I am personally not a fan of businesses giving money to charity. If they have spare cash, they should give it to their employees (who in a normal business are mainly responsible for the cash surplus) as a bonus - those employees can themselves donate their earning to a charity of their choice, rather than having the company inflict a charity on them.

I overwhelmingly disagree. The number two limiting factor on philanthropy is that, despite good intentions, people just don't actually get around to it. Giving away 1% at startup-start is a supremely good suggestion just because it means something will actually happen. If my host nonprofit had $100 for everyone who heard of us and thought it was a good idea and plans to donate to us "someday", it would probably work out to around a million dollars.

(The number one limiting factor is the lack of any efficient market in utilons. See Givewell and Giving What We Can for optimal philanthropy background.)

You seem to think that the total amount of charitable donations is all important. More is better, seems to be your argument, regardless of where that money goes, where it comes from or what it is spent on. What if all that money went to a charity you disagree with, say one that promotes eugenics?

My argument is: leave charitable giving to individuals - individuals can choose their own charities or not to give anything. That seems far more democratic to me. It may be that this will result in less charitable donations overall but at least the money will be going to organisations individuals support.

Startups aren't donating to charities that promote eugenics.

This is an individual choosing to give to charity. I am an individual, and I'm choosing to give a little bit of stock in my company to charity. So what's the problem?

I'm not a huge fan of corporate giving, but the counter-argument is that when you have one big donor instead of a lot of little ones, and objectionable decisions by the company can be boycotted.

For example, Coors used to give to a lot of right-wing organizations and also had a lot of anti-gay hiring practices. Gay organizations targetted them and eventually they not only stopped donating to those orgs, but they changed all their corporate policies.

Wow. So essentially you're saying people are too stupid to know who to donate to, so instead, let's have large corporations do it. They can be manipulated by special interests for the betterment of society!

I'll pass on that.

Leaving charity solely to individuals would be a responsibility with dire consequences. Charities need money, and we all have a moral obligation to give that all of us including me fall far short of.

Government giving to charity, business giving to charity is good and should be encouraged.

If you work at a company that gives money to charity you can always find one that doesn't.

Since you're arguing against a classic libertarian position, I don't think you have much chance of changing this person's mind with logic. Fortunately, that doesn't matter: if you're in a position to allocate 1% of the equity of your company to charity, you are under every philosophy of governance free to do so; it's your company.

As a classical liberal, I believe two important things:

1. the grandparent should be free to direct his business anyway he wants and that includes giving 100% of his profits to charity;

2. people should have discussions about what is good, logical policy for a business or individual to practice. This includes discussing whether businesses should push profits to their shareholders/employees or pay them out to charity. I agree with the sentiment that funds should probably be distributed to the stakeholders (share- and employees), because having more diverse money encourages a more efficient market in philanthropy.

"shareholders/employees" vs. "charity" is a confusing way to frame the decision. The reality is more like [owners, investors, employees, charity]. Most businesses push profits to their owners and investors, and compensate employees with salaries.

Money that is properly understood as "return on investment" can safely be "pushed" to charities without any moral or ethical quandaries.

Money that is owed to employees can't be donated to charities at all. Fortunately: nobody is suggesting that it should be.

It is not a valid criticism to complain that money that the owners of the company are entitled to anyways is instead going to charity. Let's let people do good things without looking for reasons to bitch at them.

Not Objectivism. Under that theory, given ng charitably is tolerable, but giving to charities promotes the horrors of Collectivism.

You can always change a classical liberals mind with logic, that is why they are classical liberals in the first place.

"Logic" was a poor choice of words.

Actually "classical liberalism" is another ideology as all others -- and assumes too many things that out to be discovered empirically.

There are a lot of things I would like to buy that I don't get around to, including vacations and fine foods and maid service. The two is debatable whether these purchases should be forced upon me. Your rationality here appears not to have fully overcome the bias of your economic interests.

One problem with giving extra cash to employees is that the government takes a chunk of it as tax.[1]

It should be possible to arrange a system where two or three charities are selected (with employee involvement) and allow employees to select which one they'd like "their split" to go to.

And companies don't have to just give cash. They can allow their workers time to participate in volunteering; or they can provide logistical support for some projects, etc.

