Introducing 1% of Nothing
blog.1percentof.org
blog.1percentof.org
In the same vein, if you have equity in a company, you are free to do with it as you please - and donating 1% to charity is quite noble.
My reason for disliking companies giving to charities is because it imposes a single or a small number of charities on a group of people. Not all people in that group may agree with that charity's aims.
I also think charity giving is a moral issue, and morality resides within individuals not bureaucratic capitalist structures. Not that I expect you to understand the nuance of this argument. I am just part of "the problem" - whatever that problem might be.
Good companies are companies whose work (their "cause" enacted by their "people") is socially beneficial. Such companies do not need to give 1% of their equity away to charities to be good - indeed to do so, would be to distract from their socially beneficial mission.
http://en.wikipedia.org/wiki/Corporate_personhood
If anything, this pledge is just trying to invoke one percentage of empathy in the mind of this sociopath.
I personally think 'giving to charity' is the worst option, my reason being that that charity giving is a moral issue and that morals should be left to individuals rather than businesses.
Your employees may find the business's favoured charity morally repulsive. I certainly would not like the fact that 1% of the effort I was giving went to a charity with whose aims I disagreed.
When it comes to companies spending on things that their employees might find morally repulsive, I think political contributions are a much bigger problem than charity donations. Especially since those actually come from the company's revenues, rather than being taken out of an owner's equity--- I would have much less problem with political contributions if they were donations of stock by the company's owner, rather than checks written out of the corporate budget.
In any case, the most likely thing that 1% would go into if it weren't donated, in the case of startup success, is just luxury goods/travel for the founders. Do you really think a private jet for the founder is morally superior to donating to charity? What if some of the employees are morally opposed to private jets (e.g. on environmentalist grounds)?
If it's diluting shareholders who don't approve of the donation, then I agree that's different.
Good enough description for the state of world.
It's easy for the individuals that make business decisions to ignore morality since you are cutting them the slack.
Ignore the fact that business "morals" have much broader impact than the morals of any indivual.
Enter BP, Exxon, Monsanto, Tabaco COs, everyone on this list very limited list: http://corporatecrimereporter.com/top100.html.
Sure, businesses don't need to account for morality.
Just to clarify, I'm probably taking what you said a bit out of the context, but I think it's worth pointing out nonetheless since you phrased it that way.
Secondly, saying that morals should be left to individuals does not mean that individuals who run a business should not act morally and seek to have his company have a positive impact on the world.
But what an owner of a business considers morally right may well be different from what some of his employees think is morally right.
I probably disagree with your morals. And you likely will not agree with mine. But at least neither of us is forced to work for an organisation that funds a charity of the other's choice whose aims we personally find morally offensive.
A legal person taking voluntary actions which have moral consequences must be said to have morals, in any sensible definition of the word.
This (non-binding) pledge is a bit like saying "I don't trust myself enough to make that decision on my own in the future". But of course, your future self will in fact have more knowledge and context to make a better-informed decision.
The property of "nobility", when attached to a business, only makes sense as long as it promotes the brand/PR. An inanimate business has no conscience nor ego to appease. Let business owners donate (natural persons), not businesses.
(The number one limiting factor is the lack of any efficient market in utilons. See Givewell and Giving What We Can for optimal philanthropy background.)
My argument is: leave charitable giving to individuals - individuals can choose their own charities or not to give anything. That seems far more democratic to me. It may be that this will result in less charitable donations overall but at least the money will be going to organisations individuals support.
Government giving to charity, business giving to charity is good and should be encouraged.
If you work at a company that gives money to charity you can always find one that doesn't.
For example, Coors used to give to a lot of right-wing organizations and also had a lot of anti-gay hiring practices. Gay organizations targetted them and eventually they not only stopped donating to those orgs, but they changed all their corporate policies.
I'll pass on that.
1. the grandparent should be free to direct his business anyway he wants and that includes giving 100% of his profits to charity;
2. people should have discussions about what is good, logical policy for a business or individual to practice. This includes discussing whether businesses should push profits to their shareholders/employees or pay them out to charity. I agree with the sentiment that funds should probably be distributed to the stakeholders (share- and employees), because having more diverse money encourages a more efficient market in philanthropy.
