Darin Tingey, CFP®, Investment Manager at UI Charitable, recently joined a Venture5 virtual event hosted by John Gannon. He spoke alongside Dave McClure, managing partner at Practical Venture Capital and founder of 500 Startups (now 500 Global), who has a donor-advised fund (DAF) with UI Charitable.

UI Charitable presented the session, which covered how to turn venture assets into charitable gifts before December 31. Venture5 held a similar session six months earlier, and John called it one of their most-attended events of the year.

About Venture5

Venture5 connects tens of thousands of founders, funders and operators across the global venture capital ecosystem. Its virtual events bring in people new to its community along with longtime followers, some of whom have been with Venture5 for more than a decade.

Session Highlights

In this session, Darin discussed:

• The $280,000 order-of-operations lesson. A founder selling his company wanted to give $1 million to charity. By giving part of the company to a DAF before the sale instead of after, he saved $280,000 in capital gains tax. It was the same gift, made in a different order.

• What UI Charitable does differently. UI Charitable doesn't keep a pre-approved list of funds, doesn't cap how much of a DAF can sit in one position, and doesn't force donors to sell what they give. A donor can hold a gifted asset in the DAF, sell it, or invest the DAF in a venture fund, a startup or real estate. One donor even used his DAF to buy an abandoned school in Colorado to turn into a community center.

• What has to happen before December 31. For a gift of an illiquid asset over $5,000, the IRS requires a qualified appraisal and Form 8283, signed by the appraiser and by UI Charitable as the DAF sponsor. Darin recommends reaching out by the first week of December, so the team can review the asset's governing documents and draft the gift agreement in time.

Dave McClure also shared how he donated carried interest from his early funds to his own DAF, and has since invested about $3 million from it into funds and companies. He explained why he donates his "busted unicorn" assets first: startups that were valued highly in 2020 or 2021 and may be worth less today. He closed with his view of the secondary market and when SpaceX distributions should start flowing back to LPs.

Key Takeaways

• Give before you sell. Giving an appreciated asset to a DAF before a liquidity event, instead of selling first, can avoid capital gains tax and earn a deduction. You don't have to give the whole asset. A portion of an LP interest or of your carry can go in.

• The deduction comes when you give to the DAF, not when the DAF gives out. A gift completed by December 31 counts for this year, even if you take your time choosing charities. For appreciated assets, the deduction is generally capped at 30% of adjusted gross income, and anything left over can carry forward for up to five years.

• Plan for the appraisal. Appraisals typically cost $2,500 to $10,000, so Darin suggests that gifts of about $50,000 and up are usually where it starts to make sense. The appraisal can be done within 60 days before the gift or any time after it, up until you file your taxes.

• Venture managers can raise from DAFs. DAF dollars can be invested in a venture fund, and the fund doesn't have to be impact-focused. They can't count toward a GP's own commitment, because a DAF can't benefit the donor personally.

This post is for general information, not tax, legal or financial advice. Talk with your own advisors before making decisions about gifts, investments or taxes.

Why It Matters

UI Charitable's mission is to elevate and accelerate the impact of philanthropy. Much of the wealth in the venture world sits in assets like carry, LP interests and startup stock, and most people don't know these can go to charity. This conversation shows how founders, investors and fund managers can turn those assets into giving, often while saving on taxes. Darin's message was simple: rather than limiting donors to a few options, UI Charitable lets them do "A through Z."

Watch and Learn More

• Watch the full session: Venture5 Webinar

• Learn more about Venture5: Venture5

• Learn more about Darin Tingey, or book a time to talk through your situation: Contact Us

• Learn more about UI Charitable: uicharitable.org