EDIT: [1] At least, in the UK the employee would have to pay tax on the funds.

Google does this.

This isn't spare cash, its equity. I agree with your sentiment, eg. some company giving 10% of your salary to charity on your behalf - thats obviously not a good idea, thats your money.

In the same vein, if you have equity in a company, you are free to do with it as you please - and donating 1% to charity is quite noble.

It's all cash in the end, including equity. That cash could be spent on rewarding staff, reinvesting in the business, angel investing another start-up or on a charity.

I personally think 'giving to charity' is the worst option, my reason being that that charity giving is a moral issue and that morals should be left to individuals rather than businesses.

Your employees may find the business's favoured charity morally repulsive. I certainly would not like the fact that 1% of the effort I was giving went to a charity with whose aims I disagreed.

In a cooperative that's true, but in a capitalist corporation, the equity is owned by whoever owns it, who can dispose of it as they see fit (barring any shareholder agreements preventing certain sales). It's not like Zuckerberg is going to give his Facebook IPO capital gains to his employees, or reinvest them in the business; he's going to put them in his personal bank/brokerage account. If he had donated 1% of the equity to a charity 5 years ago, the only thing that would be different is that his personal account would have 1% less of Facebook stock in it. None of the employees or the other shareholders would be affected.

When it comes to companies spending on things that their employees might find morally repulsive, I think political contributions are a much bigger problem than charity donations. Especially since those actually come from the company's revenues, rather than being taken out of an owner's equity--- I would have much less problem with political contributions if they were donations of stock by the company's owner, rather than checks written out of the corporate budget.

In any case, the most likely thing that 1% would go into if it weren't donated, in the case of startup success, is just luxury goods/travel for the founders. Do you really think a private jet for the founder is morally superior to donating to charity? What if some of the employees are morally opposed to private jets (e.g. on environmentalist grounds)?

No, it would've hit everyone. That 1% would be dilutive to all shareholders unless he specifically carved it out of his share.

That's actually not true. The way this is structured, it's the founder's stock that they're actually giving up. They're diluting themselves.

Since they're asking early-stage startups to donate 1%, I assume they're going to get the approval of all the shareholders. In that case, it's equivalent to each of the them donating a portion of their shares.

If it's diluting shareholders who don't approve of the donation, then I agree that's different.

>> morals should be left to individuals rather than businesses

Good enough description for the state of world.

It's easy for the individuals that make business decisions to ignore morality since you are cutting them the slack.

Ignore the fact that business "morals" have much broader impact than the morals of any indivual.

Enter BP, Exxon, Monsanto, Tabaco COs, everyone on this list very limited list: http://corporatecrimereporter.com/top100.html.

Sure, businesses don't need to account for morality.

Just to clarify, I'm probably taking what you said a bit out of the context, but I think it's worth pointing out nonetheless since you phrased it that way.

Firstly, businesses don't have morals. It is ridiculous to say they have. They may have a culture but they don't have morals.

Secondly, saying that morals should be left to individuals does not mean that individuals who run a business should not act morally and seek to have his company have a positive impact on the world.

But what an owner of a business considers morally right may well be different from what some of his employees think is morally right.

I probably disagree with your morals. And you likely will not agree with mine. But at least neither of us is forced to work for an organisation that funds a charity of the other's choice whose aims we personally find morally offensive.

> Firstly, businesses don't have morals. It is ridiculous to say they have. They may have a culture but they don't have morals.

A legal person taking voluntary actions which have moral consequences must be said to have morals, in any sensible definition of the word.

You both are part of the problem, where has this meme come from that companies should be heartless bastards? Companies have become poor citizens and it's this kind of thinking that's causing it.

Before accusing people of being part of the problem, you should perhaps be a little critical of yourself and your own incoherent arguments. No-one has called for companies to be heartless bastards. Nor are companies citizens of any kind. Companies are bureaucratic capitalist structures - they don't have hearts and cannot be citizens.

My reason for disliking companies giving to charities is because it imposes a single or a small number of charities on a group of people. Not all people in that group may agree with that charity's aims.

