If you work with business owners, it’s worth recognizing when a “charitable exit” opportunity arises. These rare but rewarding situations allow a client to give closely-held business interests to charity before a sale—often creating significant tax and philanthropic benefits.
How it works
When a business owner donates shares to a donor advised fund at the Community Foundation before a sale is under negotiation, the gifted portion avoids capital gains tax. The donor receives a charitable deduction for the appraised value, removes those shares from their taxable estate, and ensures the proceeds will fuel future charitable giving once the sale closes.
Why timing matters
To qualify for these benefits, the gift must occur before any formal sale discussions, shareholder votes, or letters of intent. A qualified appraisal is required, and gifts are most effective when made to a public charity—like the Community Foundation—rather than a private foundation.
Our role
The Community Foundation reviews each potential gift to ensure compliance and feasibility, helping you and your client navigate the process smoothly.
Whether this scenario comes up once or often in your career, remember: the earlier you involve the Community Foundation, the more options you’ll have to maximize your client’s tax efficiency and community impact.