Your July Content
It happened so quickly, from gala season right into the heat of summer. The summertime pace may change for attorneys, CPAs, financial advisors, business brokers and other colleagues while clients are on vacation and shifting their schedules—but you may be busier than ever as you address real-time opportunities and gear up for fall transactions and year-end planning. As always, Gulf Coast is here to help you build charitable plans for your clients. We’ll also keep you up to date on important developments even during this “slower” time of year.
3 Scenarios to Consider with IPOs & Charitable Planning
If you keep an eye on initial public offerings (IPOs), it’s been an exciting few weeks, especially if your clients are involved. As you work with clients who may hold stock that’s going public, or if your clients are considering investing in companies involved in IPOs, besides reviewing all angles of the client’s financial and estate plan that may be impacted, don’t forget the charitable planning aspects.
You may be curious about how IPOs and charitable planning might come together for your clients and how Gulf Coast can help! Consider three scenarios for inspiration
Scenario 1
Founder or executive with highly appreciated stock
A founder or executive approaching an IPO may be holding shares with very low basis and significant expected appreciation. Depending on timing, restrictions, and tax rules, contributing a portion of appreciated shares to a fund at Gulf Coast may help your client support charitable goals while potentially reducing exposure to capital gains tax. A donor advised fund, field of interest fund, or designated fund, for example, can allow the client to create a long-term charitable strategy while maintaining flexibility after the IPO dust settles.
Scenario 2
Employee with a sudden wealth event
As recent SpaceX coverage illustrates, IPOs can create thousands of newly wealthy employees who may never have needed sophisticated charitable planning before. These clients may be juggling concentrated stock positions, tax liabilities, estate planning needs, and family conversations about wealth. A donor advised fund at Gulf Coast can provide a simple, organized way to set aside charitable dollars in a high-income year and then recommend grants over time as the client becomes more intentional about giving. This strategy is called “bunching.”
Scenario 3
Investor or family seeking legacy and multigenerational community impact
Some clients who benefit from IPO activity may already have significant wealth and want to use the liquidity event to formalize a philanthropic legacy. These clients may be good candidates for multiple charitable funds, such as a donor advised fund for flexible family grantmaking, a scholarship fund to support education, and an unrestricted or field of interest fund to address changing community needs over time. Gulf Coast can work alongside you and your client’s full advisory team to align tax planning, family goals, and charitable impact.
Finally, and importantly, what’s the common thread across all three scenarios? Timing. Once an IPO, sale, or lock-up expiration is underway, some planning options may be limited. Advisors who ask charitable questions and loop in the team at Gulf Coast early can help clients turn a major financial event into meaningful support for the causes they care about.
4 Questions & 1 Word of Caution on Succession Planning
Business succession planning is becoming increasingly important as a growing share of American wealth is tied to privately held companies. According to the National Center for the Middle Market at The Ohio State University, approximately 200,000 U.S. companies generate annual revenues between $10 million and $1 billion. At the same time, a recent article by The Wall Street Journal highlighted the growing ranks of wealthy Americans whose fortunes were built through private business ownership and equity growth. For many of these business owners, a succession event may represent the largest liquidity event of their lifetime.
What is most important for advisors to know?
The single most important takeaway is that charitable planning should be part of the succession conversation as early as possible. Whether a client is preparing to sell a closely held business, transfer ownership to family members, explore an employee stock ownership plan (ESOP), or simply begin thinking about life after the company, charitable planning deserves a seat at the table early in the process. Too often, philanthropy enters the conversation only after a transaction is in the works or already complete. By then, some of the most effective planning windows may be closed. By asking the right questions early, you can help your clients support meaningful causes, potentially reduce taxes, involve family members in giving, and create a lasting charitable legacy.
What questions should I ask my clients?
Here are four “must ask” questions and why they are important, plus a word of caution.
Many of our clients explore giving in their business succession plan to cause areas that are important to them, is this something you would like more information about?
Many business owners have most of their wealth tied up in their companies. When a sale or ownership transition occurs, the resulting tax consequences can be significant. In some situations, contributing a portion of closely held business interests to charity before a transaction may allow a client to support charitable goals while potentially reducing capital gains tax exposure. Again, timing is key. Once letters of intent are signed or a transaction becomes binding, certain charitable planning opportunities may no longer be available. That's why advisors should raise charitable planning discussions long before the deal reaches the finish line.
Remember that charitable planning is not limited to third-party sales. Clients considering ESOPs, family transfers, recapitalizations, redemptions, or other succession strategies may also benefit from exploring charitable opportunities.