I also think charity giving is a moral issue, and morality resides within individuals not bureaucratic capitalist structures. Not that I expect you to understand the nuance of this argument. I am just part of "the problem" - whatever that problem might be.

You just explained the problem yourself. Companies put cash and profits over causes and people. The "1% of Nothing" initiative is only encouraging founders to invest a percentage of this cash to a philanthropic cause. If I understand correctly, employees and other shareholder equity will remain unaffected. Furthermore, if they don't believe in the company's philanthropic efforts, they are still free to work or invest elsewhere.

But the problem of good and bad companies is not about how much they give to charity. I bet tobacco and arms companies give huge wads to charities but that does not make them good.

Good companies are companies whose work (their "cause" enacted by their "people") is socially beneficial. Such companies do not need to give 1% of their equity away to charities to be good - indeed to do so, would be to distract from their socially beneficial mission.

So, you support socially beneficial companies, yet object to companies diversifying their social contributions by a percentage or so? I'm sorry, but I just don't buy the argument that donating a percentage of equity from each founder would be distractive.

It would be 1% distracting.

Also, 1% diversified. If 99% of a company's social value isn't good, at least a percentage may be.

Does morality lie within a charitable nonprofit corporation? If not, how is there morality in charitable giving? Where does that morality go?

So is a company a person now?

In a way, it already is:

http://en.wikipedia.org/wiki/Corporate_personhood

If anything, this pledge is just trying to invoke one percentage of empathy in the mind of this sociopath.

That's a (disputed) point of law, not a law of sociology or psychology or spirituality or such.

A lot of people here are arguing the emotional moral reason for donating, but businesses don't have emotions. The functionalist view of donating to charity is you donate when you want to build your community, however you define your community.

Businesses have an equal need as citizens to build the community around them.

Businesses donate to charities all the time. They donate to their industry trade associations. They donate to the local municipalities to build parks. They donate to political campaigns. They donate to research foundations and educational institutions. They donate to amateur sports teams. They donate to employee-driven charities like cancer walks.

You can argue that businesses donate when it is self-serving, such as donating to universities to attract new employees and patentable research, or political donates, or even good PR like building a new park by the new factory.

However, all charity is self-serving. We're all building up the community around us, which benefits us both directly and indirectly. I may donate to the Heart and Stroke Foundation if my family has a history of heart disease, or to my alumni association if I use it as a base of professional networking, or to my coworker's kid's softball team funding drive to stay on his good side.

You can be cynical about any of these, but these donations are part of what bind human society together.

I agree. Companies don't have emotions, but each one definitely has a culture. The kinds of donations they make presumably reflect that culture (over the long term).

Agreed.

This (non-binding) pledge is a bit like saying "I don't trust myself enough to make that decision on my own in the future". But of course, your future self will in fact have more knowledge and context to make a better-informed decision.

The property of "nobility", when attached to a business, only makes sense as long as it promotes the brand/PR. An inanimate business has no conscience nor ego to appease. Let business owners donate (natural persons), not businesses.

You shouldn't trust yourself, because the outside view is that most people don't get around to it. Give 1% at start; you can always give more later.

What is a business if not a collection of people working in common cause?

It seems likely that the owners of the business will face miscellaneous internet judgement no matter what they choose to do with their business.

I don't mean to direct that at you, I mean that there seems to be plenty of actual disagreement on the issue and that there is plenty of room for such disagreement.

Whats wrong with doing both? 2%, 1% to a charity of the business founder's choice, because according to you own arguments an individual has the choice to do what he wants with his money. Which includes and should not be limited to the donations of their own money to a charity of their own choosing. Then who knows, they could give another 1% as bonuses to the employees that helped execute and support his/her vision.

The point being, you can't say a business is just an individual or group of individuals running a company, insist that they shouldn't do with their money what they want, then continue on to say that your argument is based off of letting people be free to do what they want. It's a bit contradictory if you think about it. I figure they can do whatever they want, it's their company.

I am not insisting on anything. Rather you are insisting that I am insisting. Company owners can and will do what they want - but I personally am not a fan of businesses giving to charity for reasons I have outlined. That does not mean I would ban or villify businesses for giving to charity.

