Equity Donation Decision Checklist

[Alicia_Schmidt]

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