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The perils of art valuation

Gregory K. Norris CPF

RIP Past PPFA President 2016-2018
Certified Picture Framer®
Huntington, West Virginia
Here is a link to an article in the Washington Post:


By Michael Brice-Saddler March 4 at 11:00 PM
The four works of Asian art were supposed to provide financial relief for the small music-education-focused Pacific Boychoir Academy in Oakland, Calif.

A donor gave the school the Chinese paintings in late 2017 and early 2018. Two independent appraisers valued them at $2.8 million total, the school said. With the largest donation in its 20-year history, the private academy would no longer be forced to adhere to a tight budget — relying on tuition fees and contributions to maintain operations.

The school was so confident in the appraisals that it took out $400,000 in loans against the art, school officials say, helping to pay for a new communications director and full-time admissions director. The efforts quickly paid dividends: Enrollment in the academy, which hosts just 24 students, is expected to nearly double next school year, Janelle Geistlinger, the admissions director, said in an interview Monday.

Jerry Feig CPF

Frequent Poster
Certified Picture Framer®
Detroit, MI
It is way too soon for the IRS to get involved with the "appraisal evaluation" as it was donated in 2018. Any art donation of over $10,000 gets a higher level of scrutiny. At $2.8 mill. The magnifying glass gets even stronger.
I have participated in the appraisals of donations to non-profits before; however, the "market values" were established by the living artists who created the works of art and documented actual sales.
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Russ Wood

Frequent Poster
Lakewood Colorado
I guess at first I don't understand.

At first my thought was: How can a non-financial donation [eg. artwork] help their financial situation, unless they plan on selling the artwork?

They say they plan on borrowing with the art as collateral, but unless they have a way of increasing their cash flow and bringing in more money, how will they pay the loans back?

But by having an increase in enrollment, they should have the cash flow.

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