1. Charitable Giving Strategies for Business Owners

Charitable Giving Strategies for Business Owners

Your Business. Your Legacy.

Pay it forward. The phrase is often used by people with philanthropic goals. Successful entrepreneurs who own interests in closely held corporations, S-corporations or shares in a professional corporation have a unique opportunity to “pay it forward” they may not have thought about.

As you engage in business succession planning, you can meet your philanthropic goals with a charitable gift of an interest in your business. This strategy can facilitate the transfer of a family-owned business with lower tax exposure, contribute to your retirement income and create a permanent charitable legacy.

How It Works

Privately held business interests can be given as an outright gift. You may be able to make a gift of privately held stock or business interests as long as the constituting documentation for the business permits additional owners. (The IRS, however, says there can be no prearranged contract or agreement for us to sell the stock or for the corporation to buy it.) You will need to value the interest in the business entity with a qualified appraisal.

A gift of your privately held stock or business interests takes careful planning. Make sure to consult your professional legal and tax advisors to see how to maximize the benefits of this tax-efficient strategy for making a difference.

This Gift Is Right For You If:

  • You would like to avoid capital gains taxes on the shares or interests you give to The University of Texas Health Science Center at Houston.
  • You would like to receive a federal income tax deduction for the full appraised value of the gift.
  • You would like to make an impact.

Your Next Steps

Gifts of business interests can be complex. At UTHealth Houston, we are committed to ensuring the proposed gifts are in the best interest of both you and The University of Texas Health Science Center at Houston. We encourage you to work with your legal and financial advisors when considering a gift of business interest.

Click on the links below to see the additional ways to fund your gift:

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Next Steps

  1. Contact the Planned Giving Team at 713-500-3382 or plannedgiving@uth.tmc.edu for additional information on using your business interests as a charitable gift.
  2. Seek the advice of your financial or legal advisor.
  3. If you include UTHealth Houston in your plans, please use our legal name and federal tax ID.

Legal name: Board of Regents of The University of Texas System for the benefit of The University of Texas Health Science Center at Houston
Address: Office of Development
Estate and Gift Planning
7000 Fannin, Suite 1200
Houston, Texas 77030
Federal tax ID number: 30-0710145

Personal Estate Planning Kit

Our Top Free Resource

This comprehensive estate planning kit helps you protect your family and establish your legacy. FREE!

Download our FREE Personal Estate Planning Kit

A charitable bequest is one or two sentences in your will or living trust that leave to The University of Texas Health Science Center at Houston a specific item, an amount of money, a gift contingent upon certain events or a percentage of your estate.

an individual or organization designated to receive benefits or funds under a will or other contract, such as an insurance policy, trust or retirement plan

"I give to The University of Texas Health Science Center at Houston, a nonprofit corporation currently located at Office of Development
Estate and Gift Planning
7000 Fannin, Suite 1200
Houston, Texas 77030, or its successor thereto, ______________ [written amount or percentage of the estate or description of property] for its unrestricted use and purpose."

able to be changed or cancelled

A revocable living trust is set up during your lifetime and can be revoked at any time before death. They allow assets held in the trust to pass directly to beneficiaries without probate court proceedings and can also reduce federal estate taxes.

cannot be changed or cancelled

tax on gifts generally paid by the person making the gift rather than the recipient

the original value of an asset, such as stock, before its appreciation or depreciation

the growth in value of an asset like stock or real estate since the original purchase

the price a willing buyer and willing seller can agree on

The person receiving the gift annuity payments.

the part of an estate left after debts, taxes and specific bequests have been paid

a written and properly witnessed legal change to a will

the person named in a will to manage the estate, collect the property, pay any debt, and distribute property according to the will

A donor advised fund is an account that you set up but which is managed by a nonprofit organization. You contribute to the account, which grows tax-free. You can recommend how much (and how often) you want to distribute money from that fund to UTHealth Houston or other charities. You cannot direct the gifts.

An endowed gift can create a new endowment or add to an existing endowment. The principal of the endowment is invested and a portion of the principal’s earnings are used each year to support our mission.

Tax on the growth in value of an asset—such as real estate or stock—since its original purchase.

Securities, real estate or any other property having a fair market value greater than its original purchase price.

Real estate can be a personal residence, vacation home, timeshare property, farm, commercial property or undeveloped land.

A charitable remainder trust provides you or other named individuals income each year for life or a period not exceeding 20 years from assets you give to the trust you create.

You give assets to a trust that pays our organization set payments for a number of years, which you choose. The longer the length of time, the better the potential tax savings to you. When the term is up, the remaining trust assets go to you, your family or other beneficiaries you select. This is an excellent way to transfer property to family members at a minimal cost.

You fund this type of trust with cash or appreciated assets—and may qualify for a federal income tax charitable deduction when you itemize. You can also make additional gifts; each one also qualifies for a tax deduction. The trust pays you, each year, a variable amount based on a fixed percentage of the fair market value of the trust assets. When the trust terminates, the remaining principal goes to UTHealth Houston as a lump sum.

You fund this trust with cash or appreciated assets—and may qualify for a federal income tax charitable deduction when you itemize. Each year the trust pays you or another named individual the same dollar amount you choose at the start. When the trust terminates, the remaining principal goes to UTHealth Houston as a lump sum.

A beneficiary designation clearly identifies how specific assets will be distributed after your death.

A charitable gift annuity involves a simple contract between you and UTHealth Houston where you agree to make a gift to UTHealth Houston and we, in return, agree to pay you (and someone else, if you choose) a fixed amount each year for the rest of your life.
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