Frequently Asked Questions
Here you will find our most frequently asked questions.
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?
Providing accountability
The pledge is legally binding. In order to provide accountability, ensure the mission alignment of our community, and avoid empty promises, the pledge is designed to be a hard commitment.
However, the allocation of your pledge is completely flexible. You can select and re-select your charities as many times as you'd like up until deployment. By utilising our DAF you also have a lot of flexibility in choosing when you’d like to donate, and your grantmaking timeline.
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?
Your equity
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?
Minimum 2%
The minimum pledge percentage is 2%. The average is 7.5%, and the highest we've had is 100%.
Are there any restrictions on the charities I can support?
Total flexibility
You can donate to almost any charity of your choosing through Founders Pledge. The only restrictions are that the charities can’t be political or involved in missionary work.
You're free to donate to any not-for-profit (NFP) organisation, whether registered or not. However, we are obligated to vet any unregistered NFPs to ensure their purposes are charitable.
If you already have a charity you support, you can continue to support it through your pledge. You can select your charities at any point, and change your mind as many times as you like before your donation is deployed.
How does your Donor Advised Fund work, and what are the benefits?
A streamlined giving process
We operate a cost-free Donor Advised Fund (DAF) for members. DAFs are one of the most common ways of giving to charity, because of the benefits and simplicity they offer.
What is a DAF?
You can think of it as a charitable bank account. It allows you to make a charitable, tex-deductible contribution into it at the point of liquidity. You can then make grants to the charities of your choice from the DAF over time.
Why should I donate via your DAF?
A DAF has all the benefits of a private foundation, but without the large administrative burden. By utilising our DAF you create a longer timeline for your giving, and can leverage our research team to refine your giving strategy, without sacrificing any tax benefits. It's a streamlined way of giving, enabling more impact. We are one of the very few organisations in the world to provide this service for free.
I want to start my own charity/foundation at some point, can I still make the pledge?
Complete Control
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?
Tax-efficiency
We provide you with the mechanism to do tax-efficient, strategic philanthropy. Being a registered charity means that your transfer to the Founders Pledge Donor Advised Fund counts against your taxes as a charitable gift. We also deal with dual taxation as needed, in case you pay taxes in more than one country. You only have to worry about a single transaction and we’ll handle the rest. Signing the pledge is not a taxable event.