Options to Give Giving Grain

Giving Grain

The Missouri United Methodist Foundation can assist you in giving grain to any United Methodist church, organization or affiliated institution. This service of the Foundation is intended to assist those United Methodist charities that do not have the ability to readily receive and process gifts of grain.

 

A Wise Way to Give

For many cash-basis farmers, significant tax savings can be achieved by donating grain to their church or other favorite United Methodist charity.

 
Key Points:

1. Unsold commodity: The gift should be from unsold crop inventory, with no prior sale commitment made prior to the gift.
2. 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.
3. No control: The farmer should provide no guidance in the transfer agreement as to the retention or sale of the gifted commodity.
4. Documentation: Either a properly executed warehouse receipt in the charity’s name, or a notarized letter of transfer for crops stored on the farm must be issued from the farmer. The original sales invoice should list the charity as the seller.
5.
Storage & transportation costs: After the transfer, the charity should assume costs of storage, marketing and transportation.
6. Crop share leases: A share of a crop received as rental payment is considered the equivalent of cash rental income.  Therefore, no savings (expense deduction) can occur.
7. Help for churches: Farmers should be aware that their church may not be familiar with receiving this type of gift. Contact the Foundation for assistance if needed.

 

Farmer must give up “control and dominion” over the grain

When a farmer delivers the grain to the elevator, a warehouse receipt showing the church as owner should be executed. (The church may want to create an account at the elevator in advance.) The church orders the sale of the grain, with the original sales invoice showing the church as the seller. The proceeds check is payable to the church. (The farmer should not provide advise to the church regarding sale of the grain.)

Tax Savings:

Many farmers do not itemize deductions because the standard deduction has greatly increased over the years.  Therefore, typical cash gifts to charity do not save additional taxes.  However, by contributing grain directly to the charity, the cash-basis farmer:
– Avoids reporting the sale of the grain as income.
– Still includes the cost of growing the grain in expenses.

 

To receive tax savings, the transaction MUST be executed properly! 
Contact the Foundation if you have questions or need assistance.

Ask David


Contact David Atkins for answers to your charitable giving questions.

 

datkins@mumf.org

 

800-332-8238