As an attorney, CPA, or financial advisor, you likely work with clients who own a family business. You may also recognize that strategic philanthropy can play a meaningful role in succession planning as clients prepare for an eventual exit. But how does that strategy take shape in a real client conversation?
Consider this scenario.
When Mark and Elaine come into your office to update their estate and financial plans, retirement is only part of the conversation. At 66 and 64, they are financially secure, but they are also beginning to explore the future of the family business. After more than three decades of ownership, they are considering a potential sale within the next few years.
As you review income projections, portfolio sustainability, and the company’s future structure, the numbers tell a reassuring story. A sale would more than support Mark and Elaine’s long-term needs. But another question begins to surface: what happens to the family’s identity and connection to the community after the business changes hands?
“Our two adult children are not active in the business,” Mark explains. “A third-party sale is inevitable, and we are comfortable with that financially, but it’s a gut punch emotionally. The company’s name carries a lot of weight in the community. What happens to that identity if we sell?”
Elaine shares a different concern. “I want our children to stay connected after a liquidity event,” she says. “For years, company events and trips have been where we’ve all gathered. I hate to think of that disappearing overnight.”
This is where you introduce a broader planning lens. A business sale is not only a financial event. It can also shape family relationships, community connections, and long-term legacy.
You explain that philanthropy, structured intentionally before a sale, can help bridge that transition. One option is for Mark and Elaine to transfer shares of the business to a donor-advised fund at Community Foundation Tampa Bay before any potential transaction takes place. If the business is later sold, a portion of the proceeds would flow into the donor-advised fund.
The tax advantages can be significant. By donating a portion of closely held stock before a legally binding sale process begins, Mark and Elaine may qualify for an income tax deduction, subject to AGI limitations, based on the stock’s fair market value at the time of the gift. In addition, proceeds attributable to the shares held by the donor-advised fund are generally not subject to capital gains tax when the business is sold.
Just as importantly, establishing a donor-advised fund before the sale allows the family to begin shaping a shared charitable mission while the business is still operating. Philanthropy can provide continuity. Even if ownership changes, the family’s commitment to the community can remain active and visible.
You recommend inviting the Community Foundation team to the next meeting. Alongside the legal, financial, and tax planning process, the Community Foundation can help facilitate conversations around questions such as:
- What causes reflect the values that built the business?
- How should the family’s legacy be represented after the sale?
- How can the next generation stay meaningfully involved?
The Community Foundation can also help guide family conversations, provide insight into community needs, and support multigenerational philanthropy planning. Importantly, this gives the next generation an opportunity to engage before a liquidity event occurs. Rather than waiting for proceeds, they can begin working together to recommend grants, evaluate community impact, and carry forward the family’s values.
In many cases, philanthropy becomes a way to strengthen shared decision-making and maintain family connection during a significant transition.
Mark and Elaine embrace the idea.
“This makes a future sale feel less like an ending and more like a transition,” Elaine says.
Their situation reflects one of many scenarios business owners may encounter as they prepare for succession. With thoughtful planning and a philanthropic structure developed in coordination with Community Foundation Tampa Bay, a family’s values, influence, and sense of connection can continue long after a business sale.
If you would like to explore how charitable planning can support your clients through business transitions, the Community Foundation team is here to help.
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.
Recent Comments