Valuing donations and the art of being accurate: Pinpointing the real value of ‘antiques’

In the latest Budget, many have focused on the ever-rising cost of cars and missed a piece of good news for the local art and heritage scene. The govt will set aside S$200,000,000 for a dollar-for-dollar matching of donations given to the arts and heritage sectors (click here for the short article). So, if a donor gives a museum $100,000 in cash, the govt will give that museum another $100,000 (I suppose to encourage that museum to be pro-active in fundraising).

All is well and good if the donation is in cash. Things get a bit complicated if the donation comes in a form of an artefact (i.e. statues, painting etc). The museum, as recipient, will ascertain the value of the artefact and once submitted to the govt, the latter will match the value of that artefact with a similar cash gift to the museum.

Not a problem if the ‘artefact’ is a kilo of gold where the price is fixed and non-negotiable (about $70,000/kilo in today’s market?). But what if the artefact is a solid 1kg gold statue of an Indian deity that is 1000 years old? Then the statue is worth $70,000 (the market value of gold) + the value of the artefact as a ‘collectors’ item. It is this latter ‘intangible’ value that is highly contestable.

In the past, local museums have gotten into trouble for giving values to donations that had raised many an eyebrow. For example, a Peranakan couple had given 300+ piece of Peranakan ceramics to the Peranakan Museum in 2008 that was valued at $15,000,000 (or about $50,000/piece). (In return, the couple got a tax break of $30m off their taxable income and prestigious Patron of the Heritage award; click here for info). Later, the value was disputed and new valuations were sought (the lowest was only about $2,000,000 – or $6,666/piece). The donors, as expected, took their donation back, and the National Heritage Board was thoroughly embarrassed (click here for a bit more info) through the bad press it got.

As far as I know, there are no ‘valuers’ of artefacts in Singapore who are the ‘undisputed’ experts in the their fields. Each valuer views each artefact differently, and therefore gives his/her ‘best’ estimate of the current market value of an object at that point in time. As far as I know, NHB asks for only one valuer to provide a valuation for any one intended-donation, and submits that value to Ministry of Finance (who then accepts it for the dollar-for-dollar matching scheme). Think about it: The more generous a valuer is, the more a museum stands to gain (since it receives a similar cash donation from the govt, and the associated prestige of a highly-priced donation would encourage the donor to give ‘willingly’). Then it would make sense that the museum would seek the highest possible valuation for any one donation, right? And to add more controversy to this highly contentious act of ‘valuing’, the valuer is paid for his/her service!

In the Peranakan case, local Peranakan antique dealer Peter Wee was the kind man who gave the $15m price tag to the Tan donation. For Peter’s trouble, he was paid a five-figure sum (which Peter  declared to the press was $15,000). This is a possible conflict of interest I presume, since Peter may not have been given the task of the valuation if he had initially given an estimate much lower than $15m (and therefore would not have been able to collect the five-fig fee if he didn’t get the job in the 1st place). As far as I know, Peter never got into any legal trouble for his $15m valuation, and he never will. No one will take an antique dealer to court to challenge his ‘prices’; he may be challenged on the ‘authenticity’ of the antiques he sells, but not his ‘valuation’ of other people’s antiques as this is purely subjective. This valuation is even trickier when a ‘set’ of artefacts is considered. One Peranakan bowl may be valued at $1,000, but when a collector donates a collection of 100 similar bowls, the valuation is likely not $1,000 X 100 bowls. It would be $1,000 X 100 bowls PLUS an arbitary price-tag set by the valuer for the ‘rarity’ value of the donor being able to amass such a large collection (through time and lots of effort) that is going to a single museum. So the 1,000 bowls may fetch $100,000 altogether if they were each sold one at a time at an antique shop. But as a set of 1,000 bowls valued as a ‘rare set assembled through time and effort’, the price may be $200,000!

To use a recent example to illustrate, Chinese artist Wu Guanzhong’s donated 113 artworks worth $73.7 million to the Singapore Art Museum in 2008 (click here). This works out to be $600,000 per artwork. I doubt that if Wu had put all those artworks on the market to be sold individually, he would have been able to get $73m even if he was able to (in the unlikely event) sell every one successfully. Therefore, I presume that the $73m valuation may have included a ‘mystery’ tack-on price that gave credit for good provenance of the collection – it did come directly from the artist – and the rarity of such a comprehensive collection.

Yes, the $200m to encourage local arts and heritage institutions to source for more donations is a good thing, I must say. But for museums, they must tread carefully around the minefield of getting the ‘right’ valuation for a donation. Getting one that is too low is disastrous simply because the donors will rescind their gift (because like I have blogged before, some donors do not give for the sake of giving). Getting one that is high seems to be a win-win for both donor and recipient (since the donor gets ‘prestige’ and the museum gets rich from the matching cash donation), and seems to be what museums/donor will sensibly pursue.

Let’s see if the Tan case will have any effect on the size and price of the next big artefact-donation to a local museum. I know for a fact that many post-WW2 baby-boomers in Singapore are now in their 60s/70s and are anxious to see their lifelong collections of art and antiques find good homes in museums (rather than broken-up and sold for money before the donor dies, or anticipate the horror of passing the collections to their kids/grandkids who would then sell the collection and divide up the proceeds). What would these collectors do when the time comes to find new homes for their stuff?

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