Recent events have highlighted the opportunity – and need – for businesses of all shapes and sizes to support the communities they operate in. Many start-up founders may appreciate the importance of giving back, but it can be difficult to do so in a simple, cash-free way.
This was the impetus for the formation of The Upside Foundation, an organization that enables Canadian start-ups to donate equity to a charity or charities of the founders’ choice. This is typically done fairly early in the company’s journey, enabling the charitable donation to grow along with the company. When the company has a liquidity event, the cash proceeds are donated.
From a legal perspective, there are various avenues to establish a pledge of this nature. For companies that have an equity incentive or stock option plan, one of the simplest avenues is to update the “eligible participant” definition to include registered charities or not-for-profit corporations, and then to issue stock options to The Upside Foundation. This is a simple action that enables Canadian start-up companies to achieve their corporate social responsibility goals in an accessible, meaningful way.
Consider speaking with your lawyer about including options of this nature in your existing or anticipated equity incentive or stock option plan. For more information on The Upside Foundation and its mission, visit its website here.
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