy to encourage additional donations and supporting purchases: If Jeff is allowed to deduct what Dan pays up to FV, then more artists will donate their works for auction, there would be more revenues for non-profits, there would be increased activity by the buyers who want to support artists and there would be a distinct financial benefit to artists whose work brings actual revenues at charity auctions.
Commentary What Mr. Kany seems to be saying is that between Dan & Jeff the entire price paid for the painting will be deducted- in other words paid for by the general taxpayer- in effect the general taxpayer is refunding both the buyer of the painting and the artist for their "donations" to the non-profit fundraiser. The general taxpayer will refund the fair market value to the artist- which upon a quick examination of the tax codes appears to be based on the retail value- and the general taxpayer will also refund anything that the buyer pays above the fair market value to the buyer, while the proceeds go to the non-profit, meaning the buyer will pay fair market value and anything he pays above that will be refunded to him via the United States taxpayer and the non-profit will pocket the entire amount of the sale ( split the FV with the artist) - so that in effect the United States taxpayer is buying the painting at the cost paid by Dan- and Jeff gets refunded his full retail market value of the painting that he "donates" to the non-profit fundraiser, meaning that it is a much better deal for Jeff to donate his painting to an auction than to sell his painting through a gallery which takes a conventional 50% commission.
Moreover, if the law is clear that a 50/50 split with the artist does not have to be reported as income by the artists (for example, if Dan pays $1,000 at auction for Jeff's painting of which Jeff gets $500) then this would not only represent a tax benefit, but a simplification of the tax code as well. The 50% donation will be considered sufficient to cover Jeff's taxable income--which is essentially a more practical and productive repositioning of the logic behind the current ordinary income property model that denies financial benefit to the artist based on the idea that he has not paid income tax on the donated item.
This 50/50 Act would increase revenues both to professional artists and to the non-profits they support. Artists, after all, are among the most numerous entrepreneurs in Maine, for example; so this is a practical and wide-reaching tax relief for American entrepreneurs.
To clarify: If the artist receives half or less of the revenues for the sale of his work at an applicable non-profit charity auction, then he does not have to report that portion as ordinary income. Any revenues above 50% or over FV would have to be reported as ordinary income.
This was the point that I was very confused about and started a line of questioning

  • Jay York Mackenzie Andersen, because the artist in a 50/50% split of proceeds would get half and the charity running the auction would get the other half. Any amount the artist receives that's 50% or less than the FV of the donation would be a wash income wise because of the deductible value of the donation.
  • Jay York Mackenzie Andersen the deduction is for the FV of the artwork donated. FV could be determined by recorded past sales by that artist. If it was a 100% donation the artist could then write off the full FV regardless of sale price. And that might be an issue because if that auction sale was for less than FV it would affectively change the FV of that artist's artwork.

Commentary So , if I am understanding this right,  the artist donates as a 50-50 split with the non-profit of the full market value which corresponds to the 50-50 split that a private gallery would take.- but since the 50% donated to the gallery is calculated as a donation- it cancels out the artists ordinary income so that the artist doesn't have to report it- as he would if he sold the painting for an equitable split through a private gallery. If the artist donates the painting to a non-profit the artist gets half the take but does not have to report the income- if he sells it through a private enterprise  the artist gets half the take and is required to report the income and so making a "donation" to a non-profit action is a more profitable deal for the artist than selling his work through a free enterprise gallery. If the artist made a 100% donation- he can write off the full value- ie the US taxpayer pays for the painting in the form of a tax deduction but the problem is that if the painting sells for less than full retail value, it lowers the full retail value of the artist's work 
This policy model – here nicknamed the "50/50 Artist Auction Raised Revenue Deduction Act”-- is a clear and practical policy fix that would offer financial relief and entrepreneurial encouragement to hundreds of thousands of artist entrepreneurs across the country."
So, who’s in?

There were many!  

And once again the conversation ends with an suggested that sounds far too close to the censorship of free speech and open debate:

Mackenzie Andersen How does this affect the private market place for art vs the nonprofit sector?'

  • Mackenzie Andersen The inequities between the private sector and the non-profit sector are also seen in the outrage on this forum over a private gallery charging a monthly fee- a long standing practice with the non-profit sector.
    1 hr · Like · 1
  • Daniel Kany Let's not get off-topic, but you are barking up the wrong tree: I often extoll the qualities of galleries over museums because they pay taxes, don't charge admission, sell art for the artists, answer questions, etc. However, I can speak about "the point" of this strand because I know why I started it and what the goals of the policy are. If we lose focus, we lose our way.
    1 hr · Like · 2

I asked if the FV was calculated on retail or wholesale vale but did not receive a direct answer and instead was provided a link to the tax code, which is very long but I paid particular attention to the sections on selling art before drawing my own conclusion that it is based on the retail market value.

    • Daniel Kany 1. "And you didn't answer my question- is the FV calculated on retail or wholesale value?" That was already addressed: See the IRS tax codes in this and the Jay York-started discussion (and below) - FV is based on appraisals, sales records, etc 2. non-profits don't purchase works of art for fundraising auctions; some revenue share (particularly wet paint auctions) but they never buy the work; 3. Any other property donation to a non-profit gets a deduction (just not "ordinary income property" doesn't:) 4. If you want to change non-profits in general, good luck, this policy is about a specific fault in the law that applies to most professional artists in Maine - so it's worth putting into action: It's a clear problem with a simple solution. 5. "Is it always about tax benefits? Is that the reason people donate- only for the tax benefit?" No and no. But, again, everything else gets a deduction and this would help not only the artists but the qualified non-profits they are trying to support: it's about partiy and fairness - which are essential American values and is a better fit with what you call "original purpose."

      To figure how much you may deduct for property that you contribute, you must first determine its fair market value on the date of the contribution.

The Union Of Maine Artists is a sponsor of this lobbying effort. The benefits of joining this non-profit organization include:
  • Receive UMVA Membership Discounts on art supplies and framing (and in the near future more discounts planned to arts-related businesses)
  • Opportunities to submit to exhibitions -- both online and brick and mortar
  • Be able to design projects, exhibitions, write grants, etc. through the UMVA's non-profit 501(c)3 status and fiscal sponsorship
  • Opportunities to collaborate with other artists
  • Have the support of an organization with a strong Maine voice when needed
  • Your idea here! (the UMVA has always been about people taking ideas and running with them -- while receiving lots of support from the organization).

    The Portland Art Gallery offers a discounts to groups of 20 artists- tailor made for non-profit organizations such as The Union of Maine Artists. An artist who is interested could use the Union of Maine Artists to gather together enough other interested artists for the discount, and perhaps even develop a plan to finance the costs. So the gallery is not really excluding anyone by charging a fee. Artists are excluding them selves by not taking proactive actions if they feel that the Portland Art Gallery's way of doing business will work for them. And they can try to negotiate terms and ideas - ( a group show as suggested above ?)That is how the free enterprise system works for some, although I can't speak for the  Portland Art Gallery but one doesn't know unless one tries.


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