Two core principles drive StartupAZ Foundation: performance and generosity. Together, they propel the flywheel that keeps Arizona startups moving forward, achieving success, and giving back to the community. To inspire a generation of founders to embed purpose, generosity and civic-mindedness into their growing startups, StartupAZ developed the Generosity Pledge.
The Generosity Pledge is a commitment founders take to give something back to the community when their business achieves success. It doesn’t have to be cash. Founders have pledged their time, product, company equity, and/or personal equity to help their communities and pay it forward to the next generation. While the model behind the Generosity Pledge is simple, because it is so unique it often elicits some questions. In this blog, we will address some of those common questions, and hopefully, inspire you to become the next great Arizona entrepreneur to take the pledge.
What is the purpose of the Generosity Pledge?
Arizona is a great state, but according to research by WalletHub, we’re ranked dead last among the most philanthropic states in America, and 43 in volunteerism and service. That needs to improve.
The business and tech landscape in Phoenix is continuing to grow and thrive, which means entrepreneurs and startups will be well-positioned to reverse that trend and make a positive impact in the community. The generosity pledge is designed to make it easier for Arizona startups and their founders, employees, investors, and stakeholders, to give back to the community to keep moving our community and economy forward.
And equally as important, it helps founders establish values and a deeper sense of purpose within their organizations to help attract and retain talent, and even stand out in a competitive landscape.
What can companies pledge?
What’s important isn’t how much is pledged, it’s about finding a way to give back that resonates with, and motivates, your stakeholders –– your team, investors, vendors, and customers. When we developed the Generosity Pledge - leveraging best practices from Salesforce Foundation’s Pledge 1% - we were deliberate in creating ways for startups to give back in ways that were not only meaningful and feasible for them, but that would also fuel the flywheel of generosity + performance. The following are ways companies can commit to contributing to the flywheel:
Some companies have opted to pledge company equity by issuing stock warrants to be held by the StartupAZ Foundation, a registered 501(c)3. When a liquidation event occurs, that equity then contributes to the StartupAZ Foundation fund, which is critical to helping our organization continue to support future startup founders realize the same success. StartupAZ can also administer funds to be allocated to other charitable causes as well.
2. Founder or executive equity
Most of the time, founders also have the option to allocate a certain percentage of their personal equity, which provides support in much the same way as the company equity.
3. Profits or revenue sharing
Founders can also pledge a certain percentage of company revenue or profits through a one-time contribution or on a recurring basis.
On several occasions throughout the year, companies will have the opportunity to honor their pledge of time by providing volunteers and mentors for different events. In the past, we’ve helped organize 1Mission home building trips in Mexico and other events that support our local community, as well as those adjacent to Arizona. These have become important ways to not only bond internal teams, but also connect with other startup teams in Arizona in a meaningful way.
Some companies have a product with a social purpose or use-case. This could be in the form of free or discounted use of the product or service to a specific group or community, or to anyone who may benefit from it. And this can also be limited to a certain percentage.
This allows the Generosity Pledge to inspire giving and fuel performance, while providing ways to make it feasible for budding startups.
Thus far, more than 20 local startups have taken the pledge, including fast-growing startups like Trainual, Qwick, Picmonic, and Postscript, among others.
How do companies benefit from taking the pledge?
In addition to the tremendous impact taking the pledge can have on the Arizona community, the startups that take the pledge benefit as well. The startups that take the Generosity Pledge establish a deeper sense of purpose and philanthropic values early on, which can play a major role in recruiting and retaining talent and appealing to customers.
The current generation of workers prioritize aligning with organizations that serve a deeper purpose beyond profits. More than 60% of millennials say purpose is a key reason why they choose to work for their current employers. Studies also show workers highly engaged in their organization are 57% more likely to put more effort in, and much more likely to stick around.
Consumers have also shown they are more willing to give money to a company that’s values align with their own. In fact, 59% of Americans say they are more likely to buy a product associated with a corporate-nonprofit partnership.
In the next post, we’ll outline exactly how the Generosity Pledge supports our local economy and helps fuel performance. But in the meantime, if you’re feeling inspired and generous, you can take the pledge here (and don’t worry...this is a non-binding form).
Let’s keep the flywheel of generosity and performance going strong in Arizona –– and get our great state up to the number one slot!