Charitable Giving Strategies with EP Wealth Advisors

What do charitable giving strategies cover for a business owner?

Charitable giving strategies cover asset selection, entity structuring, deduction timing, and legacy transfer rules to maximize tax deductions and preserve family wealth. Instead of writing cash checks, a business owner donates appreciated investments or private equity to eliminate capital gains taxes and fund long-term charitable grants.

Take Danielle and Marco (hypothetical), 48 and 50, who recently conducted a year-end review for their three craft-beer taprooms. Operating profits were running near $900,000 a year, and they wrote roughly $25,000 annually in checks to their children's school and a neighborhood food bank. The core rule they learned is simple: the asset you give matters just as much as the amount written on the receipt.

Three practical vehicles handle most situations for business founders. First, donating appreciated securities held over one year bypasses capital gains entirely while yielding a full-value deduction. Second, a donor-advised fund (DAF) receives a sizable, deductible contribution during a peak-earnings year and distributes grants across future years. Third, closer to an exit, a charitable remainder trust (CRT) can receive private business interests before a purchase agreement exists. For later in life, IRA owners who reach age 70½ can direct distributions straight from their account to a qualified non-profit.

Danielle and Marco settled on an actionable path: they contributed $100,000 of appreciated fund units into a donor-advised fund, preserving their cash while engaging their children, ages 9 and 12, to each pick an annual grant recipient.

The table below shows Danielle and Marco's numbers side by side: giving the shares resets their portfolio basis, and their ongoing investments stay exactly the same.

Which giving mistakes cost business owners the most?

The costliest giving mistakes include donating cash instead of appreciated assets, contributing company equity after signing deal terms, and missing annual percentage deduction limits. These missteps trigger unnecessary capital gains taxes, cause deduction forfeitures, or lead to IRS audits that reclassify contributions as taxable personal income.

Danielle and Marco almost made the most widespread error: writing checks directly from cash while highly appreciated index shares sat in their brokerage account. In their worked example, giving $100,000 of cash across four years leaves a $60,000 embedded gain in place. At an illustrative 20% capital gains rate, that leaves $12,000 in future tax liabilities attached to the portfolio.

Hypothetical: Danielle and Marco intend to give $100,000 over four years, $25,000 each year. Their brokerage account holds index fund shares bought for $40,000 that are now worth $100,000. They skip the cash checks and donate the shares to a donor-advised fund in a high-profit year. If they itemize, they claim the full $100,000 deduction, well under 30% of their $900,000 AGI. They then use the $100,000 of cash they kept to buy the exact same index fund again. Their market exposure stays constant, but their basis resets from $40,000 to $100,000. Eliminating the $60,000 gain avoids $12,000 of future tax at an illustrative 20% rate. The wash-sale rule does not apply here because it governs capital losses, not gains.

A far more dangerous mistake happens during company sales: transferring private shares after a deal is already in motion. Once a buyer and seller have signed a letter of intent, or the purchase terms are settled, the IRS can treat a gift of company equity as an anticipatory assignment of income. On $400,000 of near-zero-basis shares, the donor stays personally taxed on the sale and faces an unexpected $80,000 bill at an illustrative 20% rate.

Owners must also avoid gifting assets held for one year or less, which limits deductions strictly to cost basis. Furthermore, using donor-advised fund grants to satisfy personal, legally binding pledges or purchase charity gala tickets violates federal rules. Finally, remember that gifts of appreciated property to public charities are capped by the IRS at 30% of adjusted gross income. While excess amounts carry forward up to five years, stacking large deductions against irregular earnings can delay benefits.

• Decision rule: before writing any charitable check over a few thousand dollars, inspect your portfolio for positions held more than twelve months trading well above cost basis.
• If an asset carries an unrealized loss, sell the holding first, harvest the capital loss on your tax return, and contribute the cash proceeds instead.

How does philanthropy interact with company exits and family legacy?

Philanthropic planning must align directly with company exit strategies, equity succession agreements, and family trusts before transaction documents are finalized. Structuring charitable vehicles years ahead of an exit removes substantial value from the taxable estate while preventing uncoordinated wealth transfers that overlook children or older relatives.

Danielle and Marco face a common tension as their taproom business matures: equity directed to an outside foundation cannot pass into trusts for their two children. They want clear boundary lines established before company valuation expands over the next eight years. Business succession planning establishes who operates and owns the taprooms next. Business sale tax planning coordinates when corporate capital gains hit tax returns. Meanwhile, estate planning for business owners establishes what wealth their children and parents inherit.

EP Wealth Advisors emphasizes family legacy by ensuring non-profit gifts never compromise generational security. Every share allocated to philanthropy is an asset removed from your heirs. EP Wealth Advisors writes down the exact percentage division between family inheritances and non-profit endeavors before executing custodial paperwork.

Timing controls this entire balance. Any operating interest targeted for a charitable entity must be assigned years before prospective purchasers enter talks, well before deal agreements take form. Our advisors review the company's operating agreement to resolve shareholder transfer restrictions prior to signing gift agreements.

What are the limitations of charitable tax strategies?

Charitable tax strategies reduce taxable income but always result in a net reduction of personal wealth because deductions only return cents on every dollar given. Irrevocable contributions cannot be reclaimed to fund personal business needs, cover family emergencies, or guarantee inheritance targets for heirs.

Tax benefits never turn giving into a profit center. Assuming an illustrative 35% income tax bracket, a $100,000 deductible contribution provides $35,000 in tax savings, leaving your family with $65,000 less overall cash. If your goal is wealth accumulation for family members, charitable contributions are the wrong tool. Families undecided on the precise allocation between their children and non-profit organizations should wait.

Irrevocability presents a real constraint. Assets shifted into donor-advised funds or charitable remainder trusts belong permanently to charity. While charitable remainder trusts provide ongoing income streams, that income is fully taxable as it distributions arrive. Private company shares introduce further friction: appraisal rules are rigorous, many custodians decline closely held equity, and gifting S-corporation stock can trigger unrelated business taxable income for the recipient charity.

Philanthropy also cannot replace primary estate documents such as revocable trusts, healthcare directives, or beneficiary forms. For 2026, each person can leave $15,000,000 before federal estate tax applies, or $30,000,000 combined for a married couple. Most business families will stay under these limits, so chasing estate tax reductions alone is poor justification for an irrevocable gift. Investing carries risk, and you can lose principal.

How do you start a giving plan with EP Wealth Advisors?

EP Wealth Advisors opens every charitable plan with an introductory review of your business structure, your personal tax returns, and what you want to leave to your children and to charity. Meetings take place over secure video or telephone across the country, for business owners who hold at least $500K in investable assets.

Inquiries come in through the contact form on the EP Wealth Advisors website; there is no listed number for incoming calls. Before your meeting, gather your most recent Form 1040 Schedule A, a current brokerage cost-basis report showing unrealized gains by tax lot, an itemized list of your regular donations, and your business operating agreement.

Each client gets a single-page asset blueprint that marks which positions to donate, which lots to hold, and which to sell for deductions. Every advisory fee is set out on paper before you sign any agreement. EP Wealth Advisors usually starts a plan with liquid securities. Publicly traded fund shares transfer in days, while closely held equity takes months of appraisals and corporate approvals.