By Joe Garofoli. Originally published in the San Francisco Chronicle.
Few entrepreneurs focus on charitable giving when they are building their companies — mere survival is a much bigger concern.
But leaders in corporate philanthropy circles say bigger companies find it even harder to make charity part of their business model, as investors have other priorities.
A campaign launching Tuesday aims to get growing businesses to do what San Francisco’s Salesforce.com did in its infancy 15 years ago: Promise to donate 1 percent of its equity, 1 percent of its employees’ time and 1 percent of the firm’s products to charity. Called the Pledge 1% Program — and led by Salesforce and others — it aims to get 500 other corporations to do the same over the next year.
Those who have bought into the idea have seen other benefits.
“It’s good for business, too,” said Bradley Heinz, program manager at Optimizely.org, the social impact arm of Optimizely, a firm which helps users enhance and grow their websites. The San Francisco company — which includes several top execs who used to work at Salesforce — is participating in the program.
It started early
Optimizely had already incorporated philanthropy into its business model when it was a 100-person firm. Now the 4-year-old company is three times that big. Employees saw the value of giving back when it donated its product to a campaign to help earthquake victims in Haiti four years ago. Improving the fundraising website led to $1 million more in additional donations toward earthquake victims, Heinz said.
“It’s much easier to integrate this when you’re a smaller company,” Heinz said.
But that can be difficult to sell to a growing company.
“I think it’s a mental barrier for most people,” said Ryan Martens, co-founder of the Entrepreneurs Foundation of Colorado, which is leading the campaign along with Salesforce and Atlassian, a software company. “People will say, ‘What will the venture capitalists say?’ Or, ‘Oh, that’s only for older adults who have made it, not for young ones.’”
“We’re just trying to make it easier for them to do this,” said Martens, who is also a co-founder of Rally, a software company that spends 4,000 hours annually volunteering and has donated $1.5 million through incorporating its principles over the past dozen years.
While saying that the goals are noble, privately some entrepreneurs say the hardest part is getting their employees — or VCs — to part with their equity shares. That’s why Martens suggested the “time to start talking about that is when it’s worth nothing. That’s the best time to talk to people about it.”
It is somewhat easier to convince a young firm to volunteer time and offer its product at a deeply discounted rate. Many young tech firms sell their software to nonprofits for up to an 80 percent discount, not only as a way to give back to the community, but also to broaden their customer base.
Aimed largely at startups and smaller firms, the campaign will provide a website where companies can learn how to enact each of the 1 percent pillars — and allow them to satisfy their commitment by taking on one challenge at a time instead of all three at once.
Making it easier
The hope is that if a younger company can make philanthropy part of its DNA when it is smaller, it will become a way of life as it grows. So far, 200 firms have signed up during the campaign’s quiet period.
Not every company can give with the volume of Salesforce. Founder Marc Benioff and his wife, Lynne, have donated tens of millions to the UCSF Benioff Children’s Hospital, to homeless families and to San Francisco public schools. In March, Salesforce and the nonprofit Tipping Point Community formed SF Gives, an initiative to get the corporate community to raise money for Bay Area antipoverty programs.
Still, San Francisco’s income inequality divide — the fastest-growing in the country — is inspiring other growing companies to look at what they can do to help those less fortunate.
Employees at Practice Fusion, a cloud medical records company in San Francisco, decided that they would take $50,000 that would have been used for their holiday gift — usually something like a fleece pullover — and give it to the poor. Later this month, some of its 400 employees will box holiday meals for 700 San Francisco families and deliver them to three nonprofit organizations.
“People were not that into the gifts and schwag,” said Practice Fusion CEO Ryan Howard. “They wanted to give back.”
Its biggest effort
While Practice Fusion has regular volunteer programs, this is the largest such outreach in its nine-year history.
Martens, one of the campaign’s leaders, hopes that by taking the pledge, such types of philanthropy can become institutionalized.
“It breeds a very virtuous cycle,” he said. “If you lean into it, it leans back on you and delivers way more benefit than you put into it.”