We recently covered WeWork co-founder Adam Neumann’s pledge to donate $1 billion over the next 10 years, or risk losing nearly half the voting rights in the company he founded. In our article, we linked Neumann’s pledge to tech’s “third wave” of giving (although not strictly a tech company, WeWork is trying to position itself as one in its IPO filing), which finds entrepreneurs breaking down the divisions between their businesses and philanthropy. Many of today’s young winners from tech, finance and other sectors are interested in giving sooner rather than later—an urge that is helping to shape the companies they’ve founded.
In some cases—as with Neumann, who enshrined his personal pledge in the company’s IPO filing—this third wave manifests within the IPO itself. In others, it appears pre- or post-IPO, embedded in the company’s operational structure. In some cases, the drive to give more looks honest and forthright, while in others, there are political or business considerations at play, which naturally makes people wonder how sincere the charitable commitments really are.
The third wave of tech philanthropy has been heavily influenced by the 1+1+1 model of corporate giving introduced by Salesforce and its founder Marc Benioff, who has been a relentless champion of socially responsible business. In recent years, Salesforce’s philanthropic arm has actively promoted the 1+1+1 model by creating Pledge 1%, a global campaign to convince early-stage tech companies to commit to that approach. Thousands of companies in nearly 100 countries have now joined the pledge.
As this new philanthropic wave matures, we’re seeing more founders and companies step up with commitments—and in the process, change expectations of the role philanthropy should play in a public or soon-to-be public company. Here are five examples:
Airbnb offers a prime example of the pre-IPO giving impulse at leading companies. In 2016, co-founders Brian Chesky, Joe Gebbia and Nathan Blecharczyk—all still under the age of 40—joined the Giving Pledge. The move came years before an IPO—the company still hasn’t gone public; it plans to in 2020—with the nouveau-billionaires embracing a commitment to social impact philanthropy. Each co-founder seems to have his pet interest, which you can read more about here, and are likely to figure prominently in the world of philanthropy for many years to come. Meanwhile, their company, which has a $35 billion valuation, has been developing its corporate philanthropy, with several social impact initiatives, like providing every employee with four hours of paid time off every month to volunteer in their local communities, and establishing a platform that provides free or low-cost short-term housing to individuals or families during times of need.
In light of the Giving Pledge commitment of Airbnb’s founders, it’s hard to doubt that there is a strong philanthropic impulse at work in the company. At the same time, Airbnb has plenty of self-interested reasons to project a socially responsible image, as it faces fierce attack by local regulators and housing advocates. Last year, just a week after New York City enacted a law tightening regulation of short-term home rentals, Airbnb announced grants of $10 million to seven local nonprofits—in what appeared to be a blatant effort to curry favor with the leaders of Gotham’s social sector.
In February 2017, one month before the company’s IPO, Snap Inc. co-founders Evan Spiegel and Bobby Murphy established the Snap Foundation, a separate legal entity with the aim of giving away 13 million Class A shares of Snap stock over the next 15 to 20 years. That could be on the order of hundreds of millions of dollars over the coming two decades, depending on the valuation of the company. The Snap Foundation’s mission is “to develop pathways to the creative economy for underrepresented youth in Los Angeles.'“
It’s interesting that the company is choosing to localize its giving at this point, although Snap did face public backlash after establishing its headquarters in L.A.’s Venice Beach, purportedly driving up rents and prices in the surrounding neighborhood. So the hyper-local focus may be a means of corporate atonement. The company hasn’t made any grants yet, and according to its website, is in strategic planning mode. So we’ll have to stay tuned to see how Snap configures its giving going forward.
Several weeks ago, it was reported that Lyft’s co-founders Logan Green and John Zimmer are donating more than 1.5 million shares of the company, which went public in March, to the National Philanthropic Trust, a leading donor-advised fund. The shares are worth roughly $70 million. “Lyft is deeply committed to improving people’s lives socially, economically and environmentally,” a company spokeswoman said in a statement. The move comes after Lyft’s recent announcement that the company plans to invest $50 million annually, or 1 percent of profits, whichever is greater, in transportation and community improvement initiatives in cities where it operates. The Lyft City Works initiative has already launched in Los Angeles, and focuses on transportation access and clean energy initiatives. In 2018, the company said that it plans to make every Lyft ride carbon-neutral, as well as use 100 percent renewable energy at all of its facilities.
Clearly, Lyft is making a strong push to blur the line between its business and its social/environmental activism. That effort comes as Lyft is playing second fiddle to Uber in the ride-sharing industry. With Uber facing lingering problems with its brand identity, thanks to the damaging behavior of its founder and ex-CEO Travis Kalanick, Lyft has a lot to gain, and has been positioning itself as the “good” ride sharing company. Meanwhile, like Airbnb, the company faces strong pressures from regulators and advocates. In California, for example, the company has reportedly committed $30 million—matching pledges by Uber and DoorDash—to a ballot initiative effort that aims to nullify the new California law that classifies its drivers as employees as opposed to independent contractors.
It remains to be seen whether the ballot push will actually materialize. But the promise of heavy political spending to push back against labor protections for “gig” workers is important context in evaluating Lyft’s public stance on socially responsible business and its “deep commitment to improving people’s lives economically.”
No stock in recent memory has experienced the type of meteoric post-IPO rise as Beyond Meat. Shares tripled on the first day of trading in May, and have returned over 500 percent in just four months. This company is different from others on the list in that neither it nor its founders have announced any plans for traditional philanthropy. Instead, the company itself is the social impact vehicle. While hardly unique in that regard, there aren’t a lot of examples of such firms succeeding at this spectacular level.
Beyond Meat does actually have a link to the world of philanthropy. One of its early investors was ImpactAssets, a donor-advised fund with a focus on making a positive environmental and social impact. The company invested $1.1 million into the fledgling startup six years ago, and has since watched its investment climb into the $50-$60 million range.
According to ImpactAssets, the DAF was making one or two venture investments per year when it made the Beyond Meat investment. Today, that number stands at around three per week. The DAF currently boasts a portfolio of 600 direct investments. As we’ve reported, impact investing by DAFs is a relatively new trend, one that reflects how donors—especially younger ones—increasingly look beyond traditional grantmaking to achieve social impact. Just as this article describes how more young entrepreneurs are interested in philanthropy, it’s also true that more young philanthropists are interested in business.
The pet supply e-commerce business has gone to great lengths to incorporate giving into the very fabric of its operations. The company donates a portion of proceeds to its animal rescues and shelter network system, and rescues and shelters are encouraged to contact Chewy to become a supported organization. The company also refunds its users for pet food that their pet disagrees with, and then suggests the user donate the unwanted food to a local shelter.
Founders Ryan Cohen and Michael Day built Chewy with a desire to give back, and the company continues to be very active in the animal-care space, even after its sale to PetSmart. Chewy has partnered with a plethora of foundations and nonprofits, and remains a shining example of a culture of philanthropy, inscribed early enough in a company’s foundation, persisting even after an acquisition by a major competitor.
This is just a sampling of younger companies that are thinking about philanthropy and corporate social responsibility, spotlighting super-high-profile examples. But there are many other, smaller companies that are engaging these issues early on. To get a sense of how many firms I’m talking about, take a look at the long list of startups that have joined the Pledge 1% campaign. It goes on and on.
The third wave of tech philanthropy may just be getting started.