How to run a charity art auction: artists, reserves and the viewing

Running a charity art auction is not the same job as selling a spa break and a signed shirt. The lots are unique, several of the people who made them are usually in the room, and the money on the hammer is not automatically all the charity’s. Get the paperwork and the viewing right and art outperforms almost anything else you can sell.

What makes a charity art auction different from a general gala auction?

Each lot is unique. The maker often keeps a financial interest in it, and the price achieved becomes part of that artist’s public record.

A donated weekend away has a price on a website. An original painting does not, so the room has to be told what it is looking at and why the number on the sheet is the number.

I would rather sell ten pieces properly than fifty at speed, and that goes double for art. For how a creative crowd actually bids, the pacing side is in my piece on arts gala fundraising. This one is about what happens before the lights go down.

How do you source art from artists and galleries?

Ask early, ask for something specific, and say in the same breath what the artist gets out of it.

Artists are asked constantly. The committee behind the artist guidelines on fundraising auctions is blunt about why that matters: these events have a reputation for selling work below market value, which affects what the artist can charge next time. A request that acknowledges materials and studio time lands very differently from one that offers exposure.

With represented artists, go through the gallery. It already holds work on consignment, knows the price list, and can tell you in one call which piece suits a room of 200 people who are not collectors.

Three things cost you nothing: a catalogue entry with the artist’s biography and website, a couple of tickets, and the buyer’s name. The rules for the ask itself are in my guide to the donation request.

What share should the artist keep from a charity art auction?

Whatever you have agreed in writing. “Nothing” is a legitimate answer, but it should be a decision both sides made on purpose.

The most widely circulated recommendation in the artist community sets a reserve at 80% of retail, pays the artist 40% and leaves the charity 40%, with the buyer taking a 20% discount against gallery price. Anything above retail is upside. Plenty of artists donate outright and are glad to, so you will not always offer that, but it is a benchmark to negotiate against.

Where a split applies, say so out loud. The year before one charity hired me, an external auction company grossed around £13,000 and the charity saw about £1,300 of it. When I came in I told the room at the start which lots gave the charity 100%, and which only paid out above the reserve. The gross came down. The live pledge raised £8,300, all of it to the charity, and their team deserves that, not me. People bid more generously when they know the answer.

If a gallery is taking a cut and promoting the event, you may be dealing with a commercial participator. Charity Commission guidance on fundraising partners expects a written agreement signed before fundraising starts, and a reasonable share of proceeds. The same thinking covers any consignment items in your sale.

Putting the artist agreement in writing

The consignment agreement used in the UK art world is short, and it covers the things that go wrong. The Artlaw template lists each work by title, medium, size and retail price with the commission beside it, then settles five points.

• Title in the work stays with the artist until it sells, then passes straight to the buyer.
• You pay the retail price less the agreed commission within a stated time.
• Unsold work goes back on written request.
• If a piece is lost or damaged while you have it, you pay retail less commission. That saves an argument about valuation.
• The artist gets the buyer’s name on request.

Add three lines for a charity event: who pays framing and transport, whether you can use the artist’s name in promotion, and what happens to an unsold lot.

How do you value art and set a reserve?

Build an estimate range from comparable sales of that artist’s work, then set the reserve at or below the low estimate and keep it confidential. That is standard saleroom practice: a reserve is the minimum below which the lot will not sell, it is never disclosed, and it must sit at or under the low estimate.

Get the range from the artist or the gallery, not from guesswork.

Two traps. An insurance valuation is not a market price, so never print it as an estimate. And you have to stand behind what you publish: the Code of Fundraising Practice says fundraising must not mislead donors by exaggerating (rules 1.2.1 and 1.2.3).

The cases where a reserve costs you money are in my post on reserve prices. For a donated original with the painter sitting six feet away, I always set one.

Does the artist’s resale right apply to your charity art auction?

Only to resales of original work sold for £1,000 or more with an art market professional involved. A piece the artist gives you fresh is a first sale and is not caught. A piece out of somebody’s collection can be.

The royalty works like income tax. The sliding scale runs 4% on the slice up to £50,000, 3% to £200,000, 1% to £350,000, 0.5% to £500,000 and 0.25% above, capped at £12,500 per sale and exempt from VAT. It lasts the artist’s life plus 70 years. Outside it: private sales with no art market professional, sales to nonprofit museums, and work bought direct from the artist under three years earlier that resells for £10,000 or less.

Artists cannot invoice for it themselves. Collecting societies handle it, and DACS has claimed over £144 million in these royalties since 2006. Check provenance before you price anything resold.

Businesses trading in art at €10,000 or more per transaction also count as art market participants and must register with HMRC for anti-money-laundering supervision.

Gift Aid and the money side of donated art

This is where art auctions catch people out. HMRC treats an item that is not commercially available, which describes almost every original artwork, as a benefit worth whatever it fetches in the auction. No donation element is left to Gift Aid, however far above estimate it goes.

Where an item is commercially available and you tell bidders its value before it is sold, the excess can qualify. That works for a limited-edition print with a published price, not a unique canvas.

A charity shop running retail Gift Aid can also sell collectable items as agent for the owner, who donates the net proceeds after commission. That route has conditions, including writing to the owner with the net figure and allowing 21 days. Set it up with your finance team, not on the night.

How should you hang and light the viewing?

Give every piece a wall and a light. A trestle table at the back of a ballroom says the art is an afterthought, and the bidding will agree.

Tate’s conditions for loaned works are a sensible ceiling for a one-night viewing: no more than 200 lux of artificial light on most works, and 50 lux on watercolours, drawings, prints and photographs, with direct sunlight off the work entirely.

The rest is practical. Labels at eye height with lot number, artist, title, medium, size and estimate. Nothing leaning on the floor. A steward in the room while guests have drinks in their hands. And a risk assessment, which the Code of Fundraising Practice requires for any event, including being clear who insures against what (rule 10.1.1). Your venue’s public liability policy almost certainly does not cover a £6,000 painting. Put the same detail in your auction catalogue.

What changes when you sell art on the night?

The pace. Everything else about commanding a room still applies, but art will not take a fast run of lots.

Each significant piece needs about 90 seconds before the first bid: who made it, what it is, where it has been, and why the estimate is the estimate. The image goes on the screens, big, while I am talking.

That is the argument for a short list. Six pieces properly introduced will outraise twenty called at speed. And the art is not the end of the night: once the room is warm, that is when the live pledge goes in, because the pledge is where the serious money has always been.

Where art auctions go wrong

• Hanging the work behind the dinner tables, where nobody can get close enough to want it.
• No reserve on a donated original, then watching it go for a fraction of retail in front of the painter.
• Discovering the resale right after the hammer has fallen.
• Offering exposure as the artist’s payment.
• Fifty lots.

Planning an art sale and want a second pair of eyes on the lot list or the splits? Call 07596 851647 for a free fundraising consultation. I would rather talk it through before the work is hung.