Using a Donor Advised Fund
A Donor Advised Fund is a charitable account that can receive donated company shares, proceeds, or other assets. Once contributed, the donor can recommend grants to charitable organizations over time.
Value the business
Use the business valuation to determine what a future gift could look like and how it may fit into the owner’s transaction goals.
Donate before the sale
Donate company shares or a portion of the ownership interest to a DAF before the sale is completed.
Potential tax benefit
The contributed shares may avoid tax on the increased value and may create an immediate charitable deduction.
Support charities later
After funding the DAF, the donor can recommend grants to selected charities over months or years.
Key Benefits
Flexibility
Pick which charities receive support later, rather than making every decision at the time of the transaction.
Long-term impact
One large contribution can be granted out over many years, creating an ongoing charitable giving plan.
Confidential giving
DAFs can allow charitable contributions to be made with added privacy, depending on how grants are structured.
Multiplier opportunity
If a seller contributes a percentage of transaction proceeds to a DAF, TKO Miller could also contribute to its own DAF, multiplying the overall charitable impact.
Family-Owned Business Worth $100 Million
Assumptions from the notes: 10% ownership interest, cost basis of $0, current value of $1 million, and a 30% capital gains rate.
Option A: Donate shares to a DAF before sale
Using appreciated shares can create meaningful tax efficiency while funding charitable giving.
Option B: Sell first, then donate cash
This may still produce a deduction, but the capital gains tax may already have been triggered.
Timing and Deduction Limits Matter
Complete pre-sale planning early
The donation should be made before signing an LOI to avoid the IRS viewing it as part of a pre-arranged sale.
Confirm deduction limits
Overall deductions to a DAF may be limited based on adjusted gross income. Confirm the applicable limit with a tax advisor.