Willmar Area Community Foundation helps farmers plan for a community legacy
The world is in the middle of the largest transfer of wealth in history as baby boomers reach retirement age. This also means today's older farmers are starting to think about and plan for their future and legacy once they pass. The Willmar Area Community Foundation has started to see an increase in the number of farmers putting legacy charity donations into place, using things such as grain, equipment and land to fund the donations.
WILLMAR — In the 2017 Census of Agriculture from the USDA, there were 1,220 farms and 1,968 ag producers in Kandiyohi County. The vast majority of the producers — 1,824 people — were over the age of 35, with 662 age 65 and older. Those numbers show that the county's agriculture base is aging and, over the next several years, many will probably be getting out of the business altogether.
The Willmar Area Community Foundation , a charitable nonprofit that gifts grant money to various community causes, is already seeing that change. Over the next five years, there will be an estimated $7.5 million worth of ag assets changing hands.
"We are seeing the largest transfer of wealth in the history of the world," said WACF Director of Donor Relations Keven Dietrich. "And that is happening right here as well. To be on the front side of that, and to let ag producers know there are options is huge."
As farmers age, retire and eventually pass away, the community not only loses an important economic force in the county, but also one of the most reliably charitable groups of people.
"As people with charitable mindsets pass, it will be harder and harder for local nonprofits to make ends meet if people aren't thinking strategically about lasting legacy gifts," said WACF Executive Director Sara Carlson.
The foundation wants to work in partnership with ag producers and their financial teams to create a legacy plan that includes the community — along with the producer's traditional heirs.
"They also need to think about the community — that has been important to them, has surrounded them during their lifetime — as an heir," Carlson said.
For farmers interested in donating to charity, either immediately or as a legacy once they pass, there are different options. And it isn't just cold, hard cash at hand. Farm assets hold value as well, and can be used for charitable causes.
Probably the easiest is a donation of grain. A farmer can just tell the elevator to which they are delivering that a specific load of grain is going to a specific charity, such as WACF. The elevator sells the grain and gives the proceeds to the charity. Many elevators have a list of charities on hand.
"It is just like a cash gift," Carlson said. "It is an underutilized tool, actually, and it is something that is real value to our producers that they can use."
Equipment can also be used as a charitable gift. Recently, WACF worked with a farmer who wanted to sell a combine. If the farmer had sold it and kept the proceeds, he would have had a sizable capital gains bill to pay the IRS. Instead, the farmer auctioned the equipment off and, with the proceeds, started a donor adviser fund with WACF. Now the farmer can donate the money to causes he cares about with the foundation acting as the intermediary.
Gifts of land are also a popular way for ag producers to donate.
"It really is prudent for ag producers to spend some time with their accountant to really start thinking strategically — what tools do they have in their tool box that can be put to work and do good in the community," Carlson said.
It can also be important for a producer to work with a charity like WACF.
The foundation is both a community charity itself and can also act as intermediary between a donor and the charities they want to assist. Sometimes, smaller charities aren't set up to receive a big gift all at once. The foundation can take over the responsibility of donating to that specific charity annually until the total has been received. The foundation also can take away a lot of the stress and challenges that come from a nonprofit such as a church having to accept, sell and distribute a gift of land or other donation.
"We can assure the gift is stewarded in the way the producer would have done themselves," Carlson said.
If an ag producer doesn't know to whom or what to donate, but wants to help the community as a whole, they can always donate to WACF itself.
Every year, the foundation gives out grants to various community ventures. One such example was the building of the Destination Playground at Willmar's Robbins Island Regional Park.
"That is what the community foundation exists to do," Carlson said. "We are a permanent vehicle, and our board is in charge of meeting the needs of the community in a perpetual way."
As the baby boomers age and are replaced with younger, but smaller generations, there is a worry that nonprofits and charitable giving might suffer.
While the younger generations might want to donate to charity, either monetarily or by giving their time, there are many challenges in the way. This includes a much busier way of life and a change in how assets and money is earned and kept.
That is especially true in agriculture as family farms are replaced with mega corporate farms, where the main office is based miles or countries away. There is also the common story where the heirs of a farmer no longer live in the local community and don't want to take over the farm. Instead, the farm is sold and the money goes to those heirs living elsewhere.
"The wealth that was grown here is leaving here and it is not helping to float the boats locally," Carlson said. "We are asking everyone — whether they are an ag producer or not — to consider the community an additional heir."
Carlson hopes people don't forget the important part nonprofits play in helping the local communities. Sometimes they are all that separates a family or community from disaster. To continue those good works, nonprofits will continue to need help.
"We care too much to let everything wither on the vine. I think there is a space for people to really think hard on the value nonprofits bring to the community, the value of quality of life," Carlson said.
Carlson and Dietrich want to make it clear that this isn't a cash grab by the WACF, or that they want ag producers to leave all their farm wealth to charity. Even if only 5% of the wealth transfer is left to charity, it would still mean millions of dollars in charitable giving.
"Farmers have donated land for the church and the school for generations. There is nothing new here," Carlson said.
The team at WACF will continue to be there to help farmers, producers and others to remain important supports of the community, even when they are no longer here.
"We exist to help make sure people are engaged to do good work and building community on the ground through living legacy and lasting legacies," Carlson said. "That is our job."