06-24-2024 06:24 PM - edited 06-29-2024 05:42 PM
Board support is vital in making an equity donation not only for legal and financial compliance but also for enhancing stakeholder confidence and organizational culture. It demonstrates a unified commitment to social responsibility, reinforcing the company’s dedication to creating positive change.
“Start by meeting 1:1 with the Board member who is most likely to support you. You probably have a rough idea of who prioritizes impact or is most friendly to your ideas, but search for investors or firms who have a track record of supporting social impact. This individual will become your ‘Boardroom Ally’ and your partner to get the equity done. ”
- Byron Deeter Partner, Bessemer Venture Partners |
To rally your Board, consider these four steps:
Look for investors who are explicitly supportive of their portfolio companies setting aside equity for philanthropy.
We recommend that you identify firms and/or specific investors who have served on Boards of other Pledge 1% companies who have taken the equity pledge (see list to the right). These investors will be familiar with the Pledge 1% equity models and best practices. They can be your thought partners as you refine your Equity pledge recommendations and navigate your Board. Your Boardroom Ally can be a valuable asset as you think through equity model selection, flesh out details (% upfront, number of years, M&A implications, etc), navigate any “naysayers,” strategize appropriate timing, and build a coalition of Board support.
Pledge 1% can help you with this research. Contact us at BoardroomAllies@Pledge1Percent.org for more information.
After securing initial support from your first member (typically a Boardroom Ally), then meet individually with each Board member to address their questions or concerns without the pressures and politics of a group setting. Begin with the next Board member who is likely to support your initiative. Mention the endorsement of the first Board member and present your case. Repeat this approach until you have built a coalition of support
Help Board members to understand why this is both the right thing and the smart thing to do for the company. See how Jeff Lawson, Co-Founder & CEO of Twilio, walks through his strategy:
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1. Commit to the discussion: Put the item on the board agenda and be unwavering in your desire to address it. 2. Explain your motivation: Articulate why you care about equity donation. 3. Highlight existing companies: Showcase other companies (ex. Twilio, Twilio, SendGrid, PagerDuty, DocuSign, Slack, etc.) that have donated equity at a late stage. 4. Make the business case: Highlight how equity donation can benefit your business goals. 5. Emphasize existing support: Assert Board members who already support this initiative. 6. Review equity model implications: Provide a quick overview of the model you selected, the implications, and trade-offs i.e. Corporate 1% Distributed Model 0.1% upfront and 0.1% a year post liquidity for 9 years; dilution spread out; annual board vote; some social impact risk. 7. Relay urgency: Reassure your board that you don’t need to have all the answers now, but that you do need to decide quickly. You’ll need to formalize the equity grant, before you file your S-1, and you will want to include language about the grant in your S-1. Any decisions about cause selection, how to hire a leader, and empower employees can occur later. |
Once you have Board support, make it official by:
At minimum, the Board Resolution should include:
Ideally, the resolution should include (or have a clear pathway to include) the following:
Have conviction.
"Clearly articulate why making the pledge can drive purpose and employee engagement. Show your conviction for why it is good for business and for the world.”
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Be prepared.
"Anticipate objections. Learn from others who have done this before you. ”
- Sameer Dholakia, |
Stay firm.
"Don’t let others talk you into a lower number. It’s called Pledge 1% for a reason! Many successful companies have set aside equity, including Twilio, Twilio SendGrid, DocuSign, Salesforce, PagerDuty, Zuora, Pluralsight, Upwork, Okta, Lookout, and others. Join us, and help change the way the world does business."
Co-Founder & CEO, Twilio |
Reach out.
"You are not alone. The Pledge 1% team along with CEOs and Board members of Pledge 1% companies are here to help you. And some day, we hope you will be there to inspire and support other CEOs that follow in your footsteps.”
- Dan Springer, |
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