Equitybee is partnering with UI Charitable, a Donor-Advised Fund sponsor built for the way startup employees and founders actually hold wealth. The two companies solve different ends of the same problem. Equitybee helps you unlock the value of startup equity. UI Charitable helps you give from illiquid and private assets. This post is about the second one, and why it matters most in the year your equity pays off.
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.
Case Study: A startup employee in California
How does it actually work? A side-by-side comparison of a startup employee in California.
This same example would work for any appreciated asset donated in-kind.
Startup employee in California
Salary: $350K • Private share value: $1M • Shares donated to a Donor-Advised Fund: $300K (30%)
Getting started
get started with UI Charitable by visiting https://www.uicharitable.org/equitybee
