Crops to Cash

Giving the Gift of Grain

 If you ask Eastern Iowa farmer Steve Tubbs why he donates through the Gifts of Grain Campaign his response is a simple two words, “Why not?” For him, donating to Iowa 4-H through this simple campaign is a no-brainer, and in his opinion it is the easiest way for farmers to donate funds to the Iowa 4-H program. 

“4-H is something I believe in,” said Tubbs. “It’s a family tradition passed down to each generation, so we’ve had a family member in 4-H for the last four generations.”

This family tradition is even carried out through his grandkids who are located in the heart of Iowa’s capital city, the most urban location in the state. “4-H is a lot different now than when I was in it, which I would say is a good thing,” he said. For Tubbs, his 4-H story focuses on the memories in club shows and 4-H camp. It is because of these experiences, as Tubbs explains, that he is an Iowa 4-H Foundation donor. “Then, and still today, the 4-H program has been about opportunities for kids to excel, for them to find their niche, and allow them to interact with other kids from across the state.” Through the Gifts of Grain campaign, Tubbs has helped ensure the Iowa 4-H program continues in his family for the next four generations.

“It is stories for like Steve Tubbs that this campaign was created,” explains Iowa 4-H Foundation’s Chief Operating Officer Albert Grunenwald.   “Gifts of Grain has given farmers who support Iowa 4-H the ability to give back to the program they love by donating some of their harvest.” 
In the last five years, the Iowa 4-H Foundation has received over $17,000 in donations from farmers through the Gifts of Grain Campaign. Grunenwald went on to stress the importance of the 6 easy tips that should be followed to ensure max tax advantage for the farmers.

“The grain donation for a self-employed farmer will reduce their self-employment tax and will increase their income tax savings.” Giving grain can save farmers up to 49 percent of the donation amount, and this large percentage of savings only happens because the farmers gave the grain in place of cash.

To receive this max tax advantage, farmers should transfer ownership of the donated grain to the Iowa 4-H Foundation at their local elevator. Making the Iowa 4-H Foundation the new owner of the grain allows farmers in most cases to receive a better tax advantage than a cash donation. After asking the local elevator to provide a warehouse receipt showing the Iowa 4-H Foundation as the new owner, all the farmer has to do is notify the Iowa 4-H Foundation that the charitable contribution has been made and where the grain is being stored. The foundation takes care of the rest. After that first donation is complete and you experience just how easy it is, you’ll be saying the same thing Tubbs said after his first donation, “Why didn't I do this earlier?”

For further information about how to donate grain to support 4-H, or to notify the foundation of a charitable contribution, contact Albert Grunenwald at 515-294-4780 or abgrunen@iastate.edu.

Note: Only farmers who are paying self-employment on their profits are eligible to do this.   Landlords sharecropping and reporting the grain income as rental income are unfortunately not eligible. You should consult with your own tax adviser regarding how the information in this article applies to you.    

 

5 Tips of Making Gifts of Grain

1.      Timing

Gifts of grain to charities can be donated from the current or previous year’s harvest.

2.      Unsold commodity

The gift should be from unsold crop inventory with no prior sale commitment. A farmer must gift the grain to the Iowa 4-H Foundation and let them decide what to do with it and when to sell it

3.      Physical Delivery

Be sure the gift is farm commodities, not warehouse receipts, which could be considered a cash equivalent. The charity must be able to demonstrate “control and dominion” over the gifted property.

4.      Retention of Control

Farmer cannot offer any guidance to the transfer agreement as to the retention or sale of the gifted commodity

5.      Documentation

Either a properly executed warehouse receipt in the Iowa 4-H Foundation’s name, or a notarized letter of transfer for crops stored on the farm. The original sales invoice should list the Iowa 4-H Foundation as the seller.

6.      Storage and Transportation Cost

After the transfer the charity must assume costs of storage, marketing, and transportation.


By: Carter Collins, Marketing Intern