Business transitions are among the most significant financial events your clients will ever experience. In the coming decade, the United States will see the largest intergenerational transfer of privately held business wealth in history. Many baby boomer owners are retiring, selling, or transitioning their companies, and for many, the business represents 70 to 80 percent of their net worth.
As owners begin to consider succession, they are thinking about more than valuation and deal terms. They are thinking about legacy: their employees, their community, their name, and the values that shaped the business. When charitable planning is introduced early, it can align those personal priorities with financial strategy in a thoughtful and tax-efficient way.
Consider a hypothetical client, Alex Monroe. When Alex casually mentioned he might sell his company, you paid attention. You knew he had supported charitable causes over the years. You also understood that the company had appreciated significantly, creating substantial unrealized capital gains. A sale without planning would likely result in a large capital gains tax, reducing the proceeds available for reinvestment, family goals, or philanthropy.
Many business owners move quickly once a potential buyer emerges, setting an asking price or signing a letter of intent. In doing so, they may miss planning opportunities that must occur before formal sale activity begins.
In Alex’s case, you recommended exploring a charitable strategy early. By contributing a portion of his closely held shares to a donor advised fund at Community Foundation Tampa Bay before any binding sale agreement was in place, Alex could potentially achieve several objectives. If structured and timed properly, the donor advised fund could sell the shares without incurring capital gains tax on the gifted portion. Alex could also receive a charitable deduction for the fair market value of the shares, subject to applicable rules, and remove the gifted interest from his taxable estate.
These strategies require careful coordination. In addition, gifts of closely held business interests are generally more advantageous when directed to a public charity rather than a private foundation due to differences in deductibility limits and tax treatment.
For advisors serving business owners, the key takeaway is timing. The opportunity to integrate philanthropy into a transition often closes once deal documents are signed. Raising the conversation early allows you to help clients preserve more of the value they have built while advancing causes that matter to them. Also, a qualified appraisal is necessary for non-cash charitable gifts.
Community Foundation Tampa Bay works alongside attorneys, CPAs, and financial advisors to evaluate proposed gifts of closely held interests, ensure compliance, and structure charitable vehicles that align with a client’s transition goals. With thoughtful planning, a business exit can do more than generate liquidity. It can strengthen a client’s legacy and create lasting impact in the community.
Denyve Boyle, CAP®, CFRE, MBA is the Associate Vice President of Philanthropy at Community Foundation Tampa Bay. She is an experienced, highly motived professional that inspires philanthropy throughout the community by educating and engaging individual donors, corporations, and professional advisors. She can be reached by phone at (813) 609-4868 or via db****@********ay.org.
About Community Foundation Tampa Bay
Community Foundation Tampa Bay is the leading philanthropic investor in the Tampa Bay area. Founded in 1990, Community Foundation Tampa Bay connects philanthropists, nonprofits, business leaders, and community leaders to drive fundamental changes in Citrus, Hernando, Hillsborough, Pasco, and Pinellas counties. Over the past 35 years, Community Foundation Tampa Bay and its donors have fostered collaboration, sought creative solutions, and invested more than $450 million in nonprofit organizations to help our community thrive. Learn about Community Foundation Tampa Bay at www.cftampabay.org.
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