In September, the NRAFF participated in the Waseca Marching Band Classic Parade. Waseca, New Richland and Janesville each had a convertible with magnetic signs indicating their town’s foundation name on them, with two representatives for each town riding in the cars. New Richland’s representatives were Kermit Schoenrock and Gail Schmidt.
The NR Foundation continues to learn, under the direction of the Waseca Area Foundation, more aspects of the giving process in not only how gifts can benefit the foundation, but also how the gift benefits the donors. Because we are in the middle of the harvesting time of year, it is an appropriate time to review the process of how to give farmer-produced commodities. As you remember, in 2011, the NRAFF received an anonymous gift of four semi loads of grain. That gift alone totaled approximately $26,000. It was a very generous gift that more than doubled our fund amount.
These are the tax benefits of a donation of farm-raised commodities by a farmer-producer (not a landlord). While charitable contributions are normally deducted on Schedule A of a tax return as an itemized deduction, this is not the case for farm-raised grain and livestock. Generally no charitable deduction is taken for a contribution of grain or livestock because it is typically more advantageous to: 1. forego the income that would have been realized if the donated property had been sold, and 2. deduct the cost of raising the grain or livestock as a farm business expense on Schedule F.
The primary tax benefits to a farmer for a charitable contribution of grain or livestock are:
• Save on Income Tax. A gift of grain or livestock will reduce farm income for purposes of calculating both federal and state taxes.
• Save on Self-Employment Taxes. No self-employment tax will be due on the income saved.
Other benefits of a commodities gift versus a cash gift are: Avoid Deduction Limitations. A donor who has reached the percentage limitation for deducting cash gifts in a particular year would still be able to receive the tax benefit of a commodities gift in the current year.
• Retain Tax Benefit for Non-Itemizers. To realize a benefit for a cash gift, a donor must itemize deductions on Schedule A. If the donor’s itemized deductions do not exceed the standard deduction, the donor realizes no tax benefit from the gift that would not already have been realized through taking the standard deduction. A commodities gift provides tax benefit to donors who do not itemize deductions.
Collectively, these benefits most often outweigh the tax benefit resulting from selling grain or commodities, realizing the income, gifting the cash, and taking a charitable deduction on Schedule A. But, as always, donors are advised to consult a tax advisor to determine the best course of action for their particular circumstances.
This is just one way to contribute to the NR Foundation Fund. There are many other ways to contribute as well. Cash, real estate, life insurance, estates, in memory of someone are just a few. Our intent is to highlight these ways of giving from time to time. In the meantime, if you would like more information, please do not hesitate to give Karen Buum, the Executive Director of the Waseca Area Foundation, a call at (507)-835-5990. She will be happy to answer any questions you may have and discuss the many options of giving.
In closing, it was announced earlier this year the NRAFF had been the recipient of a $320,000 gift left by Donald Hamilton. Those proceeds have been received and added to the New Richland Area Foundation Fund. The interest from that gift will have a great impact on the amount of grant money the Foundation will be able to grant at our next grant presentation in July of 2013.
Remember the NR Area Foundation when you want to make a donation. Your gift, large or small, will go far in the efforts to support our local schools and community as a whole. We welcome your continued support as we continue to grow our fund balance.
