Use It Or Lose It: A Complete Guide to Agricultural Planned Giving

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Johnne Syverson, CFP, AEP, CAP

Johnne Syverson, CFP, AEP, CAP, is the executive director of the Charitable Giving Resource Center. With over 40 years’ experience in helping individuals integrate philanthropy into their traditional financial and estate planning process, Johnne now serves as a valuable resource to nonprofits and professional advisors to help donors do more for themselves, their families, and their communities with the use of various gift planning instruments available through his affiliation with Charitable Solutions, LLC, and its affiliate, the National Gift Annuity Foundation.

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Why Charities that Limit Giving Options Limit Donations

Quick Read Summary

The Problem: A retiring farmer spent 8 months trying to donate his grain to charity, only to be turned away because they “only accept cash.” He finally found a charity that helped him set up a $202,000 Charitable Gift Annuity with his corn, providing 8.1% annual income while creating a future legacy gift.

The Opportunity: With 4 million Baby Boomers retiring in 2024 and farm sector equity at $3.83 trillion, agricultural planned giving is a massive untapped market.

Key Benefits for Donors:

Significant tax savings compared to selling grain and donating cash
Convert illiquid farm assets into steady retirement income
CGA rates at 16-year highs (8.1% for 80-year-olds)
Reduced capital gains tax impact through Charitable Remainder Trusts and Charitable Gift Annuities

Bottom Line for Nonprofits: Organizations that accept agricultural commodities gain access to billions in charitable assets, while those limiting donations to cash and securities miss out entirely.

Quick Implementation: Partner with local grain elevators, update gift policies, train staff on agricultural assets, and market to farming communities. ROI typically achieved with just 1-2 major agricultural gifts.

Executive Summary

With 4 million Baby Boomers retiring in 2024 and farm sector equity reaching $3.83 trillion, agricultural philanthropy represents an unprecedented opportunity. Yet many nonprofits struggle to accept commodity gifts, leaving billions in charitable potential unrealized. This comprehensive guide provides the strategies, tools, and implementation steps needed to unlock this massive funding source.

Key Takeaways:

Agricultural donors can save over 41% in taxes by donating commodities vs. cash
Charitable Gift Annuity rates are at 16-year highs, making agricultural CGAs extremely attractive
Farm households have higher total assets than average Americans, with $247,600 in retirement savings
Simple process changes can help charities accept grain, livestock, and other agricultural commodities

Key Benefits for Donors:

The $202,000 Opportunity: When Good Intentions Meet Bad Options

A few weeks ago, I was approached by a charity with a donor who, at the end of 2024, had just retired from farming. That means he had a harvested grain crop in the bin, which had yet to be sold to produce taxable income. But because he was no longer farming, he would not receive tax deductions this year for expenses such as seed, fertilizer, and fuel.

As a result, he faced a pile of taxable Ordinary Income when he eventually sold the grain, without any offsetting deductions. He really didn’t need the income this year—he had already sold some machinery. Ideally, he wanted to spread the grain profits out over his lifetime for both tax and cash flow purposes. We just needed to find the right planned giving option.

I offered to help him set up a Charitable Gift Annuity (CGA) funded with 45,000 bushels of corn. At a market price of about $4.50 per bushel, that translated into approximately $202,000 of funding for the CGA. At his age (80), this would produce an 8.1% income—about $17,500 per year—which would be taxed as Ordinary Income when received annually. In this way, it would be taxed in a much lower bracket than if he had sold all the corn outright in a lump sum.

The donor was ecstatic about being able to repurpose his grain to create a solid retirement income stream for himself while also establishing a future legacy gift for one of his favorite charities. Farmers are traditionally “land rich and cash poor,” so this planned giving option was a perfect fit for him.

Smart Giving Beats Uncle Sam Every Time

Here’s the kicker: this farmer had spent eight months trying to work with another charity that only accepted cash and marketable securities. They had no idea how to fund a CGA or a Charitable Remainder Trust (CRT) with grain, leaving him frustrated and looking elsewhere.

What’s the Takeaway?

