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Donating LLC & limited partnership interests to charity

How donating business interests before selling a company could allow you to give more to charity

Do you own an interest in a privately held LLC or limited partnership that may have a future liquidity event? Donate your business interests directly to charity and potentially increase your tax efficiency and the size of your charitable gift.

Eliminate capital gains taxes and the Medicare surtax, which combined could be up to 23.8%

Take an immediate income tax deduction in the amount of the full fair-market value^* if you itemize your deductions

Maximize support to your favorite charities

*For contributions of complex or non-publicly traded assets, generally fair market value is determined by a qualified appraiser in compliance with the IRS.

Potential tax benefits of donating LLC & limited partnership interests

When you donate business interests directly to charity, the receiving organization gains the full proceeds from the sale, and you potentially eliminate capital gains exposure. This win-win could mean more money for the causes you care about. Consider this potential savings example:

Amount of LLC business interests owned: $5,000,000

Federal long-term capital gains rate: 23.8%¹

Value of LLC business interests donated: $1,000,000²

Selling your LLC business interests and donating the proceeds Donating your LLC business interests to Fidelity Charitable

Capital gains and Medicare surtax paid on $1,000,000 (23.8%)

-$238,000

Total contribution to charity
(after deducting federal taxes)

$762,000

$1,000,000

Additional amount dedicated to charity

+$238,000

¹This assumes all realized gains are subject to the maximum federal long-term capital gains tax rate of 20% and the Medicare surtax of 3.8%. This does not take into account state or local taxes, if any.

²Assumes no Unrelated Business Income Tax (UBIT) and does not take into account limitations on itemized deductions.

Use this calculator when considering donating your LLC business interests, or consult a professional advisor.

CASE STUDY

The value of Scarlett's LLC has increased significantly since her initial investment several years ago.

Donating interests in privately held LLC to provide support for alma mater

As an executive and owner of significant interests at a privately held LLC, which was likely to be sold in a few months. Scarlett wondered if a portion could be used to provide meaningful support for her alma mater.

She spoke with her certified public accountant, who suggested that it may be possible to make a charitable contribution of the LLC interests. Together they discussed the contribution with Fidelity Charitable and, upon close review of the facts and circumstances, determined she could contribute the LLC interests to Fidelity Charitable because a sale was not yet certain to happen. A few months after Scarlett's contribution, a buyer was identified and Fidelity Charitable participated in the sale of the LLC. Fidelity Charitable used the sale proceeds to fund Scarlett's Giving Account, and she recommended a grant to her business school. Because the capital gains tax did not apply to Fidelity Charitable's sale of its interest in the LLC, Scarlett was able to make an additional grant recommendation to another charitable organization, one that provides college scholarships to foster kids.

Added benefits of a Giving Account

Support charities immediately or over time
Support multiple charities with a single contribution

Streamline recordkeeping
Consolidate many tax receipts into one

Explore more benefits

Ready to get started?

Start making a difference today by opening a Giving Account—no minimum required.

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Frequently asked questions

Will you take majority stake in an LLC or LP interest?

Fidelity Charitable will generally look to limit its ownership to a minority interest in an LLC or LP.

When is the best time to donate an LLC or LP interest?

Timing is essential to donating private business interests. Fidelity Charitable encourages donors to engage in a conversation with our Fidelity Charitable Planning Experts and the donor’s own tax and legal advisors as soon as they start exploring a business sale. It is never too early to have the conversation, but it may be too late. (It’s important to start the conversation before a business sale progresses too far).

Will I be able to deduct the full value of the asset that Fidelity Charitable receives?

Not necessarily. The IRS requires that donors receive an appraisal to determine the fair market value of the asset on the day it was received by the charity. There will likely be some discounts for lack of marketability and control.

Will the contribution trigger any tax liability for the charity?

As a member or limited partner, Fidelity Charitable may be subject to unrelated business income tax (UBIT) on any income it derives during its period of ownership and on its gain from the sale. As discussed more fully in the Complex Asset Contribution Form, UBIT Questionnaire and Fidelity Charitable Program Guidelines, any/all UBIT will be deducted from the applicable Giving Account.