You took the equity instead of the bigger paycheck. You worked long hours. You bet on the upside. And now there is a liquidity event on the horizon.
The windfall and the tax bill show up at the same time. Depending on your equity structure, that bill can be large, and once the event closes it is largely locked in. A high-income, high-tax year is the ideal time to claim deductions for giving you'd planned to spread out over years, not because you need to give it all now, but because a Donor-Advised Fund lets you take the tax benefit today and distribute later.
A Donor-Advised Fund is a way to give more efficiently, not a way to profit from giving. It works best when charitable giving is already part of your plan. When it is, this approach helps reduce taxes and increases your charitable reach to causes you care about.
Stage one: if you are giving to charity, give appreciated assets, not cash
Most people give cash. If you hold long-term appreciated assets, there is a much better way to do it. When you donate a long-term appreciated asset directly to a Donor-Advised Fund instead of selling it first, two things can happen in your favor. You are able to take a deduction based on the asset's fair market value, and you avoid the capital gains tax you would have owed if you had sold it, because you did not sell it.
On the other hand, if you sell those assets and then donate the cash proceeds, you pay capital gains taxes leading to a lower deduction and less going to the charitable causes you care about.
What a Donor-Advised Fund actually is?
A Donor-Advised Fund is a charitable account held by a sponsoring 501(c)(3), in this case UI Charitable. Once you contribute assets, you no longer legally own them, which is what makes the deduction work. What you keep is advisory privilege. You advise how the funds are invested, when assets are sold, and which charities receive grants over time. The deduction happens in the year you contribute. The giving to actual charities happens on the timeline you advise, with no required distributions in any given year.
Stage two: this is where UI Charitable is different, and where it fits startup employees
Here is the part that matters for the way you specifically hold wealth.
UI Charitable allows you to donate long-term appreciated assets such as public stock, private stock, cryptocurrency, etc. to a Donor-Advised Fund, and receive a tax deduction equal to the fair market value of those assets. Startup employees are exactly the people whose appreciated wealth sits in private and illiquid form. UI Charitable can serve the asset class most of the giving world cannot.
One important boundary: To be clear about what does and does not apply. You cannot donate shares that are covered securities by the Equitybee agreement and received by using Equitybee stock option funding. You can, however, donate other appreciated assets to UI Charitable.*This is not tax advice. Consult a qualified tax professional regarding your specific financial situation.
An Example Case Study
A startup employee in California earns a $350,000 salary and holds $1 million worth of private company shares. If they sell all of their shares and pay taxes on the resulting income, they would owe approximately $486,000 in taxes and be left with about $864,000 in take-home value, with no charitable donation. Alternatively, they could transfer $300,000 worth of shares (30% of their holdings) directly to a Donor-Advised Fund before selling the remaining $700,000. By donating the shares in-kind, they can deduct their $300,000 fair market value from their taxable income. In this scenario, their taxable income falls to $750,000 and their tax bill to approximately $243,000. They would have about $807,000 in take-home pay, plus the $300,000 held in their DAF, for a total wallet size of approximately $1.107 million—roughly $243,000 more than in the scenario where they simply sell all their shares.