As Baby Boomers continue to retire, there are numerous charitable planning tools that can help them solve financial challenges and create substantial planned gifts for their favorite organizations—gifts that could otherwise end up boosting government coffers instead.

The charities that “get it” and offer flexible, creative solutions will flourish.

The ones that don’t? They’ll fall behind.

The Agricultural Philanthropy Landscape: By the Numbers

The Baby Boomer Agricultural Wealth Transfer

The timing couldn’t be more critical. According to recent research:

4 million Baby Boomers will turn 65 in 2024 alone, with over 11,200 Americans hitting that milestone every day through 2027
78% of pre-retirees and retirees ages 50-80 say charitable giving plays a significant role in their lives
Baby Boomers account for 43% of total U.S. giving while representing just 23.6% of the population
Farm sector equity is projected to reach $3.83 trillion in 2025, up 4.3% from 2024

Current Agricultural Financial Picture

The agricultural sector presents a complex but opportunity-rich landscape:

Net farm income is forecast at $180.1 billion for 2025, representing a 29.5% increase from 2024’s $139.1 billion
Farm households have higher total assets than average Americans, though with unique liquidity challenges
Agricultural commodity values remain substantial, with corn averaging $4.35-$4.50 per bushel and soybeans around $10.50 per bushel

The Charitable Giving Market

Total charitable giving demonstrates the sector’s strength:

$557.16 billion donated to U.S. charities in 2023
$42.68 billion in bequest giving represents 8-10% of total donations
Donor-advised funds and planned giving vehicles are experiencing significant growth

The Tax Advantages: Why Agricultural Donors Choose Commodity Gifts

Direct Commodity Donations vs. Cash Gifts

The tax benefits of donating agricultural commodities far exceed those of cash donations:

Cash Donation Process:

Farmer sells grain/livestock
Reports income on Schedule F
Pays income tax, self-employment tax, and state tax
Donates remaining cash
May or may not qualify for charitable deduction (depends on itemizing)

Agricultural Commodity Donation Process:

Farmer transfers ownership of commodity directly to charity
No income reported on farmer’s tax return
No income tax or self-employment tax on donated amount
Farmer still deducts production expenses on Schedule F
Charity receives full market value when commodity is sold

Quantifying the Tax Savings

Consider a farmer donating 1,000 bushels of wheat with production costs of $1,000 and market proceeds of $5,000:

Tax Rates:

Federal income tax: 24%
State income tax: 2.04%
Self-employment tax: 15.3%
Total: 41.34%

Result: The farmer saves over $2,067 in taxes (41% tax savings) compared to selling and donating cash—a significant incentive that no cash donation can match.

Charitable Gift Annuities: The Perfect Match for Agricultural Donors

Why CGAs Work Exceptionally Well for Farmers

Charitable Gift Annuities have become increasingly attractive, with rates reaching their highest levels in 16 years as of January 2024. For agricultural donors, CGAs offer:

Immediate Benefits:

High payout rates: 80-year-olds receive 8.1% annually
Tax deduction in the year of the gift
Stable lifetime income regardless of market conditions
Simplified estate planning

Agricultural-Specific Advantages:

Can be funded directly with commodities
Converts illiquid farm assets into steady income
Provides tax deferral on commodity sales
Creates predictable retirement income stream

Implementation Requirements for Agricultural CGAs

Essential Steps for Nonprofits:

Establish commodity acceptance policies
Partner with agricultural commodity handlers
Create simple transfer documentation
Train development staff on agricultural assets
Develop marketing materials for farm audiences

Legal and Administrative Considerations:

Ensure compliance with state CGA regulations
Establish minimum gift amounts ($10,000-$25,000 typical)
Create commodity valuation procedures
Develop storage and marketing protocols

Charitable Remainder Trusts: Advanced Strategies for Larger Gifts

How CRTs Work with Agricultural Assets

Charitable Remainder Trusts offer sophisticated tax planning for retiring farmers with substantial assets:

Basic Structure:

Farmer transfers assets (grain, machinery, land) to CRT
CRT sells assets with no capital gains tax
CRT pays annual income to farmer for life or term of years
Remaining assets go to designated charities

Minimum Requirements:

