Reuniting Lovers Across Time

Case Study: Donating Artwork to Benefit a UK Charity


In this case study we describe the challenges faced by the estate of a donor who willed a valuable piece of artwork in her collection to a museum in the UK. She had inherited the art, meaning her cost basis was minimal, and the estate was looking for a deduction of the piece’s Fair Market Value. Leaning on our 30+ years of experience, CAF America was able to accept this donation to benefit the museum, issue valid gift receipts to the donor estate, and put the donation to a related use so that the estate could claim the highest possible deduction for the late donor’s generosity.

The Donor

The donation in question was A Portrait of Miss Elizabeth Adney, painted by Thomas Gainsborough in 1767. Gainsborough, one of the leading portraitists of Regency-era Britain, also captured the likeness of Miss Adney’s husband, John Bragge, whose portrait was originally displayed in a pendant arrangement alongside its pair.

The portrait of John Bragge is currently owned by and displayed in the Dorset Museum, a subsidiary of the Dorset Natural History and Archaeological Society, in Dorchester, UK. With this donation, the donor’s generous gift was an opportunity to reunite these long-lost lovers in a new exhibit.

Image: [Left] A Portrait of Elizabeth Bragge by Thomas Gainsborough [Right] A Portrait of John Bragge by Thomas Gainsborough © Mark North, Dorset Museum 2023

The Challenge

When US taxpayers donate a piece of tangible personal property to a 501(c)(3) exempt organization, they are limited to specific charitable deductions based on how the beneficiary charity uses the donated items. Because tangible personal property has intangible value, receiving charities must put the donation to a “related use” in order for the donors to claim the item’s appraised Fair Market Value (“FMV”). The chart below outlines the difference in implications between donations of tangible personal property put to related- or unrelated uses.

Summary: Two Options for Donating Tangible Personal Property

Unrelated Use Related Use
CAF America’s answer to the question “Does the organization intend to use the property for an unrelated use?” in Part IV of Donor’s Form 8283 Yes No
Implied deduction allowed Cost Basis Appraised Value
CAF America may sell or grant the work without completing Form 8282 Yes After three years

When making gifts to benefit non-US charities, meeting the requirement for related use becomes more complex. As an international grantmaking intermediary, CAF America is in the business of accepting charitable donations and making grants advised or recommended by our donors to benefit approved charities overseas. When we receive a donation of tangible personal property, we cannot gift the property to a foreign charity while claiming to put it to a “related use” as defined by regulations.

The Solution

In order to put the donation to a related use, CAF America loaned it to the Dorset Museum for display in their gallery. This allowed us to indicate that the donation was not going to an unrelated use on the donor’s Form 8283, and it has allowed the museum to reunite the two paintings for a romantic new display launched on Valentine’s Day 2023.

For the loan to work, our expert team had to educate all stakeholders on the reason why we couldn’t grant the piece, and then negotiate the loan agreement directly with the Dorset Museum. And, the donor’s estate was still responsible for the elements of a gift of tangible personal property:

  • Securing a Qualified Appraisal of the Property, done by a Qualified Appraiser,
  • Completing Form 8283 and sharing it with CAF America for signature, and
  • Paying all fees and costs associated with the donation and the loan.

Image: A wall of paintings including the Portraits of Elizabeth and John Bragge by Thomas Gainsborough © Mark North, Dorset Museum 2023

Cross-Border Considerations

Of course, this donation was made more complicated by the fact that the Dorset Museum is located in the UK. If it were a US institution, the gift could have been made directly and the related use provision would have been much simpler. While this loan does address the issue, CAF America needed to implement other critical elements of our charity due diligence protocols to ensure that we were following all regulations, mitigating any potential risks, and overall protecting our donor’s reputation from any negative outcomes.

For us, this meant that we passed the Dorset Museum through our Equivalency Determination protocol before approving the loan, which means they can also receive grants from any other CAF America donor moving forwards.

CAF America strongly recommends that any donor looking to support a foreign charity, whether through a grant, a loan, or any other giving vehicle, ensure that they have done extensive due diligence on the organization before finalizing their support.