By Marc Benioff.  Originally published on The Huffington Post.

By Rebecca Koenig.  Originally published in the Chronicle of Philanthropy.

After years of sporadic interest, technology startups are embracing the practice of setting aside company stock before initial public offerings to endow new charitable ventures.

Tech entrepreneurs say they hope to place corporate giving, once a personal matter for executives or a peripheral project for shoring up community goodwill, at the heart of budding companies.

Venture-capital firms, once skeptical of mixing business with charity, are also testing the waters by adding philanthropic startups to their portfolios and earmarking their own equity in startups for charitable purposes. Just this month, for example, Fyrfly pledged to start a new foundation — believed to be a first for a venture-capital firm.

The momentum is such that charity set-asides could soon become the new normal, according to some philanthropists, venture capitalists, and entrepreneurs in the tech world. What remains unclear is exactly how they will play out for the

nonprofit world and the populations they serve.

After all, “if the business doesn’t materialize, the money doesn’t materialize,” says Seth Levine, managing director at Foundry Group, a venture-capital firm.

If tech stock prices soar, it could mean a windfall. With $47.2 billion in venture capital invested in the first three quarters of 2015, according to the MoneyTree report, nonprofits could benefit significantly if they capture even a small fraction of those resources.

eBay Blazes a Trail

The equity set-aside movement started in 1998, the year eBay’s founders created the company’s eponymous foundation using stock reserved from before eBay went public.

The concept spread from there, according to Silicon Valley philanthropist Laura Arrillaga-Andreessen. Marc Benioff set aside 1 percent of the equity of his cloud-computing company, Salesforce.com, in 1999 to start the Salesforce foundation.

And Mr. Benioff’s move helped guide Google’s 2004 decision to set aside 3 million shares of stock, worth more than $900 million, to support its for-profit charitable arm, Google.org, Ms. Arrillaga-Andreessen says.

Today, nearly 300 companies have pledged equity through Pledge 1%, a movement to encourage business leaders to build charity into the structure of their companies. The Silicon Valley Community Foundation is working with 20 companies that have agreements to donate equity or closely held stock to charitable vehicles.

The idea has caught on outside of Silicon Valley, too — sometimes in a big way.

In 2014, Chinese e-commerce giant Alibaba announced a 2 percent set-aside of the company’s pre-IPO shares — an amount worth billions of dollars — to support two charitable trusts that will benefit the environment, education, medicine, and culture in China.

Also last year, Australian software vendor Atlassian, valued at more than $3 billion, set aside 1 percent of its shares to create the Atlassian Foundation. The company, which co-founded Pledge 1%, filed its intent to go public in November.

And in December 2014, Seattle-based software company Tableau used shares it had set aside before going public in May 2013 to establish a donor-advised fund — called the Tableau Foundation — at the Seattle Foundation, worth more than $20 million.

“It is an obvious future to me that in 10 years the majority of startups will adopt a program like this,” says John Hering, co-founder and executive chairman of mobile-security firm Lookout.

The company, still privately held and valued at around $1 billion, recently pledged to set aside equity for charity through

Pledge 1%.

“Once critical mass has taken hold, this is going to become the default,” Mr. Hering says.

Making a Commitment

By setting aside equity to endow new charitable institutions, company leaders hope to signal a long-term commitment to corporate philanthropy. Several have gone the route of opening corporate donor-advised funds at community foundations.

It’s an attractive option for startups, according to Fidelma McGinn, vice president for philanthropic services at Seattle Foundation. It saves time, affords more flexibility, doesn’t have annual payout requirements, and costs less in taxes.

It also allows them to outsource overhead expenses and administrative duties to community-foundation professionals.

That’s important in part because startups prefer their own employees, many of whom lack philanthropy experience, to run the new giving vehicles, sometimes as volunteers, says Suzanne DiBianca, co-founder and president of Salesforce’s foundation.

It is a calculated move: Startups are betting that engaging employees directly in corporate giving will help them attract and retain talent.

For example, Tableau pays an employee, Neal Myrick, to oversee its donor-advised fund. He works with 15 other employees who volunteer their time to help guide Tableau’s grant making.

Mr. Myrick says staff members seem to appreciate the opportunities they have to determine how the company uses its equity fund. During the presentations he makes to all classes of new hires, “one or more people will raise a hand and say one of the reasons they picked Tableau over other organizations is they feel we’re having a positive impact in the world,” he says.

Appealing to Customers

In addition to scoring talent, start-up leaders say building philanthropy into their companies could attract consumers who support businesses they view as agents of positive social change.

