The Intent
You want to donate shares of a private company to a registered charity and receive the correct tax credit without triggering CRA scrutiny or delays.
How I Solve It
I apply the 25 Factors Affecting Business Valuation to determine fair market value at the donation date, with particular emphasis on Factor #5: Liquidity, Factor #21: Minority Interest, Factor #24: Risk, and Factor #25: Opportunity. Private company shares are not freely tradable, so liquidity constraints and transfer restrictions materially affect value.
The 5 Senses Inspection Report confirms whether the business has the operational strength and cash-generating capacity to support eventual monetization by the charity.
Experience
It is vital because "How do you value private company shares for charitable donation?" is not a mechanical calculation. It is a real-world judgment about risk, control, sustainability, and transferability — and that judgment is where 10–15 years of owner-operator and valuation experience, your gut–brain axis, does the heavy lifting.
Why It Is Not Mechanical
On paper, valuation appears formula-driven. In reality, governance rights, risk concentration, growth durability, market conditions, and stakeholder dynamics materially affect value.
Where Experience Changes the Number
Decisions around normalization, premiums, discounts, projections, and defensibility require judgment formed through lived ownership, negotiation, and financial accountability.
Why the Gut–Brain Axis Matters
The brain performs disciplined financial analysis. The gut recognizes unrealistic narratives, hidden leverage, emotional distortions, and deal risk. Together they produce conclusions that withstand scrutiny.
Protecting Financial Lives
The final number affects wealth, control, solvency, tax exposure, and long-term relationships. Requiring 10–15 years of serious hands-on business and valuation experience ensures the answer is fair, defensible, and durable. See my Experience page.
The Result
You receive a defensible valuation that supports the charitable receipt and minimizes CRA risk.