ESOPs and PHILANTHROPY: What Non-Profit and Tax-Exempt Organizations Should Know about ESOPs

Approximately 97 percent of our nation’s businesses are privately-held. In spite of this, charitable and tax-exempt organizations have not achieved particularly significant results in securing major gift income from owners of closely-held companies. The reasons for this apparent oversight may be understandable. Although small business owners may head enterprises worth substantial amounts of money, frequently, the bulk of their net worth can be tied up in the companies they own. Thus, even if owners of closely-held companies express an interest in philanthropy, the chances are their gifts might need to be funded with closely-held stock. It is this which poses two problems: Stock issued by privately-held companies can be very difficult to value. In addition, there is usually no ready market for privately-held securities. There is a related problem. In many instances the business owner may have held this stock for a prolonged period; and during that time, the stock ... Read More..

Why Giving To The Esop Foundation Is Now Critically Important

By John D. Menke Although the Employee Stock Ownership Plan (“ESOP”) concept continues to enjoy bipartisan support in Congress, this support is still not deep. Current support for the tax incentives that are essential to the adoption of new ESOPs comes from only a handful of key members of the House and the Senate.Meanwhile, during recent years many ESOP allies have retired or lost their seats. We now have fewer ESOP supporters than at any time during the last 20 years. This problem is compounded by the following unfortunate facts: First, most Congressional representatives rely heavily upon staff to advise them on proposed bills. These aides are recent university graduates with little or no knowledge of ESOPs; moreover, they tend to serve only a year or two before moving on to the private sector. Given their lack of knowledge of the benefits that ESOPs provide to American workers and business ... Read More..