Committee hopes for more commodity donations
By GAIL SCHMIDT
New Richland Area Foundation
As we near the end of 2014, it reminds me that this is a good time for me to update everyone on the activity of the New Richland Area Foundation.
This year, through the NRAF Fund, the NRAF Grants Committee was able to grant $15,000 to seven different grant recipients in April. These grant dollars available are a result of approximately 5% of the interest income from the NRAF Fund of $426,000. The Grants Committee received eigh applications totaling $35,382. The committee carefully reviewed each and every one in order to meet the grant guidelines and yet assist in fulfilling the needs of the NRHEG Public Schools and the City of New Richland. The grants were presented at a NRHEG School Board Meeting and a City Council Meeting as well as announced at the NR Farm & City Days pancake breakfast.
The Grants Committee members of Gail Schmidt, Pam Goehring, Kermit Schoenrock, Matt Harrington and Nina Bartelt not only approve and award grants, but also spend time throughout the year promoting the NRAFF at such events as the NR Farm & City Days Parade, the Waseca County Fair and the Waseca Bluejays Classic Marching Band Parade. This year the committee also donated their time to re-stain the Garden Club sign on Hwy 30. Along with a grant and labor, great pride was taken in the participation of the improvements made to the Mural and Hospice Tree Area as well.In July of this year, the committee set a goal. It is their wish to increase the current fund amount of $426,000 to $500,000 by July 1st of 2015. That is about $74,000. It is a reachable goal and would help increase our grant dollars in order to help meet the needs of the school and community. 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 at that time.
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.
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.
We hope everyone is enjoying our fall season and having a safe harvest.