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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?

  1. 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.
  2. 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.
  3. 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.
  4. No Retention Of Control. Farmers cannot offer any guidance in the transfer agreement regarding retention or sale of the gift.
  5. 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.
  6. Storage And Transportation Costs. After the transfer, the Foundation assumes storage, marketing, and transportation costs.

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