You Do Not Need to be a Billionaire to Give It All Away, or to Make a Difference

By Michael Pirron, Impact Makers’ Founder and CEO

 

The 2015 Giving Tuesday, which followed Cyber Monday, which followed Black Friday, was especially noteworthy because of the commitment Facebook founder Mark Zuckerberg and his wife Pricilla Chan made: pledging to donate 99% of their Facebook shares to charity. The value of that gift, if all the shares were donated today, is somewhere north of $45 billion – an extraordinary amount of money.

The Zuckerberg-Chan gift is impressive not just in its size but also its timeframe: they already have started funding their education-related initiatives and will continue to do so for years to come.

This is not a “wait until I retire” kind of commitment that is more common in philanthropic circles, although the couple certainly could afford to retire even at their young ages (he is 31, she is 30). They have joined an elite group of mega philanthropists called the “Billionaires Club” which includes a few other fairly successful businessmen such as Warren Buffet and Bill Gates who have pledged their fortunes to charity. The Zuckerberg-Chan decision to structure the gift by creating a stand-alone limited liability company that will oversee giving away the shares also is unique, and not without controversy, but I will save my comments on that for another day.

Reflecting on the Zuckerberg-Chan gift and the extensive media coverage of them and the other billionaires who have made similar “give it all away” promises, it would be easy to say “wow, that’s amazing” but see no relevance of the pledge to those of us of more modest means, even where we have a deep commitment to giving. Would I make a similar commitment if I was a billionaire? Absolutely! But I am not that wealthy and even winning a Mega Millions lottery or two would not put me into the stratosphere of the Billionaires Club.

There is a way, however, to make a significant charitable impact that is within reach for more of us than what you may think. I started Impact Makers with $50, a laptop, and one small client contract with the idea of building a company for community value from the beginning. This past spring, at the milestone of having achieved one million dollars of total community impact to our nonprofit partners, Impact Makers restructured and also gifted the entire ownership of the company to two nonprofits — The Community Foundation of Richmond (TCF) and Virginia Community Capital (VCC). This is a multi-million dollar gift on paper – the actual value will come when Impact Makers is sold at some point in the future and TCF and VCC receive those proceeds.

But the impact of this gift is more immediate as well. Each nonprofit has created a social impact fund to which other companies can contribute money and/or shares of their companies. Those funds will of course do local philanthropy with the earnings, like any local foundation does. However, these funds are very different than a typical foundation model, which typically gives annually up to 5% of its earnings to charities, but invests its principal in Wall Street investments almost always in companies far away from our communities and which have little impact locally.

The funds that we have created with our gift will do something very, very different – they will also use the principal as a force for good, to improve our communities. Specifically, these funds will use the principal to invest in social enterprises and similar B Corp type companies, as well as financial investments (loans) in nonprofits and general socially-minded companies that have demonstrated their community impact, and all of which are creating jobs locally, and more importantly making a real difference locally.

Imagine if all the foundations and nonprofit endowments in our region, including universities, invested even just 1% or 2% of their assets not in Wall Street, but locally. Think of the tens or possibly hundreds of millions of dollars of capital to invest in making our own communities better – creating jobs and improving our local economy but also supporting creativity and entrepreneurship and making our community a beacon to draw that energy here, for businesses especially that are structured to make a positive impact in the world. Investments would include market-priced or just under market loans to nonprofits to help them scale, to loan guarantees for nonprofits (for fees) to help them get loans and do the good work they do. And of course there would be investments in for-profit companies making a difference; either loans, equity investments, or similar loan guarantees described above. These funds will invest in companies that have a proven track record of success as a business (financial return; first bottom line), but also are able to demonstrate how they make a contribution to community (second bottom line) or improve the environment (third bottom line).

Imagine just for a moment if those millions are available as capital and then how that would draw even more of these kinds of businesses here because that capital is available, and the impact on our community, not just in terms of job creation, but also the positive impact created when our whole community decided to use business and the free market as a force for good.

And we would be following the societal trends – millennials want to work for companies that are doing good, consumers increasingly have purchasing preferences for sustainable brands, and individual and institutional investors are increasingly doing “impact investing” to invest in sustainable companies. So let’s  come together in front of this trend and not following behind, to be leaders in this space and make what we are doing  be a model for what can be achieved!

If you share in this vision – making our community a hub for sustainable business and a model for others – then please join us!  Companies of any size can make commitments to these funds and then can see the multiplier effect applied to their gift as the TCF and VCC leverage the funds to help other companies do good.

As the executive director of the Newman’s Own Foundation and one of the B Corp founders have noted, this gifting of our company and the corresponding creation of the social impact funds is a first in the nation; a true ground-breaking initiative. We did this, however, working as information technology and business consultants running a successful company in Richmond, Virginia. We did not invent Facebook or other multi-billion dollar businesses, rather, we have leveraged our growth into creating a much more substantial and sustainable charitable impact model. Ours is a much more grass-roots model that is a total game changer: it is a group of middle class professionals doing the same work we have always done, but structuring it differently, and collectively making the same impact in the community as foundations, and eventually the large foundations, in town.

Not every company may want to take the full plunge as Impact Makers did in gifting the entire company’s value, but even more modest gifts of shares from any size company, including startups can make a difference.  Even a gift of ½% or 1% of a firm’s equity as a gift to the TCF and VCC can create a major charitable impact. Something to think about adding to your resolutions for the New Year. We hope you’ll add it, and you’ll come join us!!

Editor’s Note: Mr. Pirron and Impact Makers  is a member of The Social Venture Network - SVN is a community of the world’s leading social entrepreneurs working together to create transformational innovation, growth and impact. We’re proud Members here at The Contributor as well, so please keep your eye out for featured content to see how you can get involved.

 

 

 

 

 

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