Money that is properly understood as "return on investment" can safely be "pushed" to charities without any moral or ethical quandaries.
Money that is owed to employees can't be donated to charities at all. Fortunately: nobody is suggesting that it should be.
It is not a valid criticism to complain that money that the owners of the company are entitled to anyways is instead going to charity. Let's let people do good things without looking for reasons to bitch at them.
I don't mean to direct that at you, I mean that there seems to be plenty of actual disagreement on the issue and that there is plenty of room for such disagreement.
If charitable donations were not deductible, I think corporate charity would effectively disappear.
The solution that 1% of Nothing provides is that it's the individual giving the shares instead, only exercised when there's an exit (IPO or acquisition).
Or maybe the market feels differently?
It should be possible to arrange a system where two or three charities are selected (with employee involvement) and allow employees to select which one they'd like "their split" to go to.
And companies don't have to just give cash. They can allow their workers time to participate in volunteering; or they can provide logistical support for some projects, etc.
EDIT: [1] At least, in the UK the employee would have to pay tax on the funds.
The point being, you can't say a business is just an individual or group of individuals running a company, insist that they shouldn't do with their money what they want, then continue on to say that your argument is based off of letting people be free to do what they want. It's a bit contradictory if you think about it. I figure they can do whatever they want, it's their company.
There is also something of a power gap between employees and company owners that you don't seem to recognize. An employee giving some of his money to his favoured charity is not the same as a company owner giving 1% of his company to a charity.
Businesses have an equal need as citizens to build the community around them.
Businesses donate to charities all the time. They donate to their industry trade associations. They donate to the local municipalities to build parks. They donate to political campaigns. They donate to research foundations and educational institutions. They donate to amateur sports teams. They donate to employee-driven charities like cancer walks.
You can argue that businesses donate when it is self-serving, such as donating to universities to attract new employees and patentable research, or political donates, or even good PR like building a new park by the new factory.
However, all charity is self-serving. We're all building up the community around us, which benefits us both directly and indirectly. I may donate to the Heart and Stroke Foundation if my family has a history of heart disease, or to my alumni association if I use it as a base of professional networking, or to my coworker's kid's softball team funding drive to stay on his good side.
You can be cynical about any of these, but these donations are part of what bind human society together.
The founders of a company have the right to allocate equity however they choose, including the right to allocate a portion of that equity directly to a charitable cause they support. (A decision that can be more tax-efficient than allocating it to themselves, taking a distribution, then making a donation.) They may allocate equity to partners, employees, advisors, investors, themselves, or to people and organizations who they wish to support.
As a founder, I am not "inflicting a charity" on my employees by assigning 1% equity to a charitable organization, I am distributing my own property, voluntarily, in a manner of my own choosing.
You have no duty to work at my company. If you don't wish to help me succeed (for any reason, at all), you are free to work elsewhere. As an investor, you are free to invest elsewhere. Nothing is being inflicted on anyone.
Plus, if you think that running a business is all about what "you" want, and employees are solely there to help "you" succeed, you may find "yourself" with a recruitment problem.
That said, if you hold Marx's labor theory of value so dear that you feel equity holders should not be allowed to donate their equity to a charity without worker consent, that's your right.
And to be clear, I'm not passing judgment on you as a person. I don't know that you're generally morally repugnant; we might agree on nearly everything. But we disagree viciously on this point.
I don't care if an individual got the equity as a founder, an investor, an employee, an advisor, or a partner. Once they've earned the equity, they're free to do what they'd like with it, even if it's not what I'd prefer. I can't accept your arguments to the contrary.
And frankly, I think it'd be a very unprofessional employee who'd be so bothered by an individual's personal asset allocation choices that they'd refer to it as having a charity inflicted upon them, simply because you provided a portion of the labor that increased the value of the securities.
Your job in building a company is to hire the best, most mission aligned people you can and help THEM succeed. You seem to think of employees as nothing but bricks in the road to your own personal success. This attitude ensures I have no interest in ever working with you and it has nothing to do with the topic of this post.
You've extrapolated far beyond what is reasonable.
