Why You Should be Part of the Growing Pledge 1% Movement

By: Janie Goldstein, Executive Director, The Upside Foundation of Canada

Most of us heard about Google’s acquisition of Waze (a community-based traffic and navigation app) for $1.5 billion. But not everyone knows that it resulted in over $1 million donated to charity. In its initial stages, the founders put aside 1% of its options to be converted into cash only if, or when, it was acquired. The platform used to donate the options has been available in various US cities and countries such as Israel (the initial home of Waze), and have generated millions of dollars for charities. I, along with 2 experienced Venture Capitalists, felt Canada needed a platform of our own customized for our startup industry and so we founded The Upside Foundation of Canada, a registered charity, based on this proven model. The Upside Foundation of Canada is a local partner of Pledge 1%.

If you’re a startup founder, you presumably have a belief that one day your new company will make it big. You are likely focused on growing your company, building your product, obtaining funding and essentially survival / scaling. Even if you want to be philanthropic, you have no spare cash and definitely no spare time, but you do have that conviction that one day your company will have some upside which you may want to share. So we provide the platform to enable you to do so and get that mindset baked into the company DNA at the outset. How? Early stage companies pledge stock options or warrants to the The Upside Foundation, convertible into a small portion of equity (on average, 1%). When the company has a liquidity event (e.g., IPO, acquisition) the Upside Foundation sells its options for cash and donates the proceeds to registered Canadian charities chosen by the company founders. Your startup can have a social mission, alongside your for-profit goals, right from the start before you have a product to share, without spending any cash or your valuable founder time.

What if you’re not convinced about the notion of giving back, (and have not read Marc Benioff’s books!), why would you want to donate 1% of your company? Compelling research from a myriad of sources points to the strong ROI. In Deloitte’s recent Millennial Report, which surveyed nearly 8,000 millennials across 29 countries, it concluded that millennials are just as interested in how a business develops its people and its contribution to society as they are in its products and profits. For 6 in 10 millennials, a “sense of purpose” is part of the reason they chose to work for their current employers. Those employees satisfied with the sense of purpose plan to stick with their employer longer – 88% plan to remain for over 5 years. And looking beyond millennials, a recent Canadian Ipsos study found that 84% of Canadians said they would likely switch to a brand affiliated with a good cause if price and quality were similar. 45% of Canadians consider themselves loyal to brands that support good causes. These studies, and lots of others, show there is a tangible ROI to being socially responsible – that you can actually “do well by doing good.”

I have heard some entrepreneurs tell me that they will “of course donate to charity once their company strikes it rich.” But…isn’t it better to rally the whole company around the donation, rather than just the founder donating when he / she gets a big payout? Even if your intention is that the company will do it, what if you are no longer the majority shareholder when your company has its exit and the other shareholders don’t want to donate to charity? Wouldn’t it be great to instill a greater sense of purpose in your company for all the benefits mentioned above right at the beginning – and have all employees feel they are working towards this greater goal? Wouldn’t it be nice to ensure that you create a lasting legacy for your company?

Salesforce believed in the idea of giving back so much that it set aside 1% to create its Foundation (now Salesforce.org) right from the start, created its 1-1-1 program and, along with a couple of others, launched the global Pledge 1% movement. Pledge 1% is helping to spread awareness of the global movement to give back 1%. Today, Upside Foundation is the proud partner of Pledge 1% and is dedicated to helping entrepreneurs understand the benefits of giving back early and providing the platform which enables them to do so. We currently have an all-volunteer team, as well as the professional support of Bennett Jones, KPMG and Lucid Webgroup, and community support from a growing list of VCs, incubators and accelerators. We have approximately 50 initial companies that have used our platform to pledge to give back and are expanding our presence across Canada. Last year at the Salesforce Toronto World Tour, the logos of our earliest local donors were shown on the jumbotron, and some of our donors who attended met with Salesforce’s Alex Dayon and Ludo Ulrich. In a few years, even a jumbotron won’t be able to display all the logos of the Canadian companies whose founders pledged to giving back. If you’re a Canadian entrepreneur, learn why – and how – you too can “share your upside” and be part of the fast growing Pledge 1% movement by visiting www.upsidefoundation.ca.