Faithful stewards: Farmer finds ease in giving grain
By RENEE WEBB
Globe associate editor
Posted Sept. 19, 2002

Living in a rural diocese, donations to parishes do not always come in the form of money. Just as contributions of grain and livestock have been made to local churches, a sizable grain donation was recently made to the Diocese of Sioux City's Centennial Campaign for Excellence.

The farmer, who asked that his name not be used, said he made the contribution because he had a good year - was very blessed. And when he has had a good year, he knows who was responsible so is quite willing to give part of it back to the church.

"It's much easier for the farmers to give grain or even a steer or a pig. If they have had good luck and are getting good prices, they are willing to do it," he explained.

The farmer pointed out that so many farmers in his area give to the parish in this manner that the elevators there have accounts set up in the parish's name. The Lutheran and Methodist churches from his community also have accounts at the elevator.

This method of giving has been taking place for many years.

"I grew up in the Mount Carmel parish and the farmers did this 40 years ago," explained the farmer. "When we were in the eighth grade, the nuns would let us out of school to help shell the corn that the farmers brought in. They would always bring in a couple loads of ear corn."

According to Jim Wharton, director of stewardship and planned giving, with the depressed economy and markets at historic lows, gifts of grain allow farmers to make contributions to the church when they may not have cash assets.

"If the harvest is good, many farmers feel this is a great way to share their wealth and their return with us," he said. "We are very excited and grateful when we get a gift like that because it is the same thing as cash for us."

Wharton added that when you take a look at the diocese, which is predominately rural, it creates a unique option for farmers.

Farmers may be interested in making donations to the church in this manner because of the tax savings it offers.

Leon Jessen, a Sioux City CPA, pointed out that the advantage in giving raised raised grain or livestock is that the farmer does not have to claim the donation as income.

"Let's say I have $10,000 worth of grain. One option for me is to sell that grain, collect $10,000. I pay social security self employment tax on it and income tax on it. It's true that on my schedule A, I get to itemize $10,000 but maybe I don't itemize without it. It doesn't do me a dollar for dollar good," explained Jessen. "My other option is that I don't sell the grain, I donate that raised grain to the charity and let them sell it. I don't have to pick up any income. I am better off doing that than trying to claim the deduction on Schedule A."

The second option provides the greatest after-tax leverage because there is 100 percent savings on self-employment tax (about $1,400 savings) and the farmer does not have the income in the adjusted gross income (at least another $1,000 savings).

"There is one kicker. To do it right, I am better off if I donate prior calendar year grain," he said. If a farmer donates 2002 grain and does not report it as income, then he/she cannot deduct the costs related to it. However, if farmers deduct their costs in 2002 and donate grain in early January then they do not have to make an adjustment to their expenses. If they have some of last year's crop stored in grain bins, they are better off to use it for a donation versus gifting a crop out of the field this year.

For similar reasons, he recommended that farmers wishing to gift livestock do this at the first of the year as well, given they are ready for market.

When using this gifting method, the farmer must be certain that the church or charity is listed as the seller. It is best to have a separate load and the whole scale ticket is in the charitable organization's name.

If parishes are currently not taking donations in this manner, the farmer recommends that they do so.

"It is easier for the farmers, when they have had a good year, to take a couple loads of beans or corn in and give it to the church," he said. "If you look through the diocese, the parishes that have those grain programs are doing much better than those that have to write out checks."

The farmer has been making contributions to his parish in this manner for many years.

"The farmers depend on God more than a lot of other people do. We have the wind, rain and hail and all of the natural elements that are beating at us," he said. "When we get a good crop, we know where it came from. And this works out very well because it helps to get more of the dollars to the church instead of having to go through the tax system first."

Wharton pointed out that the Development Office has a process setup to manage and handle gifts of grain. Anyone who is considering making a gift of grain for the first time should contact Wharton at (712) 233-7556 before hauling in the grain to ensure the process runs smoothly and ensure that they get the full tax benefit.