For this kind of cause marketing to work, customers must perceive it as authentic, says Deborah Small, a marketing and psychology professor at the Wharton School at the University of Pennsylvania. Although that term is difficult to define, she says, it means that consumers look for an alignment between the brand and its charitable giving.

However, there’s a danger for companies if their charitable activities appear to be insincere or, worse, self-serving.

“Consumers quickly become cynical if there’s anything that smells of hypocrisy,” Ms. Small says.

Consumers also seem to favor brands that devise creative ways to give back, she adds: “If you’re a copycat, that doesn’t

seem very authentic.”

That may be an obstacle to the proliferation of IPO set-asides.

“I think it will be a requirement for doing business, but businesses will have to use their creativity to find out ways to make it not just a requirement but to make it competitively advantageous,” Ms. Small says.

Persuading Venture Capitalists

There are signs that another obstacle — persuading investors to support the practice — is eroding. Proponents report that attitudes among venture capitalists are beginning to shift as they “recognize there’s actually a return from a business perspective” in setting aside equity for charity, Mr. Levine says. His venture-capital firm, Foundry Group, gives money raised when it exits investments through the Pledge 1% program to the Community Foundation of Boulder County’s general fund.

Still, skepticism endures. Swaying doubting investors will require evidence that IPO set-asides improve company success, and measuring that may prove difficult. Researchers say it’s nearly impossible to prove that an individual start-up that has set aside equity is doing better or worse for having made that decision, although it may be possible to assess the sector as a whole once enough companies have done it.

And movement leaders say they’re still puzzling over how to collect and measure evidence of employee engagement and customer approval. Pledge 1% asks participants to report the effects of their charitable programs.

There’s little experimental evidence about whether people actually prefer to work at philanthropic companies, says John List, economics professor at the University of Chicago. He’s testing the question by running a large-scale field experiment using job ads on Craig’s List; results should arrive in the spring.

Mr. Myrick says Tableau can measure employee engagement by checking how many staff members use the company’s

online portal for logging personal volunteer hours. So far, 26 percent do.

But the company is not measuring the level of influence the foundation has over customer purchasing decisions, he says. Although he acknowledged that corporate foundations “have to return value to the company in some way or another,” he doesn’t want that mind-set to direct the foundation’s work.

“Our focus on a foundation is on the social impact,” Mr. Myrick says. “Any benefits to the company we see as collateral benefits, not part of the primary decision-making process. We don’t want to put them in the driver seat.”

New Normal

Despite the doubters, start-up leaders and their venture-capital allies are forging ahead. Ms. DiBianca says it’s her dream that companies of the future won’t think twice before setting aside equity for charity. She wants the number of companies signing up through Pledge 1% to double.

“People are learning that this is how you build a great company today,” she says. “The new normal is our big vision.”

And proponents have one more rationale for setting aside equity for corporate giving, Mr. Hering says: “It’s also just the right thing to do.”

Correction: An earlier version of this story incorrectly referred to Suzanne DiBianca as co-founder and executive director of Salesforce’s foundation. She is co-founder and president. 

Originally posted: December 15, 2015

By Joe Garofoli.  Originally published in the San Francisco Chronicle.

Few entrepreneurs focus on charitable giving when they are building their companies — mere survival is a much bigger concern.

By Carolyn Said.  Originally published on SF Gate.

Ever since receiving cochlear implants 15 years ago at age 12, Caroline Clark has wanted to help other hearing-impaired people. She started a foundation, the Baker Institute, to provide speech therapy and offer a weeklong summer camp at Stanford University for hearing-impaired children.

Now a product marketing manager at San Francisco software company Atlassian, she was attracted to the company when she discovered that philanthropy is embedded in its mission. Since its launch 12 years ago, Atlassian has given 1 percent of its profit, products and equity, and a bit more than 1 percent of employee time, to nonprofits. That freed her up to spend a week volunteering at the camp.

“As a Millennial, social purpose is really important,” Clark said. “We don’t just look at a company as a way to make money, but something we want to feel passionately tied to. Atlassian is at the forefront of that revolution and really speaks to our generation. I feel really lucky to be at a company that allows me to dedicate time to a cause.”

A year ago Atlassian partnered with Salesforce, which has long had a similar approach to philanthropy, the Entrepreneurs Foundation of Colorado and Rally for Impact to inspire other companies to make similar charitable commitments. They launched the Pledge 1% Foundation, dedicated to transforming corporate philanthropy by helping companies donate 1 percent of their equity, products, employee time and/or profits to nonprofits.

