U.S. corn and soybean farmers garnered a third consecutive record or near-record harvest in 2006. The large yields and improved prices may influence corn and soybean growers across the nation to open their hearts…and their grain bins for people in need.
Max Unseld is one farmer who has donated both grain and cash. He recommends farmers consider in-kind or cash donations to charities that have a record of doing the most good for the neediest people.
“I give to Orphan Grain Train, because they get the product to the people who need it as quickly as possible without a lot of paperwork,” says Unseld, who farms near Pierce, NE. “For example, they were one of the first outfits helping people in the Gulf Coast after Hurricane Katrina.”
Founded in 1992, Orphan Grain Train describes itself as “a hands-on, Christian, humanitarian aid and disaster relief organization built on a nationwide network of volunteers” that has “delivered nearly 30 million pounds of humanitarian aid to needy people in more than 40 countries on five continents.”
Unseld says his only in-kind donation came during Operation Hay and Grain Lift, when Orphan Grain Train delivered 300 semi loads of hay in 2002-03 to drought-stricken farmers in the Midwest. “That year, when western South Dakota was short of feed due to a severe drought, I stopped by the Orphan Grain Train office and told them I would donate some grain,” he says. “They came out to our farm and loaded a semi load of ear corn that got split up among several small farms in western South Dakota.”
Volunteers for Orphan Grain Train weighed the corn and provided a receipt, which Unseld was able to count for tax purposes. “I raise cattle and know that ear corn makes really good cattle feed,” he says. “We had some surplus here at the time, so I thought I'd do what I could to help out.”
Farmers can deliver grain to their local elevator and send the income as a charitable donation, “or we can come to your farm to pick up the grain and send it directly to those who need it,” says Ray Wilke, founder and president of Orphan Grain Train, which is headquartered in Norfolk, NE. “Either way, you'll get a letter from us that you can use for your tax records.”
Volunteers at the organization's 18 current regional divisions enable this charity to react quickly to regional, national and international needs, says Wilke, who operates a farm with stock cows and about 350 acres of hay, soybeans and corn with his son, Ray II. “Orphan Grain Train has only five paid employees, but we have more than 1,000 volunteers across the nation and the globe,” he emphasizes. “We operate on a 3% overhead, which is one of the lowest overheads of any charity in the U.S.”
Orphan Grain Train is planning to open another regional division in Chicago during 2007, notes Wilke, who says that he started the organization to help starving people in the Balkans after the fall of communism. “Last year we gave away more than $11 million to hurting people around the world,” he says. “That's almost $1 million per month, but it's only because people are charitable to our organization that we can do this.”
While working and living in rural areas, Wilke says he's seen firsthand that farmers are inclined to be charitable. “It's often easier to give grain than cash,” he points out, “and you can still get a tax deduction for doing so.”
The Wilke family has not only contributed to the organization by delivering ag products from their farm for donations where needed, but also by contributing their talents. “Our farm has sent hay to New Mexico,” he says, “we've delivered grain for in-kind donations and we've contributed time and energy as volunteers.”
With financial support from his church in Norfolk, Wilke says he is able to serve as an unpaid staff member for Orphan Grain Train. “I work a little bit for them every day but take no salary,” he says. “I'm able to do this because I'm a pastor at Grace Lutheran Church.”
The organization's grassroots are its strength, but so is its reliance on faith in God to work through ordinary people doing ordinary things to extraordinarily improve the lives of others. Wilke adds, “We may worship on Sunday, but perform work-ship from Monday through Saturday.”
Farmers who want to help others via charitable giving should also consider the tax implications of those contributions, advises Gary Hoff, University of Illinois taxation specialist.
“When a farmer sells grain, he must report the income on his tax return,” says Hoff. “This increases both his taxable income and his self employment income. However, if the farmer donates the grain to a qualified charity, he doesn't report the grain as income, but he's still allowed to deduct his production costs as a farm expense.”
While the farmer isn't entitled to an itemized deduction for this in-kind grain donation, he is still entitled to take the standard deduction, which is $10,300 for a married couple in 2006, says Hoff. “The farmer must be careful when he makes the contribution,” he emphasizes. “The farmer should notify the charity in writing that he is donating a specific quantity and type of grain. He should ask for instructions of where and when to deliver the grain. If the farmer simply takes grain to the elevator and asks that the check be made out to the charity, the IRS could rule that the grain sale was income to the farmer.”
Hoff also notes that different rules apply to crop-share landlords. They are required to report the grain as income on their tax return and then claim an itemized deduction of the same amount.
Confused? Hoff recommends talking with your tax accountant or logging onto the University of Illinois farmdoc Web site at: www.farmdoc.uiuc.edu/legal/index.asp.