Equity for charity proposed by new Upside Foundation

Startup firms may not have a dollar to their names, but that shouldn’t prevent them from giving to charity, according to a new foundation.

The Upside Foundation launched today at the Canadian Innovation Exchange event in Toronto. Its proposition is simple: startup businesses donate 0.5 to one per cent of their equity to charity in the form of options. If and when that startup exits – whether by acquisition by a larger firm or a debut on a public market – the appropriate amount of cash goes to charity at that point. There’s no money up front.

Similar models have worked for charity fundraising in Israel and in California, according to Janie Goldstein, the executive director and co-founder of Upside Foundation. Usually, donating to charity involves giving time or money – neither of which startup firms have in abundance. But donating to Upside only requires equity.

How money gets to charities selected by the Upside Foundation.

“It’s a powerful model geared for startups who are cash poor and have barely any time,” she says. “We’ve taken all the complexity out of this and done it in a way that when you have a liquidity event, the cash flows. So you’re a charitable giver before the exit.

Upside foundation has pre-approved charities that support causes relevant to the startup community. The areas of support at first will include education, poverty, and technology. Each area of support will see a limited number of charities selected to receive equity.

Donors will get visibility on the Upside Foundation Web site and be invited to events with the venture capital, angel, and startup community.

“It establishes a corporate culture of giving back,” says Robert Antoniades, the chair and co-founder of the foundation. “It helps to network with like-minded CEOs.”

Upside will work with incubators, accelerators, and investors to hopefully become a standard in the startup community, Goldstein says. “Canada can be a role model for other countries on how chartable our startups will be.”

The registered charity is currently being reviewed by the Canadian Revenue Association and equity pledged to charities will be transferred after the status is approved.

The charity’s organization is entirely done by pro bono efforts, Antoniades says. The goal is for 100 per cent of the equity to go to charities involved. The effort will be nation-wide.

Startups donating to Upside so far include:

•  DomainAgents – A negotiation platform that allows domain owners and potential buyers to agree upon a transfer of a Web site domain.

•  Shifthub – A scheduling app for mobile workforces.

•  Hovr – A browser plug-in that provides product comparison shopping.

•  Morpheus

•  UnderstoodIt – A classroom tool that allows students to claim their confusion anonymously.

•  Hubba – Data sharing platform that gets a retailer’s message to customers at a specific time.

•  Integris Pension Management Corp. – Provides registered pension plans to entrepreneurs.

 

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