A Farmer's Guide to Year-End Giving
Oct. 27, 2021
By Joe Sorenson, CAP®, Vice President of Affiliate Relations
With the holiday season around the corner, Iowans will soon be gathering with friends and family. Conversations around college football, predictions on the quickly approaching winter, and who makes the best pie will take place. Many families will also discuss causes that matter to them and which nonprofits they will support before the end of the year.
At the Community Foundation of Greater Des Moines, we know agricultural roots extend into support of the community in which you live, and it is important to meet your family’s charitable and financial goals. Below are a few unique ways you can support causes and communities you care about as we near the end of the year.
Grain – A gift of grain is a unique and underutilized way to make a charitable gift. For farm operators, gifting grain directly, rather than selling the grain and making a gift from the proceeds, may provide significant tax savings. Contributing grain allows you to avoid recognizing the sale of the commodity as income, while the production costs may still be deductible. Reducing taxable income may provide advantages such as minimizing or eliminating self-employment tax and reducing adjusted gross income.
IRA Charitable Rollover – For farmers over age 70 ½ and older, making charitable contributions from an IRA can provide similar tax advantages to a gift of grain. Distributions from an IRA directly to charity avoids federal and state income tax on transfers up to $100,000 and goes towards meeting your required minimum distribution (RMD). No need to worry if you don’t itemize your federal tax return. Gifts of grain and the IRA charitable rollover are not deductible, but instead benefit from the avoidance of claiming the income.
Donor Advised Funds – Farmers know that timing can be everything. The same can be said for aligning charitable gifts to when it makes financial sense for you or your family. Donor advised funds are a solution to this problem. Donor advised funds are like a charitable checkbook. Farmers can contribute cash, stock, grain or other assets to their donor advised fund, take advantage of maximum tax benefits, and distribute grants to causes they care about when needs arise. A donor advised fund can also help your family put charitable dollars aside for a rainy day when your farm may not be as profitable but your commitment to your community has not changed. Through the Community Foundation, contributions to your donor advised fund may qualify for the Endow Iowa tax credit, a 25% state income tax credit.
These three tax-wise giving strategies are simple strategies for you and your farm operation to consider as you support causes you care about at year-end. Be sure to consult with your professional advisor for specific tax or legal advice that applies to you and your family.
To learn more about these and other giving opportunities through Keep Iowa Growing, Iowa’s Agriculture Giving Program, contact Joe Sorenson at 515-447-4210.