Pledge 1% Asks VCs to Unlock Corporate Philanthropy

Pledge 1% and the Growing Movement of Equity Philanthropy

Launched in 2014, the corporate philanthropy organization Pledge 1% encourages founders to commit 1% of their company’s equity, products, or employees’ time to charitable causes, beginning from the company’s inception.

Expanding the Reach of Philanthropic Giving

Initially gaining traction with companies such as DocuSign, Box, Twilio, Okta, and PagerDuty before their public offerings, Pledge 1% is now broadening its approach. The organization is increasingly seeking the support of venture capitalists (VCs) to facilitate larger donations.

The goal is to potentially unlock billions of dollars in philanthropic contributions by encouraging companies to pledge 1% of their outstanding equity prior to going public.

A Collaborative Approach with Venture Capitalists

According to CEO Amy Lesnick, the organization employs a subtle and persuasive strategy. Pledge 1% isn’t requesting VCs to relinquish their own ownership stakes in pre-IPO companies.

Instead, the organization – originally co-founded by Marc Benioff of Salesforce and Scott Farquhar of Atlassian – is collaborating with VCs who act as “allies.” These allies are engaging in systematic conversations with founders whose companies are anticipated to become public within 12 to 18 months.

Facilitating Equity Donations

The intention is to motivate these founding teams to establish corporate-donor-advised funds. This would allow for a pre-scheduled sale of shares upon the commencement of trading, or plans to donate shares following the company’s post-IPO lock-up period.

This practice is already occurring to some extent. Over the past year, Coinbase, UiPath, and Unity collaborated with Pledge 1% to allocate equity valued at $1 billion.

Institutionalizing Philanthropic Practices

Lesnick emphasizes that a key objective is to standardize this process. Many companies aspire to integrate philanthropy into their corporate culture, but often lack clarity on how to effectively implement it, particularly during rapid growth phases.

Recognizing the influence VCs hold through their board positions, approximately 50 of them have joined forces to assist Pledge 1% in developing a practical guide for founders. This includes a step-by-step framework for formalizing equity pledges, alongside a corresponding resource for CFOs and legal counsel.

Long-Term Vision: Equity Pledges as Standard Practice

Currently, participating VCs are concentrating on encouraging their portfolio companies to consider equity gifting. However, Pledge 1% envisions a future where all venture-backed companies routinely allocate equity for social impact with each funding round.

Lesnick anticipates that, within five years, the concept of startups donating equity will be commonplace, rendering discussions about it unnecessary.

Getting Involved

Further information about the program, including a list of participating VCs such as Accel, Bessemer, Benchmark, and Andreessen Horowitz, and how to get involved as a VC or founder, can be found here.