Are there causes or organizations that helped shape your business, your employees, or your family's values?
Business succession often prompts reflection. Many owners begin thinking not only about what they have built, but also about the communities, schools, nonprofits, and organizations that contributed to their success. This conversation can help clients identify charitable priorities that might otherwise be left unexplored. It also creates an opportunity to discuss how a business transition could become a catalyst for meaningful community impact rather than simply a financial event.
Would you like your children or grandchildren to be involved in charitable decisions after the transition?
For many families, succession planning is about more than transferring wealth. It is also about passing along values. A donor advised fund at Gulf Coast can provide a flexible way for family members to participate in charitable decisions over time. Rather than making all charitable decisions immediately after a sale, a family can establish a fund, potentially involve multiple generations in recommending grants, and create a structure that supports ongoing conversations about philanthropy and community impact. Our Philanthropic Advisors are available to help guide family discussions around charitable giving, making it easier to engage the next generation and build a shared vision for philanthropy and community impact.
Are you interested in creating a charitable fund that can support multiple organizations over time?
Many business owners want to make a significant charitable commitment during a liquidity event but are not yet ready to determine exactly which organizations should receive support. A donor advised fund can help bridge that gap. Clients can contribute assets during a high-income year, receive a charitable deduction if eligible, and then recommend grants to charitable organizations over time. This flexibility allows clients to separate the timing of a charitable contribution from the timing of individual grant decisions.
For clients interested in creating a lasting charitable legacy, Gulf Coast also offers the option to establish an endowed donor advised fund. This approach allows families to experience the joy and impact of giving during their lifetimes while creating a permanent charitable resource that can continue supporting causes they care about for generations to come. An endowed donor advised fund can help kickstart a multigenerational legacy of philanthropy, ensuring a family's values and community impact endure well beyond today.
A Word of Caution
Clients may assume a private foundation is the best vehicle for their charitable giving goals alongside a business exit or succession plan. However, private foundations can be subject to complex rules on self-dealing, business holdings, distributions, and investments, along with unfavorable tax deductibility rules for gifts of closely held stock. For many business owners, a donor advised fund or a supporting organization can provide a simpler alternative with significantly less administrative burden and, in many cases, more favorable tax treatment.
We’re happy to work alongside you and your clients to explore charitable planning opportunities. Please reach out anytime you encounter a pending business succession situation—or preferably a potential business succession situation!
2 Recent Articles Worth the Read
Gulf Coast keeps an eye on trends, research, legislative developments, and thought leadership at the intersection of charitable planning, estate planning, and wealth management. Here are two recent articles we think are especially relevant for attorneys, CPAs, and financial advisors serving charitable clients.
Charitable Planning Beats AI?
In the article "Why Charitable Efforts Are the Advisor's Edge in an AI-Driven World" appearing in Financial Advisor Magazine, the author suggests that charitable planning may become an increasingly significant way for advisors to differentiate themselves as artificial intelligence automates more traditional planning and investment functions. The article argues that conversations about philanthropy, legacy, and personal values create opportunities for advisors to build deeper client relationships in ways that technology cannot easily replicate, reinforcing the advisor's role as a trusted counselor rather than simply a technical expert.
Have You Asked Frank™?
We know that AI cannot replace your role as a trusted advisor, but Gulf Coast always wants to provide resources to help your knowledge continue to grow. That’s why we’ve partnered with Planned Giving Interactive to bring you Frank™, a completely secure AI tool to utilize in planned giving and estate planning scenarios and broaden your knowledge on even the most infrequent charitable giving questions.
Ask Frank™ your initial questions and then take it a step further with Gulf Coast!
Donor Advised Funds Continue to Grow. . .
The article "DAF Fundraising Report: Nonprofit Takeaways" on Candid’s website highlights findings showing that donor advised fund donors are often highly engaged philanthropists who give repeatedly and frequently make larger charitable gifts over time. Understanding these giving patterns can help advisors identify opportunities to deepen client conversations around charitable goals, legacy planning, and community impact. For advisors working with charitable clients, these insights underscore the value of partnering with Gulf Coast to help clients develop thoughtful, long-term philanthropic strategies.
What’s the takeaway?
Remember that we can provide a wide range of solutions for your clients’ charitable giving needs, including donor advised funds, legacy planning, information about community needs and nonprofits, and ways to involve family members in philanthropy. We are here to support you as you serve your clients. Please reach out anytime.
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