With harvest season in full-swing, it’s the perfect time of year to discuss raising funds through gifts of grain. For many cash-basis farmers, significant tax savings can be achieved by donating crops directly to nonprofit organizations.
Why are gifts of grain desirable to farmers? Cash charitable contributions are deductible only as an itemized deduction from adjusted gross income, which results in reducing federal income tax only. Many farmers do not itemize deductions because the standard deduction has greatly increased over the years.
By contributing crops, the cash-basis farmer avoids including the sale of the cash crop in income, which results in savings of self-employment taxes, federal income taxes and state income taxes.
Keep in mind that crop share landlords are not eligible. A share of a crop is rental income that must be included in reportable income by the landlord.
How do we set this up? Once your nonprofit connects with a local grain elevator or co-op, instruct interested farmers to:
- Deliver the grain to their local elevator or co-op
- Transfer the grain to your nonprofit
- Ask for a warehouse receipt showing the nonprofit as the owner
- Contact the nonprofit and tell them where the grain is stored. The nonprofit will order the sale of the grain with the original sales invoice
- After the transfer, the nonprofit assumes the cost of storage, transportation and marketing, and bears any risk of loss
Encourage your donors to consult with a tax professional or legal advisor to determine tax implications prior to making their gifts. Tax laws change frequently, so information provided here may become outdated or inaccurate.
Gifts of grain make up a significant portion of funding for some of our more rural capital campaigns. Don’t overlook this opportunity!
AMPERAGE Fundraising Advisers is a full-service fundraising company whose mission is to move the needle for our clients. For more information on Amperage Fundraising Advisers or to make a recommendation for a future blog post, contact us today!