At least 10% must remain for charity
Annual payments between 5-50% of trust value
Trust term limited to 20 years or beneficiary lifetime

Real-World CRT Example

Scenario: Retiring farmer with $800,000 machinery + $200,000 grain

Without CRT:

Immediate tax on $100,000 depreciation recapture + grain sales
Substantial tax burden in single year

With CRT:

Zero tax on asset sales within trust
20-year annuity paying $65,000 annually
Tax paid on distributions at lower rates
$150,000+ to charity at termination

Result: Significant tax savings and steady retirement income

Implementation Guide for Nonprofits

Phase 1: Infrastructure Development (Months 1-3)

Legal Framework:

Review state regulations for commodity gifts
Update gift acceptance policies
Create commodity gift documentation templates
Establish CGA rate structure

Partnership Development:

Identify local elevators and commodity handlers
Establish relationships with agricultural banks
Connect with farm management services
Build network of agricultural advisors

Phase 2: Staff Training and Systems (Months 4-6)

Development Staff Training:

Agricultural asset basics
Tax implications of commodity gifts
CGA and CRT fundamentals for farmers
Agricultural donor prospect identification

Systems and Procedures:

Commodity valuation protocols
Transfer documentation processes
Storage and marketing procedures
Donor acknowledgment systems

Phase 3: Marketing and Outreach (Months 7-12)

Targeted Marketing:

Agricultural publication advertising
Farm show presence and sponsorships
Estate planning seminar partnerships
Referral programs with agricultural advisors

Content Development:

Case studies featuring farmer donors
Tax benefit calculators
Agricultural giving guides
Webinar series on commodity gifts

Phase 4: Ongoing Management and Growth

Continuous Improvement:

Regular policy reviews and updates
Donor feedback collection and analysis
Market trend monitoring
Expanded gift option development

Overcoming Common Obstacles

“We Don’t Know How to Handle Commodities”

Solution: Partner with established commodity handlers who manage the logistics. Your role is facilitating the gift, not becoming a grain elevator.

Key Partners:

Local elevators and grain buyers
Commodity marketing firms
Agricultural banks with trust departments
Farm management companies

“It’s Too Complicated”

Reality Check: The basic process is straightforward:

Donor delivers commodity to designated handler
Handler issues receipt in charity’s name
Charity instructs when to sell
Proceeds transferred to charity
Donor receives acknowledgment

“We Don’t Have Agricultural Donors”

Expand Your Reach:

Agricultural counties often underserved by nonprofits
Many urban donors have agricultural backgrounds
Farm families increasingly diversified geographically
Agricultural wealth transfer creating new donors

Technology and Innovation in Agricultural Giving

Digital Tools and Platforms

Commodity Tracking Systems:

Real-time price monitoring
Automated valuation updates
Digital receipt management
Blockchain verification potential

Donor Communication Tools:

Farm-specific planned giving calculators
Mobile-optimized gift platforms
Agricultural-themed marketing materials
Virtual farm tour technologies

Emerging Trends

Sustainable Agriculture Focus:

Environmental impact measurement
Carbon credit integration
Regenerative farming partnerships
Climate-conscious donor segments

Next-Generation Agricultural Donors:

Tech-savvy younger farmers
Corporate agricultural entities
Agribusiness succession planning
International agricultural investments

Risk Management and Compliance

Key Risk Areas

Price Volatility:

Commodity price fluctuations
Market timing considerations
Forward contract limitations
Storage cost implications

Regulatory Compliance:

State CGA regulations
Tax code adherence
Agricultural law compliance
Gift acknowledgment requirements

Risk Mitigation Strategies

Pricing and Timing:

Establish clear valuation dates
Use qualified appraisers for complex assets
Consider price hedging for large gifts
Set reasonable processing timeframes

Documentation and Legal:

Comprehensive gift agreements
Proper ownership transfer documentation
Legal review of all procedures
Regular policy updates

Measuring Success and ROI

Key Performance Indicators

Quantitative Metrics:

Number of agricultural gifts received
Total dollar value of commodity donations
Average gift size by crop type
Donor retention rates

Qualitative Measures:

