How to Pledge 1% of Equity

Pledging 1% of equity is the most effective way for a company to fund its social impact work for years to come. It is one of the easiest pledge types to execute as an early stage company, sending a message to your employees, customers and partners that you are a company that cares about giving back, from inception. We have created models to make it just as easy for growth and late stage companies to set aside equity, as well . Complete this form indicating your desire to Pledge 1% of equity today, then we’ll follow up with template paperwork and everything else you need to complete your pledge.

Ways to Give Equity

 There are a couple of options to consider when pledging equity. You can pledge:

  • Company equity. The earlier you set aside corporate equity, the better. Not only is it easier to commit when you have fewer cooks in the kitchen (i.e. fewer investors/a cleaner cap table), but it also sets the tone for your current/future funders and employees on where your priorities lie. Early stage companies may simply issue and transfer shares to a nonprofit at the time of corporate formation, without having to worry about obtaining Board approval or diluting investors. That said, it is possible to set aside equity later in the game (e.g. Twilio, PagerDuty, Okta and other companies formalized their equity set aside less than one year from their exit).  We have established  models for setting aside corporate equity that work well for early, growth and late stage companies.
  • Personal equity as a founder. Personal equity pledges are easy to implement as they do not require board or shareholder approval to formalize (as required with company equity).  Founders and CEOs may make a pledge to donate their personal shares any time, but we recommend doing so  immediately after a liquidity event in order to maximize their ability to take a tax deduction. Remember to always consult your personal tax advisor, as everyone’s situation is different!
  • A combination of personal and corporate equity. Many founders first pledge their personal equity as a gateway to securing a company equity pledge. You are, of course,  welcome to do both.

You can read about the pros and cons of the different equity models here.

It’s important to note that pledging equity does require formalization through legally binding paperwork. You may want to seek financial/legal advice before moving forward. With that said, we’ll provide you high-level guidance on the equity allocation process in your country of incorporation, options for where to hold your equity (i.e. Donor Advised Fund or private corporate foundation), and key considerations to take into account before finalizing your pledge.

Where to Start

If you are at an early stage, finalize your company equity donation as soon as possible. The sooner, the better from an ease of execution standpoint!

If you are a late-stage company, we recommend connecting with existing companies who have gone through this process to learn from their experience. We would be happy to schedule time to walk you through the options, and/or intro you to other Pledge 1% members who have gone through this process at a similar stage and who can guide you on next steps.

No matter your company’s stage or size, take the pledge as the first step today.

The new Pledge 1% CEO Equity Playbook was designed in collaboration with top CEOs and thought leaders to help companies of all sizes and stages formalize their equity pledges. 

Pledging equity is valuable for startups who are interested in giving back, but have yet to see profit. Download the Playbook and pledge equity today to secure your company’s impact tomorrow.  For investors, download the Playbook and learn how you can support an equity pledge for your portfolio companies.

Today’s issues will not be resolved by governments and nonprofits alone. The companies who set aside equity for philanthropy pre-liquidity have been able to fund efforts around humanitarian and disaster relief, climate change, social justice, economic development, and other pressing issues. Download the Playbook to learn more.

For more information or to set up a call with our team email equity@pledge1percent.org.