Charitable Equity Partnership Example

cep_womanThe business owner donates a percentage of corporate stock to the GCF Trust. The owner gets a tax deduction — the equivalent of taking money tax-free from the business.

Any profit from the Trust-held shares is taxed at no more than half the rate assessed to the business owner. The Trust holds the shares until the business is sold, including the Trust-held shares. (You can sell to whomever you want, including family members.)

You can also reinvest tax-free cash in your business, increasing its value. We set up a Donor Advised Fund (DAF) account, where your after-tax proceeds go. Through this Great Commission DAF, you decide which ministries receive contributions. It’s totally up to you.

Consider a Charitable Equity Partnership along with other planning opportunities we can offer to help you with your stewardship planning.

How the Partnership Works

CGF Trust Graphic

Accelerate your impact with business equity

Closely held businesses hold pent-up value that will be taxed when transferred to family or sold. This leaves less for the seller and their family to live on and do the charitable things they would like to do.

But when you sell your business using a “Zero Tax Plan,” worked out in advance, the results are:

  • Greater meaning and fulfillment in your giving.
  • Providing well for your family.
  • More money flowing into ministry and greater impact for the kingdom!

The table below shows the leverage gained by making a 20% gift of the business before the sale compared to 20% of after-sale cash proceeds.*

By giving a portion of the business before selling, $500,000 more would go to ministry with no impact on the net proceeds/cash flow!

HCharitable Equity Partnership Chart* Scenario assumes FMV of $10,000,000, ordinary income tax rate of 37%, capital gains rate of 25%, $0 cost basis and the shares are not S-Corp. Giving S-Corp shares first is also tax-efficient.

This strategy is proven.

Ed ThomasAsk Ed Thomas. He owns a real estate development business. He has a passion for fulfilling the Great Commission. He was generous in supporting ministry, and he thought he was giving as much as he could. Maxed out.

But then he learned about the Charitable Equity Partnership. He studied it, he investigated, he weighed the options, he prayed. He decided to go for it.

And he could not be more pleased.

“The Trust is a tool to turn tax dollars into Kingdom dollars,” he says.

Now, for the first time, he and his children could give away a minority non-voting interest in their primary business without losing any control — and gain “huge tax advantages.” Ed calls them “new dollars” — newly available dollars, thanks to the tax savings — and he pours them into ministries pursuing the Great Commission.

One great advantage, Ed observes: Generous Christian business owners can use the Charitable Equity Partnership to turn non-liquid assets (like percentages of business ownership) into “immediate Kingdom dollars … instead of waiting for a sale sometime in the future.”

Through the Partnership, he says, “I can accelerate the privilege of giving,” and be more involved than ever “in the eternal destiny of the souls of men and women.”

This is the adventure to which we invite you today. For your sake, and for the sake of your family. For the sake of your business. Most importantly, for the sake of the gospel.