If one were to approach a member of ITM with a cash offer for a piece of equipment, how could they know if that person has the legal right to make the transaction on behalf of the museum? Railroad equipment does not have titles like automobiles do, what would prevent another member or board of directors from saying, "well that person didn't clear the sale with the organization, so we want it returned". Is possession 9/10ths of the argument? I would hate to see someone pony up their hard earned money, give it to someone at ITM (or choose another organization) only to have the deal end up in a legal quagmire like we saw with AT&SF 3463. I guess what I'm asking here is how do you know who has the legal right to sell an artifact within an organization...do you need signatures from every member of the board, so that none could come back later and say, "that wasn't an authorized sale and is now null and void"?

Good question!

Our museum uses a written letter of agreement signed by both parties to document a sale or transfer of equipment or other items in the collection. Information is included about price and delivery where applicable. You should consult counsel for more details appropriate to your specify transaction.

Wesley

Buying something from "a member" of an organization would be like buying a plane from "an employee" of Boeing.

Documentation, documentation, and documentation.

I have been personally involved with the acquisition of two steam locomotives for our organization. In both cases, the other organizations had policies regarding the formal process in transferring the ownership of artifacts from their collection which involved a vote by their board of directors. (Conversely, I had authorization for our board to act as an agent for our organization.) Additionally, I had a professional relationship with the other parties....I had high confidence the RIGHT individuals were involved. Lastly, the parties had documention confirming they had clear ownership of the particular locomotive.

In another situation, I backed out of acquisition opportunity because the other party could not provide clear title.

At Noblesville I had one hand tied behind my back because of how I store my money, but now I realize that method passively protects me from this.

I use a Donor Advised Fund. This is a special category of charity that you donate money to, and later, that money is re-donated to a charity of your choice, at a time of your choosing. In the meantime the money can be invested for growth, letting you choose one of several mutual funds, bond funds etc. similar to a 401k. I donate to the DAF when I'm making money, take the tax deduction immediately, and then re-donate when a worthy project is at hand. I can also donate anonymously since it is not me donating, but the DAF.

The DAF properly researches the charity to assure they are legit, then mails a check. This can take a few weeks. The slow timing is what makes it so frustrating at short-fuse opportunities like Noblesville. The research protects me from a random employee taking my money because the DAF will only send to their permanent address on record, and I can assign a specific purpose to the fund (a term or purpose restriction). If the charity fails to use the money for that purpose, they are in violation of their state's version of UPMIFA. If the purpose is not one they agreed to, they must return the check.

From what I see, the legitimacy of the transaction would be that it's rooted in action by the BOD. The BOD could then authorize someone to act on their behalf within guidelines.
Also mentioned is the transaction can't be a unethical benefit to the officers. But I don't think doing that would make the transaction invalid, but it would be subject to penalties.

It's a pretty good bet that each organization is a bit different. The one I know most about is very restrictive on sales--they must only be public auctions. Trades are different, but they must still be approved by at least two administrative levels.

Acquisitions are pretty much the reverse of that. If there is money involved, it goes to the board. If it is simply big, it still has to be approved up the line (due to the high cost of dealing with it "forever"). Artifacts that are small enough to carry can be accepted pretty much in-house.

But, frankly, it always feels rude to have some stranger come onto the property and start shopping. The restrictions on sales save a lot of angst.

LOL, we had some person come into our facility, pick up the first historicey thing they saw, and made us an offer on it. And then they led me through the faciliity and said "hey, what about this other thing inside here?" (They'd been snooping into the areas where we keep the lights off as a sign of non-invitation). It was obvious they were regular watchers of American Pickers, and were following their advice on dealing with reluctant sellers who don't want to sell anything: once you get them to agree to a price on one item, that breaks the ice, and now they are much more willing to sell generally.

If you are buying from another organization's insider who rigs a deal to benefit himself, that's his problem. When a random person unduly benefits from a nonprofit, that's called private benefit, but when a board member or other principal does it, it's called inurement. His problem is called inurement. You can google the consequences for each. The board member's bigger problem is the scandal and the state accusing him of fraud.

And it's for reasons like this, and past instances of such things occurring, that dealing with certain large professional museums with regards to deaccession, equipment loans, leasing a steamer for restoration, etc. has been wrapped with confounding layers of bureaucracy and protection. What could be a perfectly sensible arrangement to a curator could run afoul of all kinds of restrictions designed to prevent such a staffer from "personally benefiting" from said transaction, or the classic "left hand not knowing what the right hand is doing" situation we could be seeing arise with ITM and other places.