Learn how giving crops, farm equipment or livestock can allow farmers to support nonprofits they care about.
When it comes to giving, farmers are more frequently considering farm assets – such as livestock, farm equipment and harvested crops – as a way to support their favorite causes.
The Saint Paul & Minnesota Foundation partners with farmers across Minnesota on this unique giving method, which offers several benefits to both the farmer and the organizations they wish to support.
Our staff will work with you to establish a donor advised fund (DAF) that can easily accept a wide variety of agricultural assets. Once established, any farm-related gifts can be transferred to the fund and liquidated tax-free – out of which you can recommend grants to your favorite causes.
Crops are probably the most common type of agricultural asset that farmers donate.
You can make gifts of harvested crops, such as grains, soybeans and corn, by delivering the crops as you would for a normal sale, except in this case they are delivered in the name of the Saint Paul & Minnesota Foundation.
- You will need to first put the Foundation in touch with the elevator, which will accept the crops as they would any other sale.
- Ownership of the sale is then completed through a Deed of Gift – a document between you and the Foundation that records the act.
- Once that takes place, the elevator will send a check for the sale to the Foundation to place in your fund for you to recommend grants.
Farmers don’t often receive much of a charitable income tax deduction for a gift of crops, but they should be able to avoid the income tax and self-employment tax that would occur upon a normal sale. The charitable income tax deduction for a gift of crops is limited to the basis of the crops – not the market value. See below for more details on the tax benefits of donating crops.
Gifts of Livestock
Livestock is donated in a similar way. Cattle and hogs are the most common type of livestock donated.
- We work with you to deliver the livestock to a sale barn in the name of the Foundation.
- Ownership is transferred via a Deed of Gift.
- The sale barn auctions the livestock and sends the Foundation a check for the proceeds.
- The check is added to your donor advised fund at the Foundation.
- You recommend grants through your fund.
As with crops, there isn’t much of a charitable income tax deduction. The deduction is limited to the basis of the livestock.
“ The Saint Paul & Minnesota Foundation partners with farmers across Minnesota who donate livestock, farm equipment and harvested crops. This unique giving method offers several benefits to both the farmer and the organizations they wish to support.”
Donating Farm Equipment & Machinery
While donating crops and livestock can be simple, donating farm machinery can be a bit trickier.
The sale prices for used machines are still quite high and can come with a steep tax bill. Some people forgo the sale of their used machinery and donate tractors or combines to causes they care about instead. The Foundation can work with you to sell the machinery at auction, with the proceeds available for you to recommend grants to the causes you choose, or they can be used to fund a life-income vehicle such as a Charitable Remainder Trust.
With farm machinery donations, the charitable income tax deduction is relatively low because it is limited to the basis of the machine, but the income tax on the sale may be avoided.
Benefits of Donating Farm Assets
Even though there may not be much of a charitable income tax deduction available for gifts of crops, livestock and machinery – there are many reasons why giving these assets are financially beneficial.
First, these are the assets you may have available, and they are worth quite a bit on the open market, making them a good way to support the causes you care about without draining your cash reserves.
Second, eliminating income and self-employment tax due on the sale of agricultural assets may be more financially beneficial than a charitable income tax deduction.
For example, the extra income can increase the rate of income tax you may pay and can increase the income tax due on Social Security income along with Medicare premiums. Charitable income tax deductions do not reduce Social Security income tax or Medicare premiums.
Financial benefits likely aren’t the reason you choose to give, but they can be the reason you choose to give these particular assets.
The Saint Paul & Minnesota Foundation welcomes gifts of farm assets.
Our staff is ready to work with donors and their advisors to help determine what assets may be the most beneficial for them to give.
The Saint Paul & Minnesota Foundation does not provide tax, legal or accounting advice. Please consult your own tax, legal and accounting advisors regarding your individual situation before engaging in any transaction.
The Jones Family Foundation makes an impact on students in the city of Red Wing by providing free tuition.Learn More
Learn how fundholder Dick Senese turned his property into gifts for his favorite causes with a real estate donation to his donor advised fund.Read Dick's story
Here are five unique benefits of working with a community foundation to reach your charitable giving goals.See the Five Benefits
Compare the benefits and responsibilities of two popular charitable giving vehicles your clients may be considering.Compare the two