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Consider a gift of grain to 4-H
You can't wrap it up and put it under the Christmas tree, but gifts of grain are a direct way for farmers to show their support for the 4-H program.
As budgets have been cut, Extension and 4-H programs in many states are struggling to maintain a vital role.
"Because of budget cuts to the Iowa 4-H Youth Development program, it's crucial to find new ways to raise money," says Bill Tomlinson, Iowa 4-H Foundation past president and production director for Pioneer. "Giving a gift of grain is one way we're reaching out to individuals and counties to support 4-H in ways we haven't seen in the past."
Rockwell City, Iowa, farmers Keith and Barb Sexton give annual gifts of grain to the Iowa 4-H Foundation. Keith and Barb were active 4-H members, and their three children carried on the family tradition.
"We've received many benefits from the 4-H program over the years," Keith says. "When you give a gift of grain, I think you get a bigger bang for your buck."
Here's what you should know
The majority of states have the 4-H Foundation structured as a nonprofit 501 (c)3. Donating grain not only helps provide opportunities for 4-H youth, but also may save self-employment tax, federal income tax, and state income tax. (Crop-share landlords aren't eligible.)
Grain elevators and processors must contact the 4-H Foundation to create an account and to set up grain disposition instructions.
"The business where you deliver grain must be willing to set up a separate account," Keith says.
What else is important?
- Charity Rules Differ. Farmers may give grain harvested in the current year to charities, such as the 4-H Foundation. Gifts of grain to non-charities should be from the prior year.
- Unsold Status. The gift should come from unsold crop inventory with no prior sale commitment. Farmers gift grain to the 4-H Foundation. It's up to the Foundation to decide what to do with it and when to sell.
- Physical Delivery. Farmers must donate the actual grain -- not just the warehouse receipts -- which may be considered a cash equivalent. The 4-H Foundation must demonstrate that it has "control and dominion" over the gifted property.
- No Retention Of Control. Farmers cannot offer any guidance in the transfer agreement regarding retention or sale of the gift.
- Documentation. A properly executed warehouse receipt in the 4-H Foundation's name or a notarized letter of transfer for crops stored on the farm is required. The original sales invoice should list the Foundation as the seller.
- Storage And Transportation Costs. After the transfer, the Foundation assumes storage, marketing, and transportation costs.