If you are considering a private business sale, including charitable giving in your exit strategy can help mitigate your tax liability and benefit your community. Greater Horizons’ complex assets team has decades of experience working with private business owners who have turned their business interests into charitable dollars.Our team’s priority is to maximize the charitable dollars in your donor-advised fund, which you will use to make donations to your favorite causes or charities after the asset is liquidated.
Learn key considerations for donating privately held business interests to a donor-advised fund.
Hear our process for accepting gifts of private business interests to donor-advised funds.
First, you’ll need to determine whether the private business interest is transferable to charity. Greater Horizons can generally accept minority interests in most private businesses, including C-Corps, Limited Liability Companies, Limited Partnerships and S-Corps. However, we cannot accept general partnerships. When your gift is complete, Greater Horizons will become an owner, so it’s important that the company is aware of a possible donation, as it may require special approval.
Your tax advisor will be a key resource for exploring all aspects of your gift, including tax benefits and implications; gift timing, especially if there’s already a sale on the horizon; and a qualified appraisal, which is required by the IRS. In some instances, it may make more sense from a tax and transaction perspective to donate cash proceeds after a sale, instead of giving private business interests before a sale.
For more details, review our video, Exploring Private Business Interest Gifts: Key Considerations.
Contact Greater Horizons to discuss the potential gift and exit strategy. A member of our complex assets team will ask you to complete our business donation form to provide general information about your business. We’ll also ask you to provide your business documents, which may include your governing legal documents and your most recent financial statement and tax return.
Rest assured that we will keep everything confidential throughout the entire process. We are happy to sign a non-disclosure agreement if requested.
If you don’t currently have a donor-advised fund at Greater Horizons, you’ll need to establish one to accept the gift. You can start the process of opening a donor-advised fund using our online form. There is no minimum balance required for the fund, and we will not assess any fees to the fund until after we receive your gift.
You will work with your counsel to prepare transfer documents for Greater Horizons to review and sign. You will also review and sign a custom gift agreement prepared by Greater Horizons that will include an indemnification provision and information about Greater Horizons’ fees.
If you don’t already have a qualified appraisal for your gift, you’ll need to have one completed and sent to Greater Horizons, ideally by January 31 of the year following your gift.
You’ll need to prepare IRS Form 8283, which you and your qualified appraiser will sign, and send to Greater Horizons for signature.
Greater Horizons will work with you on the timing and liquidation of the interest. We will need to know if there is a potential third-party sale or company redemption so that we can review and sign any purchase agreements and consents. We’ll also ask for details regarding the distribution schedule, final tax documents and confirmation of the dissolution of the business.
You can then use your donor-advised fund to provide grants to any 501(c)(3) public charity in the U.S., including educational and religious institutions, all on your own timeline.
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Our complex assets team is available to discuss donating privately held business interests with you.
Greater Horizons does not provide tax, legal or accounting advice.This is for informational purposes only.