There is also something of a power gap between employees and company owners that you don't seem to recognize. An employee giving some of his money to his favoured charity is not the same as a company owner giving 1% of his company to a charity.

tptacek made the only refutation of your criticism that needs making later in the thread, so I'll copy it here as a direct response:

It is not a valid criticism to complain that money that the owners of the company are entitled to anyways is instead going to charity.

The pledge is the founders pledging equity. It is not "the company" giving money to charities, it's the founders themselves. Thus your point about corporate philanthropy (with which I disagree) is off-topic. The company isn't giving any money, anyway. This is individual donation, of the kind you claim to promote.

This is correct. (I'm one of the founders of 1% of Nothing)

Isn't most corporate charity a form of tax management anyway?

If charitable donations were not deductible, I think corporate charity would effectively disappear.

Corporate donations are indeed deductible, but generally speaking it's when the actual grant is made. If the grant is made when the stock has a low strike price, then there's really no benefit attached. If the grant is made when the strike price is high, then it's a significant cost on the business and dilutive to all parties involved.

The solution that 1% of Nothing provides is that it's the individual giving the shares instead, only exercised when there's an exit (IPO or acquisition).

Not necessarily, I work with companies that utilize philanthropy as a way to market to the locals. It's a sort of, "Look guys, come here, we give back to our community." and it seems to work rather well.

Exactly. In my community Whole Foods makes a big deal about giving to local orgs. They keep a running tally on the wall.

I'm sure the market pressure coming from employees like you will correct this mistake. Companies that make charitable donations simply won't be able to compete with those that do as they will lose some of their employees.

Or maybe the market feels differently?

A company giving to charity is different from an owner giving to charity.

Why? Are the employees needs greater than the recipients of charity?

I find it repugnant that this is the top-rated comment on this site.

The founders of a company have the right to allocate equity however they choose, including the right to allocate a portion of that equity directly to a charitable cause they support. (A decision that can be more tax-efficient than allocating it to themselves, taking a distribution, then making a donation.) They may allocate equity to partners, employees, advisors, investors, themselves, or to people and organizations who they wish to support.

As a founder, I am not "inflicting a charity" on my employees by assigning 1% equity to a charitable organization, I am distributing my own property, voluntarily, in a manner of my own choosing.

You have no duty to work at my company. If you don't wish to help me succeed (for any reason, at all), you are free to work elsewhere. As an investor, you are free to invest elsewhere. Nothing is being inflicted on anyone.

> You have no duty to work at my company. If you don't wish to help me succeed (for any reason, at all), you are free to work elsewhere.

Your job in building a company is to hire the best, most mission aligned people you can and help THEM succeed. You seem to think of employees as nothing but bricks in the road to your own personal success. This attitude ensures I have no interest in ever working with you and it has nothing to do with the topic of this post.

But the opposite is also true--a charitable program can help attract the best employees if it is well-aligned with the type of people you want to hire. Patagonia's strong environmental commitment has helped them attract the best employees for their business, for instance. That commitment is solely Yvon Chouinard's decision since it is his company, but it's not inflicting anything on his employees--they love him for it.

I completely agree but i don't understand how these are opposites. I believe your comment speaks to my "mission aligned" point. My position is that even if I was mission aligned with Yvon, if he views his employees as cogs in the machine to his personal success I would never work for him, or with him.

You prefer to view your employer as a cog in the machine of your personal success. You aren't quite there on the concept of teamwork yet...

> You seem to think of employees as nothing but bricks in the road to your own personal success. This attitude ensures I have no interest in ever working with you and it has nothing to do with the topic of this post.

You've extrapolated far beyond what is reasonable.

It's true, I find Marxism morally repugnant.

That said, if you hold Marx's labor theory of value so dear that you feel equity holders should not be allowed to donate their equity to a charity without worker consent, that's your right.

And to be clear, I'm not passing judgment on you as a person. I don't know that you're generally morally repugnant; we might agree on nearly everything. But we disagree viciously on this point.

I don't care if an individual got the equity as a founder, an investor, an employee, an advisor, or a partner. Once they've earned the equity, they're free to do what they'd like with it, even if it's not what I'd prefer. I can't accept your arguments to the contrary.

