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Planning a benevolent exit

Planning a benevolent exit

If you’re a business owner, at some point you may begin thinking about an exit strategy. Before you start putting out feelers to potential acquirers, you may wish to explore the benefits of contributing an ownership interest in your business to a donor-advised fund or other type of fund at the FM Area Foundation. 

If you’ve owned your business for several years–or decades–you could be sitting on substantial unrealized capital gains thanks to the increasing value of the business over time. Upon a sale, capital gains tax will be triggered, reducing the proceeds you get to keep. No capital gains tax will apply, however, to the sale of any portion of the business owned by your donor-advised fund. Because of the favorable rules governing the taxation of charitable organizations, your donor-advised fund is likely to net 100 cents on the dollar for the portion it owns. The sale proceeds received by the donor-advised fund are immediately available for you and your family to enjoy by recommending grants from the fund to favorite charities, in whatever amounts and according to whatever schedule aligns with your philanthropic values. 

If you own a business and like the idea of potentially giving a portion of the business to a donor-advised fund or other type of fund at the Foundation, please reach out. The team at the FM Area Foundation can help you and your advisors evaluate your options and ultimately prepare for the transaction, including reminding your advisors to secure a proper valuation for the charitable deduction at the time a portion of the business interest is contributed to your donor-advised or other type of fund. 

Finally, be careful not to start negotiating for your company’s sale before you’ve talked with the FM Area Foundation and your advisors. Otherwise, you might get caught in the IRS’s step transaction trap that is a risk with any pre-sale gift to charity of real estate, closely-held stock, or other alternative asset.    



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You have the power to make a positive impact in two ways. You can donate to one of our 500 existing funds, or you can contact us to create a charitable fund that matches your values. Whichever route you choose, we are humbled by your trust and grateful for your kindness and generosity.

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