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203 Agricultural Communications
Lincoln, NE 68588-0912
PO Box 94942
Lincoln, NE 68509-4942

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Tax Benefits of Charitable Giving

Every year people chose to give charitable donations to support the Nebraska FFA Foundation. While most just donate cash, there are other ways to make charitable donations that yield the donor tax savings such as gifting grain, livestock, equipment, stocks, and making donations from their retirement accounts.  Donors may also want to consider ways to give to the FFA Foundation in the future through planned giving.

Grain Gifts:   

Anyone who has grain to sell (which typically generates income) has the option to gift grain to the Nebraska FFA Foundation. Gifts of grain allow the farmers to exclude the grain income from being taxed while still being able to deduct the expenses. Additionally, depending on a farmer's tax structure, grain gifting will not only save a farmer income taxes but also self-employment taxes. To make a grain gift you should contact the cooperative or grain elevator and the organization who is receiving the gift ahead of time.  The farmer delivers the grain and title passes to the organization.  The charitable organization can then determine the timing of the grain sale.  

Livestock Gifts:

This concept follows much of the same concepts and steps listed under grain gifts.

IRA Required Minimum Distributions (RMDs):

Taxpayers over the age of 70 1/2 can make qualified charitable distributions (QCDs) from their Individual Retirement Accounts (IRAs). Normally when a taxpayer pulls money out of their traditional IRA the distribution is taxable. However, a QCD is excluded from your gross income, regardless if you are taking itemized deductions on your taxes or not. To make a QCD to the Nebraska FFA Foundation you should contact the firm that holds your IRA and provide the FFAs contact information.  The distribution will then go directly to the FFA.

Stock Gifts:

Taxpayers can also gift stock to charitable organizations. The key is to gift stock that has gained in value. By gifting the stock, you avoid having to pay taxes and on the capital gains. Furthermore, if you do itemize your deductions you get a deduction for the FMV of the stock.

Equipment Gifts:

Equipment gifts are not as common as the others listed above but if this is something you are interested in, we can help walk you through this process.

Legacy Gifts:

The more common ways of gifting are listed above, but often gifting in the future is needed for tax purposes and/or to establish a lasting effect with the mission of the Nebraska FFA Foundation.  Some of easier methods used are naming our organization as a direct beneficiary within your will or trust.  You can also include the FFA Foundation as a beneficiary of an IRA, 401K, annuity, or life insurance.  They are a bit more involved, but the use of donor advised funds and various charitable trusts are also options to consider

Why Creative Gifting Can be Necessary:

Generally, cash donations are only tax-deductible as an itemized deduction. A taxpayer will itemize their deductions if their state income and property taxes (limited to $10,000), home mortgage interest, and charitable donations exceed the standard deduction. For 2020 the standard deduction is $12,400 for single taxpayers and $24,800 for married filing jointly taxpayers. Today most taxpayers do not itemize and instead claim the standard deduction on their tax return. As a result, there are fewer taxpayers that can take a charitable deduction.

Tax planning for future wealth transfer and income taxes after that wealth is transferred is very important.  Consider the FFA Foundation when planning for your transfer of wealth or in your estate planning.

For more information on how to maximize tax savings and ensure your intentions are met for your charitable giving please contact your tax advisor or attorney.