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Professional advisors working with closely held business owners often play a central role in helping their clients navigate liquidity events with both technical precision and strategic foresight. When a client is contemplating the sale of a business interest, the Rhode Island Foundation can be a valuable philanthropic partner, offering tools that integrate charitable intent into transaction, tax, and estate planning strategies.

As Rhode Island’s community foundation, we maintain the capacity and experience to accept gifts of non-cash assets, including interests in privately held businesses. Subject to proper structuring and valuation, this approach can help mitigate capital gains exposure while providing an income tax charitable deduction.

From a legal perspective, timing and documentation are critical. The Foundation works closely with donors and their counsel to conduct timely due diligence, review governing documents and transfer restrictions, and coordinate valuation and gift acceptance.

Beyond transactional considerations, proceeds from the sale can be housed in a donor-advised fund at the Foundation, allowing clients to extend the impact of a liquidity event over time. Advisors often find this structure helpful for clients who want flexibility in grantmaking, the ability to involve future generations, and coordination with broader estate and legacy planning objectives.

The Foundation recently worked with a couple who decided to sell a highly appreciated commercial property that was owned by a Limited Liability Company of which they were members. By gifting a portion of their LLC membership to the Foundation – before the sale of the property – the donors were able to reap significant tax advantages while pursuing their philanthropic goals through a donor advised fund at the Foundation. They were so happy with the outcome that they are selling additional property as a way to further fund their philanthropy.

For advisors counseling business owners on exits, early engagement with the Rhode Island Foundation can expand planning options, reduce last-minute complexity, and help clients convert a significant business milestone into a lasting investment in the Rhode Island community.

Information contained in this piece is for the general education and knowledge of our readers. It is not designed to be a substitute for professional tax or legal advice.