For many business owners in Greater Dallas, the majority of personal wealth is not held in a brokerage account. It is held in the company they have spent years, sometimes decades, building. Whether that is privately held company stock, partnership interests in an LLC, or a stake in a family enterprise, these assets often represent both the culmination of hard work and a significant source of future opportunity.

They also represent one of the most powerful, and often overlooked, tools in tax and charitable planning.

At The Dallas Foundation, we work alongside business owners and their advisors to help transform complex assets into meaningful, lasting impact across our community. When business interests are donated thoughtfully, the results can be extraordinary: greater charitable capacity than cash alone, significant tax advantages, and a philanthropic legacy woven into the fabric of Dallas itself.

Why Business Interests Are Among the Most Powerful Charitable Gifts

About 90% of household wealth in the United States consists of non-cash assets, yet most donors default to writing a check. For business owners, that instinct can mean leaving significant tax savings on the table.

The reason is straightforward: business interests are typically highly appreciated, illiquid assets. If sold outright, they may trigger substantial capital gains taxes, permanently reducing both what a business owner keeps and what they are able to give. By donating all or a portion of a business interest directly to a qualified charitable vehicle, business owners may be able to sidestep that erosion entirely.

Specifically, a gift of business interests to a donor advised fund at The Dallas Foundation may allow you to:

• Avoid capital gains tax on the appreciated value of the interest
• Receive a charitable deduction based on fair market value for qualifying long-term holdings
• Reduce your taxable estate, removing appreciating assets before they compound further
• Create immediate and enduring philanthropic impact to the causes you care most about

Gifting a percentage of a privately held business interest, particularly C-Corp stock or qualifying partnership interests, can generally eliminate the long-term capital gains tax you would otherwise incur by selling the asset first and donating a portion of the proceeds. You may also claim a charitable deduction based on the fair market value of the interest, as determined by a qualified appraiser meeting the IRS requirement. The specific tax treatment depends on the type of interest and how it is structured, so early coordination with your legal and tax advisors is essential. For entrepreneurs and business owners, this approach often unlocks significantly more charitable capacity than a cash-only strategy.

What Types of Business Interests Can Be Donated?

Business interests come in several forms, and each requires careful coordination with legal, tax, and philanthropic advisors. Common examples include:

Privately Held Company Stock
Shares in a privately owned C-Corp can often be donated prior to a liquidity event or sale. S-Corp interests present additional considerations, including potential tax implications for the receiving organization, and are evaluated on a case-by-case basis.

Partnership or LLC Interests
Interests in partnerships or limited liability companies may also be eligible for charitable contribution. These gifts require careful upfront review, beginning with the operating agreement itself. Transfer restrictions, including requirements for general partner or co-owner consent, can affect whether a charitable transfer is permissible at all and must be addressed before the gift process moves forward. Embedded tax attributes may present additional considerations.

Closely Held Family Business Interests
Family-owned enterprises are often the most emotionally significant assets a donor holds. With proper planning, a portion of ownership can be gifted while preserving operational control and family continuity, allowing the business to continue while the charitable impact begins.

Planning Considerations for You and Your Advisors

Donating business interests can be a powerful way to support the causes you care about while maximizing the impact of your charitable giving and may provide significant tax benefits. Like any significant financial decision, however, it benefits from thoughtful planning and coordination. The following considerations can help business owners and their advisory teams evaluate the timing, structure, and documentation needed for a successful gift.

A New Tax Landscape and Why It Matters Now

The passage of the One Big Beautiful Bill Act (OBBBA) in July 2025 introduced meaningful changes to the charitable giving landscape that business owners and their advisors should factor into planning. Starting in 2026, a new 0.5% AGI floor applies to itemized charitable deductions, meaning only contributions exceeding 0.5% of adjusted gross income will be deductible. Top-bracket taxpayers will also see the value of itemized deductions capped at 35% rather than 37%. For large gifts of appreciated business interests, these changes make early and coordinated planning with your advisor team more important than ever.

The Role of Timing: Why Earlier Is Almost Always Better

Timing is essential to donating private business interests. It is never too early to have the conversation, but it may be too late if a business sale progresses too far. Once a transaction is effectively in motion, IRS rules around pre-arranged sales can limit or eliminate certain tax benefits.

This is why we encourage business owners and their advisors to bring us into the conversation early, ideally well before a liquidity event is imminent. At The Dallas Foundation, we frequently work alongside attorneys, CPAs, and wealth managers to help structure gifts at the right moment, maximizing both tax efficiency and charitable outcome.

A Note on Compliance and Documentation

The tax advantages of donating business interests depend on proper structuring, documentation, and IRS compliance. Key requirements typically include a qualified appraisal from an independent, IRS-approved appraiser to establish fair market value, a contemporaneous written acknowledgment from the receiving charitable organization, and careful attention to AGI-based deduction limits. Unused deductions may generally be carried forward for up to five years. Every situation is unique, and The Dallas Foundation strongly encourages business owners to work closely with their legal, tax, and financial advisors throughout this process.

Donor Advised Funds: A Flexible, Practical Vehicle

For most business owners considering this strategy, a donor advised fund (DAF) at The Dallas Foundation serves as the most practical and flexible receiving vehicle. Gifts of appreciated assets, including closely held stock and other complex interests, may be used to establish a fund and achieve the maximum tax deduction in the year of the gift. Your gifts are then invested and can grow, with the resulting charitable funds distributed over time.

Once a business interest is contributed, the asset can be liquidated in a tax-efficient environment. This structure allows donors to:

• Simplify the administration of complex assets
• Separate the timing of a tax deduction from grantmaking decisions
• Support multiple causes and organizations over many years
• Maintain a long-term philanthropic strategy aligned with family values and generational legacy

According to the 2025 Annual DAF Report, the total number of donor advised fund accounts in the United States reached a record high of 3.59 million in 2024, with charitable contributions to DAFs surging 38.6% year-over-year. Business owners are increasingly recognizing that DAFs offer a smarter on-ramp to structured, lasting giving.

A Coordinated Partnership With Deep Dallas Roots

Donating business interests is not a standalone transaction. It is a coordinated planning strategy that works best when everyone is aligned early and working toward the same outcome.

Successful gifts of business interests are rarely accomplished by one advisor alone. They are the result of thoughtful collaboration between a donor, their attorney, CPA, wealth advisor, and philanthropic partner.

Established in 1929 as the first community foundation in Texas, The Dallas Foundation has cultivated a century-long legacy of trust, facilitating over $1 billion in grants and serving as both a steadfast partner and a responsible steward of our donors’ philanthropic visions. We are here not just to receive gifts, but to help business owners think through what they want their giving to accomplish, in their lifetime and beyond.

Creating Something That Outlasts the Business

Beyond the tax advantages, donating business interests creates something more enduring: meaningful investment in the future of Dallas. Whether supporting early childhood development, housing stability, workforce readiness, or arts and culture, these gifts allow business owners to extend their legacy well beyond their companies and into the community those companies helped build.

If you are considering a gift of business interests or anticipate a liquidity event on the horizon, we encourage you to start the conversation early. The Dallas Foundation is here to help you and your advisors structure a strategy that maximizes both your tax position and your philanthropic impact.