Giving a Gift of Grain…
Growing the Future with your Community Foundation
SHARE YOUR HARVEST - GIVE GRAIN
Your crops are your livelihood. You prepare, you plant, you nurture, and they grow. That’s what we do with the charitable gifts entrusted to your Community Foundation, and we invite you to grow the future of your community with us.
Why Donate Grain?
Donating a gift of grain to your Community Foundation is a simple way to make a lasting difference. The value of the grain can be used to start an endowed fund in the name of your family, for a specific nonprofit organization important to you, or to support charitable causes in your community. No matter what type of endowment you chose to establish or fund you support, you can be sure that your gift of grain is growing the future of your community.
HOW YOU BENEFIT…
By giving grain to your Community Foundation, you avoid including the sale of the grain in your farm income. Although a charitable income tax deduction is generally not available to you, the avoidance of declaring it as income can be a significant benefit. You deduct the cost of growing the crops, which typically results in saving self-employment tax, federal income tax, and state income tax. You can benefit even if you don’t itemize your deductions and take the standard deduction.
HOW TO COMPLETE YOUR GIFT…
Following these steps will help ensure you receive intended tax benefits from a gift of grain.
NOTE: If you deliver the grain, sell it and order the proceeds sent to the Community Foundation, you won't be eligible for the tax benefits described in this brochure.
Let the Community Foundation know which elevator you will be taking the grain to. The gift should be from unsold crop inventory with no sale commitment made prior to the gift.
Deliver the grain to the elevator in the Community Foundation's name and fill out the Notification of Gift of Grain form at the bottom of this page to let us know where and how much grain you donated.
Send a settlement report to the Community Foundation. This must show the Community Foundation as the owner of the grain. (Avoid making a gift of an actual warehouse receipt; give the grain itself.)
We will provide you with a donation receipt for your gift. Remember it is non-deductible on your taxes. You don't have to declare this amount of grain as income to your farming operation.
After the grain is donated, the elevator will sell it at the spot closing price on the day of delivery for the Community Foundation. The scale ticket will name the Community Foundation as the seller of the grain and the Community Foundation will receive the sale proceeds.
ADDITIONAL TIPS FOR GIFTING GRAIN:
Timing – Gifts of grain to charity can be made from the current or previous year’s harvest.
Unsold Commodity – The gift must be from unsold crop inventory with no prior sale commitment. A farmer will gift the grain to the Morton Community Foundation (MCF), or designate a specific charitable fund within the Foundation.
Physical Delivery – Be sure the gift is farm commodities, not warehouse receipts, which could be considered a cash equivalent. The MCF must be able to demonstrate “control and dominion” over the gifted property.
Retention of Control – Farmers cannot offer guidance in the transfer agreement as to retention or sale of the gifted commodity.
Documentation – the transaction must be well-documented to show the MCF as owner of the grain. A Gift of Grain Notification Form and a properly executed warehouse receipt in the MCF’s name must be completed. The original sales invoice for the gift of grain must list the MCF as the seller.
Storage & Transportation Costs – After the transfer of ownership of the grain. The MCF assumes the risks of storage, marketing, and transportation costs, as well as price risk.
Crop Share Landlords – Crop share landlords cannot gift grain. Shares of crop are rental income that must be reported as income on their tax return.
Tax Outcomes – Costs associated with growing the crops may not be deductible if those costs are incurred in the same year as the year of the donation of the grain. Therefore, gifts made from the prior years’ unsold crop inventory may offer the best tax results. Tax outcomes are also impacted by whether a farmer does cash or accrual accounting. See you tax advisor to determine if this is the best course of action for your circumstances.
Storing Grain on Farm – Grain can be stored on a farm rather than being delivered to an elevator and still be gifted to the MCF. A notarized letter of grain transfer should be prepared and delivered to the MCF. This will take the place of a warehouse receipt.
Farm Corporations – The benefits described here apply to the calendar year-cash basis sole proprietorships. Corporations are not treated the same way from a tax perspective. Ask your tax professional to see if your farm operation can benefit from a charitable gift.
Government Payments Limitation Caps – The gift of grain will not count as income in government payments limitation cap.