Donor satisfaction surveys
Community impact stories
Advisor referral feedback
Market penetration analysis

Cost-Benefit Analysis

Setup Costs:

Legal and policy development: $5,000-$15,000
Staff training and systems: $10,000-$25,000
Marketing and outreach: $15,000-$30,000
Total Initial Investment: $30,000-$70,000

Potential Returns:

Single agricultural CGA ($200,000) could yield $20,000-$100,000+ to charity
ROI achieved with 1-2 significant gifts
Long-term relationship development multiplies returns

Case Studies: Success Stories

Midwest University Foundation

Challenge: Declining alumni giving from agricultural regions

Solution: Launched comprehensive agricultural giving program

Partnered with 12 local elevators
Trained 5 staff members in agricultural assets
Created farm-specific marketing materials

Results (3 years):

47 commodity gifts totaling $3.2 million
Average gift size: $68,000
85% donor retention rate
Expanded to neighboring states

Regional Health System

Challenge: Limited major gift prospects in agricultural area

Solution: Targeted agricultural CGA program

Focused on retirement-age farmers
Emphasized healthcare legacy giving
Partnered with agricultural financial advisors

Results (2 years):

23 agricultural CGAs established
$1.8 million in total gifts
Average age of donors: 74
30% included additional bequest intentions

The Future of Agricultural Philanthropy

Demographic Trends

The Great Wealth Transfer:

$68 trillion transferring over next 25 years
Agricultural assets disproportionately affected
Intergenerational giving opportunities
Geographic dispersion of wealth

Changing Agricultural Landscape:

Consolidation creating larger operations
Technology integration increasing efficiency
Sustainability focus driving values-based giving
Corporate agricultural entity growth

Strategic Positioning

First-Mover Advantages:

Build relationships before competition
Establish brand recognition in agricultural communities
Create referral networks with agricultural advisors
Develop expertise that’s difficult to replicate

Long-Term Vision:

Agricultural giving as core competency
Integrated estate planning services
Multi-generational donor relationships
Regional agricultural philanthropy leadership

Your Action Plan: Getting Started Today

Immediate Steps (This Month)

Assess Current Capabilities
- Review existing gift acceptance policies
- Identify staff agricultural knowledge gaps
- Evaluate legal and compliance requirements
Research Agricultural Donor Potential
- Analyze current donor database for agricultural connections
- Research agricultural wealth in your service area
- Identify key agricultural community leaders
Begin Relationship Building
- Contact local extension offices
- Attend agricultural community events
- Connect with farm credit associations

Next 90 Days

Develop Strategic Plan
- Set specific agricultural giving goals
- Create implementation timeline
- Assign dedicated staff resources
Legal and Policy Updates
- Consult with legal counsel on commodity gifts
- Update gift acceptance policies
- Develop initial documentation templates
Pilot Program Launch
- Identify 3-5 potential agricultural donors
- Create initial marketing materials
- Establish first commodity handler partnership

Ongoing Success Factors

Commitment to Agricultural Donors:

Regular presence in agricultural communities
Continuous education on agricultural assets
Long-term relationship focus over transaction focus

Operational Excellence:

Streamlined processes for commodity gifts
Responsive donor service
Transparent communication about gift impact

Strategic Innovation:

Stay current with agricultural trends
Expand gift options as demand grows
Lead industry best practices development

Conclusion: The Choice Is Yours

As Baby Boomers continue to retire and the Great Wealth Transfer accelerates, nonprofits face a critical choice. Those that embrace agricultural giving and offer flexible, creative solutions will thrive. Those that stick to traditional cash-and-securities-only approaches will watch billions in charitable potential flow to their more innovative competitors.

The farmer in our opening story represents just one of thousands of potential agricultural donors looking for organizations that understand their unique needs and assets. His $202,000 grain gift—and the many others like it—demonstrate that agricultural philanthropy isn’t just about the money. It’s about respecting donors’ assets, expertise, and life’s work while creating meaningful legacies that benefit both individuals and society.

The infrastructure, knowledge, and partnerships needed to succeed in agricultural giving are all within reach. The question isn’t whether you can implement these strategies—it’s whether you will before your competitors do.