I recently took part in a focus group at the Community Foundation of Greater Des Moines with the topic of charitable gifting of farmland, and I learned much more than I contributed.
Community Foundations throughout the state of Iowa provide a tremendous opportunity for Iowans to create a perpetual legacy by supporting their chosen causes via personalized gifting strategies, and in return obtain significant tax benefits.
By working with a Community Foundation, you can be assured your expressed charitable interests will be maintained. Charitable gifts through your local Community Foundation can be made to any nonprofit of your choice, from schools and churches to health and human service organizations – and all other areas of interest – gifts will impact those selected for support.
Iowa Community Foundations, including the Community Foundation of Greater Des Moines, provide exclusive access to the Endow Iowa Tax Credit program. Giving through the Endow Iowa program allows Iowa taxpayers the opportunity to receive a 25 percent Iowa tax credit, in addition to the normal federal income tax deduction, when making gifts to qualified endowments. This unique opportunity allows for even greater philanthropic impact by allowing donors to make meaningful gifts to the causes they care about, while creating a charitable legacy which will impact those served by the charities of their choice for generations.
A charitable gift is eligible for the 25 percent Endow Iowa Tax Credit when the gift is made:
- Through a qualified community foundation
- To a permanent endowment fund which limits distributions to 5%
- For the benefit of one or more Iowa charitable causes
- By individuals, businesses or financial institutions
Tax credits of 25 percent of the gifted amount are limited to $300,000 in tax credits per individual for a gift of $1.2 million. For couples, $600,000 in tax credits are available for a gift of $2.4 million if both are Iowa taxpayers. Endow Iowa Tax Credits are made available on a first-come/first-serve basis, so it is beneficial to work with your local Community Foundation early in the year to ensure you or your clients can take advantage of this opportunity.
Often when considering charitable contributions, traditional gifts of cash or appreciated securities are top of mind. The Endow Iowa Tax Credit program allows for consideration of a much wider variety of charitable assets to make a gift which is most advantageous for donors based upon current resources and charitable interests. A variety of gifts qualify for Endow Iowa Tax Credits including cash, appreciated securities, retirement assets, real estate and grain. This flexibility allows for the opportunity to give of currently held resources, and ensures the causes you or your clients love have sustainable support to continue their work for years to come.
Gifts of real estate or land provide a wonderful opportunity to turn a currently held asset into charitable support for the future. The transition of these resources into charitable assets can be made simple by working with the Community Foundation of Greater Des Moines to unearth the maximum deduction available for the gift. This gifting structure also allows donors to bypass capital gains tax on the gift. By making a gift of real estate or land, property gains translate into community impact, a rewarding return on investment.
Considering a gift of grain is another opportunity to make a lasting difference, and perhaps give more than otherwise thought possible to support causes in the community. By giving grain, sale of the grain is avoided in farm income. The avoidance of declaring the sale of grain as income is a significant benefit. The cost of growing the crops can be deducted which typically results in saving self-employment tax, federal income tax and state income tax. Benefits can be realized even if deductions are not itemized and the standard deduction is taken instead. As with gifts of real estate or land, Endow Iowa Tax Credits are available when making a gift of grain.
For information on how to contact Community Foundation of Greater Des Moines or making an Endow Iowa qualified gift, contact Ron Beach at Peoples Company at (712) 579-2587 or Ron@PeoplesCompany.com.