Frequently Asked Questions
Everything you need to know about our services and pledge process.
Who can make a Founders Pledge?
Anyone who holds equity
You can make a Founders Pledge if you hold equity in a company. This includes founders, investors, and institutional investors.
If Founders Pledge membership is free, how are you funded?
Our zero-cost model
Founders Pledge membership is completely free. We charge no commissions, dues or transaction fees for any of our services. All we require for membership is a binding pledge to donate future proceeds to charity.
Our entire operational costs are funded by a separate group of visionary founders, philanthropists and institutions who believe in our mission. These supporters provide a mix of monetary and in-kind support.
If a member wants to support Founders Pledge's operations they can choose to give a portion of their pledge directly to us (as we are a registered charity), but there is absolutely no requirement to do so.
Is the pledge legally binding?
In order to provide accountability, ensure mission alignment in our community, and avoid empty promises, the Pledge Agreement is a binding and legally framed commitment that you should take seriously.
That said, the allocation of your pledge and the non-profit organisations you ultimately decide to support, is wholly in your control. In other words, you can donate to any NPO of your choosing, anywhere in the world.
By utilising our Donor Advised Fund (more info below) you can expand your optionality and flexibility by extending your grantmaking timeline and deploying your tax-advantaged charitable funds to any corner of the planet.
Do I need board or investor approval to pledge?
Your personal choice
You do not need board or investor approval in order to sign the pledge, as it is a personal commitment made on an individual basis. Pledge donations come out of the personal proceeds a member makes on their individual liquidity, and does not affect any other stakeholder in the company.
Is Founders Pledge on the cap table?
No, Founders Pledge is never on the cap table. The pledge is based on a percentage of your personal proceeds from an exit, and you remain the owner of the equity, not us.
What happens if I never exit, or my business fails?
Give if you win
If you don't exit your business or make money by liquidating your shares, your pledge is void and nothing is owed. The pledge only means that you will donate if and when you make money from a liquidity event.
Is there a minimum pledge percentage?
Our team can work with you to identify a pledge percentage which aligns with your values and impact objectives. You can read more about how others in our community have chosen a pledge percentage here. The minimum pledge percentage is 5%. The average is 7.5%, and the highest we've had is 100%.
Are there any restrictions on the charities I can support?
You can donate to any non-profit organisations (NPOs) of your choosing, anywhere in the world, to fulfill your Founders Pledge. You can make these donations directly or you can use our Donor Advised Fund (DAF), at your discretion.
If you decide to use the Founders Pledge DAF, it is subject to relevant local legal and regulatory restrictions on grant-making. What this means practically is that our DAF can donate to NPOs that are registered as such in their respective tax jurisdictions (e.g. 501(c)3 in the US and 'Registered Charities' in the UK) as well as NPOs that are not registered. In these instances, we are obligated to vet unregistered NPOs to ensure their purposes are solely charitable. All grant requests are subject to the Founders Pledge Zero Harm Policy.
If you already have a charity you support, you can continue to support it through your pledge. Once you've selected your charities, you can amend your choice(s) at any point and as many times as you like before your donation is deployed.
How does your Donor Advised Fund work, and what are the benefits?
What is a Donor Advised Fund?
A flexible, efficient and secure way to donate to your chosen charities.
You can think of a Donor Advised Fund, or ‘DAF’, as a charitable bank account, used solely to support the non-profit organizations you care about. The basic principle is that you can contribute now, receive any available charitable tax deductions on that contribution, and then use the funds to support your chosen charities over time.
What are the advantages of using the Founders Pledge DAF?
Zero cost: Unlike most DAF programs, Founders Pledge does not charge any administration fees (for account balances of up to $5m) on our DAFs; 100% of your contribution is available to grant to your chosen causes.
Global reach: Our global end-to-end giving infrastructure allows us to make grants from the Founders Pledge DAF to charitable organizations across the world. Your contributions overseas via a DAF are still eligible for tax relief, whereas direct overseas donations typically are not.
Grant-making freedom: You’re in charge of the timing and frequency of your grant-making and choose whether you would like to remain anonymous or be connected with the charities. All grant requests are subject to the Founders Pledge Zero Harm Policy.
Expert Advice: Our in-house research team can support you in finding meaningful and effective focus for your giving. They identify strategic and evidence-led giving opportunities around the world and match those to your individual values through our Value Discovery Approach.
I want to start my own charity/foundation at some point, can I still pledge?
Of course! Founders Pledge gives you ultimate control over where your donation goes. If you decide to set up your own charity or foundation, you can designate it as the recipient of your pledge.
Will people think I'm about to exit if I make the pledge?
For any stage of your journey
Making the pledge is in no way an indication that you're close to - our even thinking about - exiting. Rather, it is a signal that you support the movement of giving, and want to hold your future self accountable. We have members ranging from companies with seed funding up to Series E+. Founders Pledge is designed to help you commit to donate when you exit, no matter where you are along your journey.
Are there tax implications to making the pledge?
Signing the pledge should not be a taxable event.
Please note that this information is for information purposes only and does not constitute legal or tax advice. Founders Pledge does not provide legal or tax advice. If you have any concerns about the tax or legal implications of signing the pledge or making a contribution to our Donor Advised Fund, we recommend you seek advice from your tax and/or legal advisor.
Can I pledge different percentages on set amounts of proceeds?
The progressive pledge
If you want to donate different percentages of different 'tiers' of your proceeds, you can sign our progressive pledge. This allows you to set different percentages for different amounts of liquidity received (for example: 10% on everything up to a certain amount, and 50% on everything above that). The minimum is still 5%. Get in touch via our joining page to learn more about this option.
Do impact investments count towards the pledge?
Impact investments made with charitable funds, the returns of which re-enter the charitable sector, count towards pledge fulfillment at the point at which funds are initially donated to a charitable giving vehicle. This type of impact investing is commonly facilitated through a donor advised fund or private foundation, and may take the form of program related investments (PRIs) or mission related investments (MRIs). Impact investments made for personal profit, and outside of the charitable sector do not count towards pledge fulfillment.
Do political or advocacy donations count towards the pledge?
We see advocacy as a potentially high-impact way to leverage dollars donated for the public good. Therefore some advocacy donations (i.e. 501(c)(4) donations in the U.S.) will count towards pledge fulfilment. Please contact us to find out if an organisation you’d like to support qualifies.
Political donations (e.g. donations to a political action committee, political party or candidate) do not count towards pledge fulfilment.
If I set up a ‘charitable’ LLC, will funds contributed count towards my pledge?
Donating through an LLC
Funds donated to charities through an LLC count towards pledge fulfillment at the time at which they are donated to charity. If you plan to use an LLC structure for your charitable giving, please speak with a member of our team about the possibility of extending your timeline for pledge fulfillment.