“Corporations need to step up and provide an outlet for people to give back,” said Scott Farquhar, Atlassian co-CEO and co-founder.

The founders have spent the year raising awareness through launch events, seminars and networking with affiliated companies at Salesforce and Atlassian conferences. Salesforce CEO Marc Benioff hosted dinners for executives at companies like Lookout, Glassdoor and Twilio. The Pledge 1% Foundation website provided resources, legal documents, case studies and other information for corporations.

“We came together with a collective vision: To help companies integrate giving and a culture of social impact from the beginning so it’s part of their DNA,” said Dipti Pratt, director of the foundation. “We want to make it easy for any company in the world to be philanthropic.”

On Tuesday — designated as Giving Tuesday — the foundation is announcing that it’s exceeded its goal of getting 500 companies to sign up in the first year. It drew 530, including high-growth companies like DocuSign, Glassdoor, Lookout, Twilio, Xactly and Zuora. Now in the coming year, it hopes to secure another 1,000 pledges.

“We saw a groundswell of not only interest but people who were ready to execute,” said Suzanne DiBianca, president and co-founder of Salesforce.org, the software firm’s philanthropy wing. “It’s a movement. We wanted to take away the myth that it’s too hard or complicated or time consuming to do.”

Almost all the pledged companies are tech firms, and the majority are fairly new.

“The earlier you are as a company, frankly the easier it is,” DiBianca said. “It’s very easy for a small company to pledge a percentage of its equity, for instance, because the pie isn’t cut up yet. It can make this part of the articles of incorporation.”

Each of the 530 companies picked one or more resources to pledge donations. Equity (59 percent) and employee volunteering time (54 percent) were the most popular options, followed by products (39 percent) and profit (19 percent).

Of course, an equity donation doesn’t translate into money until a company goes public or is sold. The foundation suggests trust structures such as a donor-advised fund operated by an existing foundation as a mechanism to transfer money once there’s a sale. “Effectively it means just setting aside the shares,” Farquhar said. “Some do it through a dedicated foundation.”

The Entrepreneurs Foundation of Colorado provides a map for how the 1 percent pledge works. Ryan Martens, who’d incorporated the 1 percent model into Rally, a company he co-founded in 2002, worked with the foundation to get about 100 Colorado companies taking a similar pledge, although Rally was the only one that went public. After its Wall Street launch, it put $700,000 into a donor-advised fund and donated the same amount to the community foundation in its Boulder hometown.

“It takes a peer relationships to really get this started,” he said. “It’s not common that giving is the first thing you think of when you start a business. Meeting someone else who’s done it, and hearing what it’s meant to them and their community personalizes it, and shows how it can become a cultural norm.”

Ultimately, they hope this will be the new normal as part of the startup process.

“The great news is that venture capitalists aren’t blocking it anymore, which is massive,” DiBianca said, crediting supporters like Ron Conway, SV Angel, and accelerators like General Assembly and Techstars. “They’re starting to see that (philanthropy) can add to your success as a company.”

Both Salesforce and Atlassian say their 1 percent commitment is a powerful recruiting tool.

“Millennials tell us it’s in the top three reasons they join Atlassian,” Farquhar said. “And it’s great for morale. We let employees choose projects they’re passionate about (for volunteering); we don’t put any rules around it. I think humans have an innate desire to give back and help people.”

Pledge 1% first-year results

Pledge 1% launched a year ago seeking to transform corporate philanthropy by inspiring and helping companies to pledge 1 percent of various resources to charity. Some 530 companies worldwide are now participating. Here’s a breakdown of the pledge types from those companies.

Equity: 59%

Time: 54%

Product: 39%

Profit: 18%

Companies that joined the Pledge 1% movement in its first year include 6Sense, AppNexus, Campaign Monitor, Dstillery, Glassdoor, Gliffy, Hampton Creek Foods, Lookout, MediaMath, Planet Labs, Sage, Splunk, Twilio, Weebly, Xactly and Zuora.

Originally posted: December 1, 2015

Originally published on Next in Nonprofits.

Pledge 1% “is a corporate philanthropy movement dedicated to making the community a key stakeholder in every business. Pledge 1% encourages and challenges individuals and companies to pledge 1% of equity, product, and employee time for their communities.”

Co-founder and Rally Software CTO Ryan Martens joins host Steve Boland to talk about the important work of encouraging corporations – starting with the technology sector – to pledge to improving our communities through diverse giving. Ryan talks about working with community foundations, measuring the impact of in-kind gifts, and reaching sustainable business models for increased giving.

