What’s the real price for a hot artist’s work these days? It may not actually be the gallery’s stated price but double that—the reason being that if you truly want a work by that artist, you’ll have to buy two of them. You’ll only get to keep one, though. And if that doesn’t make sense, welcome to the pressure cooker that is the contemporary art market. There’s an acronym for this: BOGO, which stands for ‘buy one, gift one,’ although in actuality the collector is buying two artworks. It’s just that one of them will be, via an agreement brokered by the art dealer, donated to a museum.
Sign Up For Our Daily Newsletter
SIGN UP
In theory, and perhaps in fact, the art buying BOGO is a win-win-win-win scheme, as the artist benefits from two sales and gains the prestige of having artwork in the collection of a museum; the dealer gets to sell two pieces for the effort of selling just the one; the museum gets an artwork it might not have the budget to buy outright; and the collector gets an artwork by an in-demand artist plus a tax break.
SEE ALSO: Collaboration Queen Sarah Andelman Is Behind Art Basel’s Concept Shop
BOGO is the most recent incarnation of the gallery waiting list, wherein people interested in purchasing a work by a much sought-after talent would be allowed to buy their way up the queue, proving their loyalty to the gallery in the hope of eventually being at the top of the list. It was an exercise in patience that could take years to pay off, while BOGO is right now. There can be such a large swarm of prospective buyers competing for a limited number of artworks by a particular artist that those who are willing to buy two and part with one of them gain an advantage. “I may have three hundred requests for twelve works,” New York gallery owner Marianne Boesky told Observer. “Part of my job is to be a gatekeeper.”
In the hunt for work by sought-after artists, dealers have the upper hand, and while some might offer discounts of 10 or 20 percent for purchases of two works, they don’t have to. When every piece has ten possible buyers, Boesky noted, there is little need to provide incentives. Los Angeles art advisor Victoria Burns said that when prospective buyers express interest in one of the hottest artist’s works, they’re often told, “We are taking interest, and we’ll get back to you.”
Opinions on art buying BOGO deals are mixed
“Some clients, for lack of a better term, feel icky about it,” because of the degree of market manipulation baked in—BOGO artificially elevates an artist’s prestige by engineering a museum acquisition, said Alex Glauber, a Manhattan art advisor. New York City art advisor Ralph DeLuca called BOGO “a lazy way for a gallery to sell two paintings.” But a third New York art advisor and collector in his own right, Todd Levin, found that one such arrangement made sense. He had visited the Marianne Boesky Gallery in the fall of 2022 to see an exhibit of paintings by artist Danielle Mckinney and gave Boesky a list of three works in the show that were of interest to him as a buyer. One of those three paintings, Idol, was identified by a curator at the Detroit Institute of Arts as a piece the institution would like to own. In fact, DIA was one of nine museums that notified the gallery of their interest in works by the artist, so Boesky offered to sell Levin that painting and another by the artist if he agreed to donate Idol to the museum. He paid $50,000 total for two works and received one.
“We’re in the career-building business,” Boesky explained, noting that “in the eyes of the market, the standing of an artist is elevated by works getting into museum collections.”
Levin, who lived the first thirty years of his life in Detroit, was happy to “give back to the community I was so long a part of” by putting the painting on long-term loan to the museum with the idea of making a permanent donation of it later this year.
The tax benefits of art buying BOGOs
Under current IRS rules, donors of objects must wait at least a year and a day to gift them to nonprofit institutions like art museums if they plan to claim an income tax deduction based on the piece’s fair market value as determined by a qualified appraiser. Less than a year and a day, the IRS will only allow a deduction of the cost value of the item—what the donor actually paid. In the speculative world of art, the hope is that an artist’s prices will rise quickly, which sometimes does happen, as gaps between the primary and secondary markets can be wide as galleries are reluctant to jack up the prices for their artists’ works too quickly, which could destabilize an artist’s market. As a result, “if you have an artist who is selling at $25,000 on the primary market but is going for $250,000 at auction, buying two at $50,000 is a bargain,” Boesky said.
That is a big part of the sales pitch that art dealers make for BOGO. When there are sizable gaps between what the primary market dealer is charging for the artist’s work and what is being realized on the secondary (auction) market, the buyer potentially could make up in a charitable deduction some or all of the price of the second artwork. It’s a crafty way to think about collecting art, but consider that quite a few of the top art collectors manage hedge funds.
Here’s an example of how BOGO benefits buyers: Artist X’s work sells for $25,000. A collector who earns $500,000 per year wants one, but the only way that can happen is if he buys two, at $50,000 total, with one going to a museum. Part of the appeal of a BOGO for art buyers is the potential gap between the primary market price and the secondary market price. Assuming a qualified appraiser deems the artist’s work to have a fair market value of $100,000 (perhaps based on Artist X’s art selling at auction for $100,000 or more), the donor may end up breaking even as part of a tax filing. Ralph Lerner, a Manhattan lawyer who works with collectors on their tax planning, told Observer that “any transfer of an artwork to a public charity is limited to thirty percent of adjusted gross income, so in theory, if the taxpayer could obtain a qualified appraisal by a qualified appraiser, a deduction of $100,000 might be claimed that would potentially reduce the taxpayer’s tax bill by $50,000.”
Some art collectors aren’t willing to play the game
Despite the potential tax benefits, some collectors are just plain turned off by what amounts to BOGO requirements. Vicki Kogan, an art collector in Manhattan Beach, California, expressed interest in a sculptural work by New York City-based artist Kathleen Ryan that was on display at a lower Manhattan art gallery in 2021 during a visit to the city. “The gallery told me, ‘You can buy one work now, but you’ll also have to buy another piece and give it to a museum.’” Each work costs $95,000.
“My first reaction was, who would go along with that?” she said. “It’s ridiculous. It’s bullshit.” Other words she used were “galling” and “completely unacceptable,” and she informed her art advisor, the aforementioned Burns, that she wanted nothing to do with that gallery, ever. “There is plenty of art in the world. There are a lot of good artists who are worth supporting. I don’t need art that badly.”
And of course, just because an artist has been deemed “hot” does not ensure that every museum will want that donation—or that prices for that artist’s work will go up. New York art advisor Megan Fox Kelly said that some “galleries might insist that a collector buy and donate a work to a particular museum but the museum is not yet interested in adding that artist to their collection; in other cases, the gallery might insist the collector donate the work to a specific museum when they have a strong affiliation with another museum.”
Worse is when a gallery demands that a work be donated to a museum but has not identified any museums for the buyer to approach. “In that case, the dealer is demanding that the buyer do the work that the dealer should have done already,” said Michael Duffy, head of art planning at Merrill Lynch, Bank of America. Ultimately, a gallery should make arrangements for where and when an artwork is to be donated before buyers part with their money.
Filed Under: Arts, Galleries, Victoria Burns, Alex Glauber, Ralph DeLuca, Vicki Kogan, Michael Duffy, Danielle Mckinney, Kathleen Ryan, Ralph Lerner, Marianne Boesky Gallery, Todd Levin, Art Sales, Detroit Institute Of Arts, Marianne Boesky, Art Collectors
