When Good Intentions Meet Bad Options
A few weeks ago, I was approached by a charity with a donor who, at the end of 2025, 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 a 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.