And frankly, I think it'd be a very unprofessional employee who'd be so bothered by an individual's personal asset allocation choices that they'd refer to it as having a charity inflicted upon them, simply because you provided a portion of the labor that increased the value of the securities.

A sudden burst of donation for a philanthropic organisations isn't necessarily as useful. They would rather be happy with a constant stream of money to build their efforts and to be able to plan for things. So dividends work out very well I guess.

Yet given this is one feasible way for startups (who can't take out dividends) to engage in philanthropy kudos to the team and idea.

Can we have a list of startups that are doing this? Quixey would be on it, and I'm pretty sure there's one or two others I've heard of, but I don't remember offhand.

No - such a list would have to be of founders doing this. The legal-entity that is a startup has nothing to do with 1% of nothing. (See my conversation with ccory elsewhere in this thread)

Does anyone have more information about this? Saw this last year, thought it was a cool idea (with a great name!), haven't heard a peep since.

It's like asking frequent lottery ticket buyers to promise 1% of their future winnings for charity. Easy sell, though most people would probably end up giving that much anyway. It should be 10% of nothing, really...

Shervin Pishevar has more info, as he is one of the initiators. Here's more info as well: http://www.hunterwalk.com/2012/04/1-of-nothing-is-something-...

--------- If you’d like to know more or understand more please get in touch with us. You can tweet us or you can email us at “info [at] 1percentof [dot] org”. ---------

Maybe it's just me but when I first saw the name I thought it had something to do with Occupy Wall Street. I like the concept but maybe "1 percent" has been tainted?

How is this better than personally donating a % of your earnings after your start up gets acquired? Does donating as a business rather than an individual hold any additional benefits?

I think it's a very good idea. Not only people can donate, but now startups can too.

I'm not sure I see the value in pledging 1% before the startup is worth anything (as opposed to asking for donations after the company is worth something).

Can someone explain it to me?

The point is that the 1% can potentially turn into a huge amount of money. Let's take the most extreme example: Facebook. If they gave 1% of their equity to a cause in the early stages, it doesn't seem like much. But with their IPO, it's now worth $1 billion. Facebook would never give a $1B donation to charity now, but they are held accountable to what they originally gave in equity.

It's worth noting that Mark Zuckerberg has already pledged to donate more than half of his wealth to charity, in addition to +$100 million he has already given away.

So I still don't see the advantage to facebook pledging 1%. Seems like you just explained why everyone would want to have had 1% in facebook at that time.

> Facebook would never give a $1B donation to charity now, but they are held accountable to what they originally gave in equity.

Perhaps there's a reason why facebook wouldn't give $1B right now. So in hindsight that 1% donated would seem like a bad idea at this stage. So why not (for the startup) just wait and donate what feels right if they do get big?

It's charity. Donating to a charity is, by definition, not supposed to give you (monetary) advantage.

The point is, it's easy to give that 1% when it has no real value yet. Also, it's only 1%, almost a negligible part of a whole. For most of the companies who would pledge it, this 1% would stay meaningless, but every once in a while a startup will grow into something Facebook-big, and suddenly, this 1% means a whole lot of money to charity.

What gives a company the right to determine what non-profit seeking donations is going to be a positive impact on society? Isn't a the company just supposed to do its main thing (whatever that may be) and do it well?

Also I'd imagine the only reason any major company donates to charity is to strengthen its brand in some way. This 1% charity donation for a startup doesn't seem like it would do much that donating $1b later on wouldn't do.

Even if Facebook can't donate $1b for whatever reason, Mark Zuckerberg can still donate the equivalent of 1% of facebook through his own personal shares right now.

1% may not have real value for early stage companies but I doubt most successful founders go in undervaluing their companies or treating 1% like an external evaluator would.

The same thing that gives any person the right to do whatever they want with their money. Contrary to popular belief, companies don't have the obligation to restrict themselves to a particular business nor do profitable things. They can donate the amount they want to the charities they want. If, as a shareholder, you don't like it, vote the board of directors out.

> Also I'd imagine the only reason any major company donates to charity is to strengthen its brand in some way.