It is not a valid criticism to complain that money that the owners of the company are entitled to anyways is instead going to charity.
The pledge is the founders pledging equity. It is not "the company" giving money to charities, it's the founders themselves. Thus your point about corporate philanthropy (with which I disagree) is off-topic. The company isn't giving any money, anyway. This is individual donation, of the kind you claim to promote.
Yet given this is one feasible way for startups (who can't take out dividends) to engage in philanthropy kudos to the team and idea.
It's like asking frequent lottery ticket buyers to promise 1% of their future winnings for charity. Easy sell, though most people would probably end up giving that much anyway. It should be 10% of nothing, really...
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Can someone explain it to me?
> Facebook would never give a $1B donation to charity now, but they are held accountable to what they originally gave in equity.
Perhaps there's a reason why facebook wouldn't give $1B right now. So in hindsight that 1% donated would seem like a bad idea at this stage. So why not (for the startup) just wait and donate what feels right if they do get big?
The point is, it's easy to give that 1% when it has no real value yet. Also, it's only 1%, almost a negligible part of a whole. For most of the companies who would pledge it, this 1% would stay meaningless, but every once in a while a startup will grow into something Facebook-big, and suddenly, this 1% means a whole lot of money to charity.
Also I'd imagine the only reason any major company donates to charity is to strengthen its brand in some way. This 1% charity donation for a startup doesn't seem like it would do much that donating $1b later on wouldn't do.
Even if Facebook can't donate $1b for whatever reason, Mark Zuckerberg can still donate the equivalent of 1% of facebook through his own personal shares right now.
1% may not have real value for early stage companies but I doubt most successful founders go in undervaluing their companies or treating 1% like an external evaluator would.
> Also I'd imagine the only reason any major company donates to charity is to strengthen its brand in some way.
Not everybody who bites their nails does so because they are sexually repressed. Not every bourgeois makes organized and self-conscious efforts to push down the workers' revolution. Not all people feign compassion and altruism, but are just jealous of the strong-willed nobles.
The way I see companies is a machine that is specially built to accomplish a specific purpose or purposes.
A public company is usually not one person's property so what charities its assets go to support should not be dictated for the shareholders by giving to one specific charity. This would be underutilization of its assets if it were donated because a company usually isn't formed for the purpose of handing out money
In other words, why not leave the company to do what it's best at doing and let its shareholders who profit off the company donate or utilize the profits as they see fit. If a company chooses to donate to Red Cross for no specific practical business reason then it is essentially robbing a shareholder the right of choosing to donate his share of the profits to another charity, or of his right to spend it on strippers.
Unless the company is donating to further its goals (such as enhancing corporate image or brand), I do not see a place or purpose for arbitrary corporate charity.
The 1% equity however can be seen as a contribution from the founder's personal shares, but even then it makes little sense to commit to that early on vs later on especially if the founder plans on not failing.
If you're handing out free lottery tickets it doesn't make sense for the lottery.
E(X) = Sum from 0 to n [ 0.01 * exit(n) ]
Where n is number of pledging companies, and exit(n) is their equity value at exit.
There will be a lot of exit(n)=0, but if even just a few hit Heroku, Instagram, or FB exits, 1percentof.com will strike it rich. It's the YC approach to philanthropy fundraising.
(this is another reason why I don't like engineers getting paid in equity - that limits the availiable equity pool for investors to buy, baring share dilution.)
I would call that out somehow, because this is an important detail that I know I missed first reading. Certainly you're free to do whatever you want with your part of the equity... (but giving away 1% of the shared resource that is the company is a lot different).
Perhaps revising your marketing? You're not connecting a startup (the legal entity) to anything - you're connecting a founder with a charity willing to accept 1% of the cash value of the founder's equity at (exit?).
They’ve now since used that donation and through smart
investing, our involvement had a hand in pushing forward a
proposition that would increase funding for “at risk”
schools in Colorado by $5m forever
Some people think that schools for the gifted are more necessary than schools for the "at risk", and that for profits that build real products create far more value for society than nonprofits. If you are one of these people, you will take that 1% and use it to invest in self-sustaining businesses rather than on permanently dependent nonprofits.