Pledge 1% of Equity or Profit
Learning Objectives
After completing this unit, you’ll be able to:
- Understand the benefits of donating financial resources for businesses at any size or stage.
- Learn the difference between donating equity and profit, and choose the right mix for your company.
- Identify the steps to get started.
Grow Your Giving Alongside Your Business
Providing financial support is one of the most common and important ways to give. Funding, particularly unrestricted funding, enables nonprofit organizations to carry out initiatives crucial to their mission, and it allows them more flexibility than donations of time or product.
If you’re focused on establishing or running your business, you may find the idea of setting aside equity or profit daunting. Don’t worry! The Pledge 1% team has a simple playbook to take you through each step of the process. They also provide their expertise along the way and can connect you to other Pledge 1% members who can share their tips and tricks.
“Giving back early was one of the best decisions we ever made.” —Suzanne DiBianca, Chief Impact Officer, Salesforce
When Salesforce was founded in 1999, Marc Benioff committed to giving back 1% of time, product, and equity to the community. Marc likes to joke that it was an easy commitment to make because it was before he had anything to give! But it was because of that foundational commitment that Salesforce has been able to achieve incredible impact together with local nonprofits and educational institutions over the decades.
Unique Advantages to Donating Equity and Profit
Pledging 1% of equity is the most effective way for a company to fund its social impact work for years to come. There are a couple of options to consider when pledging equity.
|
Equity Type |
Description |
|---|---|
| Company equity |
The earlier you set aside corporate equity, the better. Not only is it easier to commit when you have fewer investors and a cleaner cap table, but it also sets the tone for your funders and employees on where your priorities lie. However, later stage companies have also successfully set aside equity. |
|
Personal equity as a founder |
Personal equity pledges do not require board or shareholder approval to formalize as required with company equity. Remember to always consult your personal tax advisor. |
|
Combination of company and personal equity |
Many founders first pledge their personal equity to help secure a company equity pledge. |
Pledging profit, on the other hand, builds in a flexible commitment to financial giving tied to a company’s capacity. Even if your company does not yet have profit, you could instead consider donating a portion of revenue as part of your giving program to align with your company values and culture. Unlike equity, profit and revenue provide a more immediate source of funding to support time-critical needs.
Get Started
Pledge 1% has resources and playbooks to help your company set aside equity for future impact and set up a profit pledge. Join Pledge 1% to learn more and get guidance to support your program development. In the meantime, here are a few ideas to get you started.
- Create a clear mission and vision, determining short- and long-term goals.
- Determine what method of financial support (or combination of methods) makes sense for your organization to commit, considering its size, stage, and liquidity.
- Get buy-in from key stakeholders.
- Determine the size of financial support that fits your budget.
- Establish giving guidelines, like eligibility or reporting requirements.
Sum It Up
Collectively the Pledge 1% movement has been a force multiplier, igniting billions of new dollars to address the toughest issues of our time. Of all the ways to support your community, financial support is extremely valuable because it affords beneficiaries operational flexibility and judgment. Depending on your company’s size, stage, and assets, and your giving goals and timeline, you can pledge profit, equity, or both over time.