Not everybody who bites their nails does so because they are sexually repressed. Not every bourgeois makes organized and self-conscious efforts to push down the workers' revolution. Not all people feign compassion and altruism, but are just jealous of the strong-willed nobles.

So are you saying corporations are people?

The way I see companies is a machine that is specially built to accomplish a specific purpose or purposes.

A public company is usually not one person's property so what charities its assets go to support should not be dictated for the shareholders by giving to one specific charity. This would be underutilization of its assets if it were donated because a company usually isn't formed for the purpose of handing out money

In other words, why not leave the company to do what it's best at doing and let its shareholders who profit off the company donate or utilize the profits as they see fit. If a company chooses to donate to Red Cross for no specific practical business reason then it is essentially robbing a shareholder the right of choosing to donate his share of the profits to another charity, or of his right to spend it on strippers.

Unless the company is donating to further its goals (such as enhancing corporate image or brand), I do not see a place or purpose for arbitrary corporate charity.

The 1% equity however can be seen as a contribution from the founder's personal shares, but even then it makes little sense to commit to that early on vs later on especially if the founder plans on not failing.

Think of it as a lottery. If the company takes off, your lottery ticket pays off, until then it's worth nothing. And the charity that gets the lottery ticket doesn't even have to pay for it in the first place.

This would only make sense if the charities are investing in the startups. If the charities paid to invest then it makes sense for the company as they are just another investor.

If you're handing out free lottery tickets it doesn't make sense for the lottery.

Think of it terms of expected payoff across hundreds of companies donating 1% of equity before they're worth anything.

E(X) = Sum from 0 to n [ 0.01 * exit(n) ]

Where n is number of pledging companies, and exit(n) is their equity value at exit.

There will be a lot of exit(n)=0, but if even just a few hit Heroku, Instagram, or FB exits, 1percentof.com will strike it rich. It's the YC approach to philanthropy fundraising.

Psychology. It's massively easier to get someone to agree to donate a portion of a future windfall they may receive in the future than it is to get them to donate hundreds of thousands/millions of dollars after they cash out.

What do your investors or board think about you removing 1% of the company's equity from play?

(this is another reason why I don't like engineers getting paid in equity - that limits the availiable equity pool for investors to buy, baring share dilution.)

It's not 1% of the overall equity - you're just pledging the cash value of 1% of YOUR SHARE of equity. Investors obviously don't care about how you manage your personal cash post-exit.

Ohh, your shares.

I would call that out somehow, because this is an important detail that I know I missed first reading. Certainly you're free to do whatever you want with your part of the equity... (but giving away 1% of the shared resource that is the company is a lot different).

Perhaps revising your marketing? You're not connecting a startup (the legal entity) to anything - you're connecting a founder with a charity willing to accept 1% of the cash value of the founder's equity at (exit?).

   They’ve now since used that donation and through smart 
  investing, our involvement had a hand in pushing forward a 
  proposition that would increase funding for “at risk” 
  schools in Colorado by $5m forever

This is presented as if it is unambiguously a good thing. Phrased in a less complimentary way, the nonprofit spent a significant amount of money on political lobbying to get the taxpayer to involuntarily fork over $5M/year to a cause the original guy supported ("at risk" schools).

Some people think that schools for the gifted are more necessary than schools for the "at risk", and that for profits that build real products create far more value for society than nonprofits. If you are one of these people, you will take that 1% and use it to invest in self-sustaining businesses rather than on permanently dependent nonprofits.

The two are not mutually exclusive. You can have both. He chose "at risk", you can invest in "the gifted". He chose not for profit, you can chose for profit.

Classic case of "missing the forest for the trees." Unchecked myopia and frankly just kind of a stupid point.

I presume you are referring to your own comment here, because when you strip away the insults, the mixed metaphors and the cliche, you are saying a whole lot of nothing. Why bother even posting it.

I presume you are referring to your own comments here, because when you strip away the condescension you are saying a whole lot of nothing. Why bother even posting it.

Happy to fling it, it seems, but not so happy to receive it. Anyway, congrats on writing a coherent sentence. It reads really well.

Thanks! I've been working hard on it.

Charity is very clearly the domain of rich guys winding down their careers and/or trying to buy their way into heaven. It would be a total distraction for someone in his prime.