Farmers put in countless hours planting and caring for crops, however they may not realize that what they plant could reap benefits for the community after harvest time. While most people think of making charitable contributions in the form of cash, farmers may consider benefitting their community with a gift of grain.
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Donating a gift of grain is a simple, tax-wise way for farmers to make a difference in their local community. By giving grain to the cause close to their heart, farmers support an organization doing great things in their community and can avoid including the sale of the grain in their farm income. Although a charitable income tax deduction is generally not available, the significant benefit is the avoidance of declaring it as income. The cost of growing the crops is deducted, which typically results in saving self-employment tax, federal income tax and state income tax. Benefits can be had even if one does not itemize the deductions and takes the standard deduction. Farmers considering a gift of grain are encouraged to first discuss this option with their tax advisor.
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The simplest way to give a gift of grain is to let the organization know of the intended gift. The gift should be from unsold crop inventory with no sale commitment made prior to the gift. The crop is then taken to the grain buyer and the seller tells the buyer how much grain he/she would like to put into an account set up by the organization of choice. The grain buyer then notifies the organization which sells the grain and receives the sale proceeds.
Farmers can work with the Community Foundation of Northeast Iowa to enrich their community and receive additional tax benefits. Making a gift of grain through CFNEIA create long lasting benefits that can go directly to a nonprofit organization, or the gift can be used to start an advised fund that allows the individual or family to recommend grants to nonprofits annually. The value of the grain can be used to start an endowed fund that will create charitable impacts forever.
Gifts of grain to endowment funds with a qualified community foundation, like CFNEIA and its affiliate foundations, are eligible for a 25% state tax credit on the total value of the gift through the Endow Iowa Tax Credit Program. All qualified donors can carry forward the tax credit for up to five years after the year the donation was made. More information about Endow Iowa can be found at www.cfneia.org/endowiowa.
Crops are the livelihood and life of our local farmer. Farmers prepare, plant and nurture, and the crops grow. That’s what the Community Foundation does with the charitable gifts entrusted to us.
More information about gifts of grain and other charitable giving strategies can be found at www.cfneia.org.
Laurie Everhardt is director of development at the Community Foundation of Northeast Iowa. The Foundation manages over $133 million in assets and has granted over $101 million to organizations since 1956. Contact: leverhardt@cfneia.org or 319-243-1352.
