Introducing Pledge 1%.

Pledge 1% is an organization I only somewhat recently learned about, but is one that I hope many of you reading this newsletter have already heard of. If you haven’t yet — below is a brief overview.

What: Pledge 1% is a global movement that empowers entrepreneurs, companies, and employees to be a force for good. It was founded in 2014 in partnership with Salesforce founder Marc Benioff, Atlassian co-founder Scott Farquhar, Rally founder Ryan Martens and The Entrepreneurs Foundation of Colorado. Very simply, companies or people make a “pledge” to give back in some way and receive educational and community resources in return.

How: Companies (or people) can choose to pledge (usually 1%, hence the name Pledge 1%) of any number of the below:

  1. Product: If a company sells a good or service, it can be donated in-kind or offered to nonprofits at discount pricing. Not only is this a way to give back, it can also be a great way for businesses to build new customer bases or save on taxes. Techsoup is an awesome resource for all stages of startups that have a tech product they want to donate (Box.com donates through them for example).

  2. Time: Most companies have employees! And usually those employees can spare some extra time volunteering (1% of a 40 hour week is less than 25 minutes). This might look like traditional hands-on volunteering such as cleaning up a beach; skills based/pro bono giving such as a marketing expert strategizing with a nonprofit on a fundraising campaign; or a workforce development program such as an internship for individuals with diverse backgrounds. World is your oyster on this one!

  3. Equity: This can be company equity, founder personal equity, or a combination. Twilio, Okta, Coinbase, and Airbnb are a few examples of companies that pledged 1% of company equity (which often sits in a managed DAF) and allows them to couple their product and employee time donations with grants and impact investing. (As there can be some admin/legal burden to this option, Pledge 1% built a new community of investors called Boardroom Allies (of which I am a proud member) to guide founders who want to do this. Andrew Braccia from Accel, Byron Deeter from Bessemer, Sarah Tavel from Benchmark, Ron Conway from SV Angel and Aileen Lee from Cowboy Ventures are some familiar names in the Boardroom Allies group.)

  4. Profit: This is obviously only an option for companies that actually make a profit, which many still in the pre-IPO stage do not yet do. For companies that choose this path, most donate 1% of profits to either a DAF or private foundation.

My take: I’m a big fan of the Product and Time pledge’s as they are both low-barrier options for companies not yet in the profitability stage.

Who: Many of the initial companies that joined the Pledge 1% community were Bay Area tech startups. However, there are now over 15,000 members in 100 countries that have taken “the pledge” (see a list of them here). Several Corporate Partners and Venture Funds like Bessemer, Foundry Group and Greylock also formally support this movement.

When: Companies can participate in this program at any stage due to the flexible nature. Younger, cash strapped companies typically focus on product & time & equity while later stage companies can participate in the profit (and all other) pledges.

So What: To date, this movement has unlocked over $2 billion in philanthropic dollars through equity set aside (it was a good past couple of years for IPOs!); to me, this movement is so much more powerful than those dollars raised because they are forever changing the dynamics around how for-profit companies of all sizes and stages can create their own impact.

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Three Venture Firms Integrating Venture and Philanthropy