Listen now by clicking the player above, download the file for later here, or subscribe to the podcast on your phone for automatic updates. Get more details on how to subscribe on our podcast page.

Originally posted: December 1, 2015

By Therese Poletti.  Originally published on MarketWatch.

As #GivingTuesday donation pleas flood social networks and in-boxes today in a worldwide effort to raise attention and funding for nonprofits, some might be skeptical of pleas or philanthropic touts from tech companies, which have an inconsistent reputation for philanthropy.

But Pledge 1%, a year-old corporate philanthropy movement, is using the fourth annual Giving Tuesday to announce that more than 500 companies, including many tech startups, have committed to the once-novel donation model created by Salesforce.com Inc. CRM, -0.66%  co-founder Marc Benioff in the early days of the cloud-based software company.

Pledge 1% is a promise to give 1% of a company’s equity, 1% of the company’s product, or 1% of employee time back to communities around the world; Salesforce does all three.

“We try to make it easy for CEOs and for startup companies and CEOs to be focused with their philanthropy,” said Suzanne DiBianca, president of Salesforce.org, the company’s nonprofit arm. “We want every company to make their own decisions where their investments should be.”

San Francisco-based Salesforce.org is joined as a founding members of Pledge 1% by Atlassian, the Australian software company with a Slack rival called HipChat; the Entrepreneurs Foundation of Colorado; Tides; and Rally for Impact.

Among the list of 500-plus companies that have taken the pledge are a mix of unknown young tech companies and better known startups with hefty valuations, such as Twilio and Zuora Inc. Others are not even tech firms, like Half Moon Bay Brewing Co. Some venture capital firms — from well-known funders such as Bessemer Venture Partners to smaller shops like Blackbird Ventures in Surry Hills, Australia — are also joining in to make it part of the process for startups they fund.

The effort could help tech’s somewhat poor reputation for community outreach, which has festered despite the efforts of Microsoft Corp. MSFT, +0.90%   co-founder Bill Gates, who created the world’s largest private foundation in the Bill and Melinda Gates Foundation. Benioff and the Salesforce model have often been highlighted as an example of a rare tech company focused on giving back to its community, especially as San Francisco Bay Area residents blame rising rents, evictions and the cost of living on the tech boom.

DiBianca defends tech companies and says any negative reputation is a bit of a myth.

“I don’t think it’s true, it’s true for some companies and some CEOs,” she said, adding that many companies just want guidance or help. “They just don’t know what to do and how to do it. We are just providing tools.”

A recent corporate philanthropy list compiled by the San Francisco Business Times based on 2014 cash donations made in the Bay Area shows that many tech companies are not the Scrooges they are often believed to be. Of the 83 companies cited, 26 are tech firms, with Google Inc. (now known as Alphabet Inc.)GOOG, -2.28% GOOGL, -2.26%  topping the list with cash donations to Bay Area nonprofits of $40 million in 2014. Cisco Systems Inc. CSCO, +0.13%  ranked No. 5 with $14 million in local giving, followed by Salesforce at No. 6, with $12 million.

The list does not include time spent volunteering by employees, product donations and equity donations, which Salesforce pioneered. A company spokeswoman said that since its founding in 1999, Salesforce has donated $100 million in grants around the world, employees have volunteered 1.1 million hours, and 27,000 organizations are using Salesforce software for free or at a discount.

The group has big plans for the initiative: Emboldened by their success this year, the Pledge 1% movement hopes to reach more than 1,500 pledges by Giving Tuesday in 2016. Here’s wishing them luck in pushing tech to follow Salesforce’s example in the community.

Originally posted: December 1, 2015

By Ludovic Ulrich.  Originally published on the Salesforce blog. 

Last year, Salesforce for Startups launched globally with the mission to empower startups to build, grow and give back. In that time, more than 3,500 members have joined the program from more than 85 countries. And we’re just getting started. To coincide with this milestone, the program has introduced a new offer related to Salesforce’s marketing automation tool, Pardot; a new partnership with enterprise technology venture fund Work-Bench; and new plans to grow and expand globally.

SALESFORCE WORLD TOUR TORONTO—May 14, 2015—Salesforce, the Customer Success Platform and world’s #1 CRM company, today announced it is joining forces with the Canadian startup ecosystem. Salesforce also announced a new partnership with Communitech, an innovation centre that provides mentorship, training and resources to help high potential startups scale into profitable technology companies.