Equity Donation Decision Checklist

Alicia_Schmidt — Thu, 11 Jul 2024 17:07:25 GMT

Use this checklist as you are planning your equity pledge to ensure you have alignment around the following decision points:

Choose your EQUITY SOURCE

Corporate
Founder
Hybrid

Choose your CORPORATE EQUITY MODEL

1% Upfront
1% Distributed

Choose your FOUNDER EQUITY MODEL

1% Pre-exit
1% Post-exit

Choose the % LOCKED IN UP FRONT

Full 1% upfront
0.1% (additional .1% a year spread over 9 years)
0.2% (additional .2% a year spread over 4 years)

Choose a plan for CHANGE OF OWNERSHIP

100% of the 1% Equity Social Impact legacy preserved (exerciseable/transferred)
45% total of the 1% Social Impact Legacy preserved (accelerate remaining warrants/shares)
All remaining warrants/reserved shares go away

Safeguard from SOCIAL IMPACT DILUTION

Establish your intent to top off pre liquidity
(Social Impact commitment equals 1% of fully diluted shares at exit)
Establish your intent to top off with each funding round
(Social Impact commitment equals 1% of fully diluted shares at exit)
Anchor 1% commitment on number of fully diluted shares at time of exit
Incorporate written commitment to top off in Board resolution and legal documents

Think about UPSIDE OF STOCK/SCHEDULED SALE

0.1% a year for 10 years post liquidity
0.2% a year for 5 years post liquidity
Immediate sale of all social impact shares upon liquidity
Warrant vests over time
Acceleration in event of Change of Control
Other (i.e. scheduled transfer and possibly sale begins pre-liquidity)

Try to AVOID VOLATILITY/INITIAL SALE

As soon as possible after lock up
2 months after lock up
1 year anniversary of IPO

Choose whether or not to LEVERAGE A CORPORATE DONOR-ADVISED FUND

Yes - Tides
Yes - Other Philanthropic Partner
No- Foundation and/or other philanthropic structure

article Equity Donation Decision Checklist in Make an Equity Pledge

Equity Donation Decision Checklist