How it Works
Benefits
Incorporated into the cap table early on, the value of equity grows alongside the company’s. Founders can focus on building their business, knowing that will result in a greater charitable donation in the future. The Upside Foundation of Canada was inspired by similar, successful models in Israel and Silicon Valley.
In addition to other impact initiatives, founders can commit to a cash-free, quick, and guaranteed commitment to giving back. You can pledge if you are
Are incorporated
Are private
Are pursuing scale - either sell or IPO
Want to make an impact
Companies can join early in their lifecycle (shortly following incorporation, during an incubator program, or when pre-revenue) or late (after raising hundreds of millions of dollars, having hundreds of employees, or preparing for an acquisition or IPO).
Or connect with us by email at info@upsidefoundation.ca
Eligibility
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Attract like-minded employees, customers and investors, and promote Upside’s innovative model as a best practice for startup social responsibility. Share your pledge through your marketing channels and promote it to investors.
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Connect and collaborate with Upside’s thriving community of hundreds of impact-driven founders, as well as with our curated group of partners.
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Learn from other values-aligned entrepreneurs at Upside’s intimate events attended by startup CEOs, investors, and community leaders.
How it Works
Company donates stock options, warrants, or personal proceeds (typically 1%) to Upside
Company has a liquidity event (goes public or gets acquired)
Cash proceeds are donated to the charity of the company's choice
Frequently asked questions.
Your questions, answered.
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Equity donations through The Upside Foundation are perfect for founders of companies that:
- Are incorporated
- Are private
- Are Canadian
- Hope to grow the company to either sell or IPO one day
- Want to make an impact
Companies can join as early as at incorporation or as late as having raised hundreds of millions of dollars or having hundreds of employees. Companies can join from any industry, though the majority of Member companies are tech-focused.
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Typically, early-stage companies donate 1% of the company. Later-stage companies tend to donate a smaller percentage, often the equivalent of what they would give to a senior level employee. This percentage is entirely at your discretion, however, we encourage you to ensure the donation is a meaningful amount.
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The structure that makes the most sense for you typically depends on the stage your company is at and how your cap table is structured. In any case, the donation is triggered by a liquidity event (typically acquisition or IPO), where the cash proceeds from the donation are donated to us, and then distributed to the charity(s) of your choice.
There are four ways you can structure your donation:
1) A standard option agreement
2) Stock options
3) Warrants
4) Personal proceeds
Format 1
Sign a 5-page legal document that grants 1% of outstanding options to Upside. Typically for companies with simple ownership structures, such as newer companies or companies with only one or a few shareholders.
Format 2
Assign options from your ESOP (Employee Stock Option Plan). For companies who have, or plan to have, an ESOP, issuing options to Upside just as you would to an employee is generally the easiest route. When you have a liquidity event (acquisition or IPO), those options are exercised, we receive the shares, and sell them. The cash received from that transaction is then donated to the charity of your choice. The only change required for your ESOP is to update the "eligible participant" definition to include a registered charity or not-for-profit corporation.
Format 3
Assign warrants (similar to options but generates outside of existing option plan). For companies who are comfortable with warrants (similar to options, but generated outside of an existing option plan), we have a standard warrant agreement.
Format 4
Finally, for companies where obtaining agreement to issue equity from the company is too difficult, we have the option for founders to donate personal proceeds instead. Any founder or CEO can sign a legal agreement that indicates they have pledged to donate the proceeds from a certain number of the options they individually own (typically 2-5%). When the liquidity event happens, they redeem their options for shares, and donate the designated proceeds to us.
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10% of donations support the work of The Upside Foundation of Canada, with the remainder granted to the Canadian charities of the Founder’s choice.
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Each Member company chooses the charity(s) to which they'd like their donation allocated. For more information, please see our Charities page.
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For more information, please see our Charities page.
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If your company never exits or fails, no donation to charity will be made. There are no consequences or liabilities to Upside on your company's part. We hope that you will consider taking the pledge again with your next, more successful venture.
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When the donation is completed up front, upon issuance of options or warrants, those assets are owned by The Upside Foundation. Since we’re a registered charity, those assets will never experience capital gains tax. This structure allows a founder to donate assets pre-taxation. In that case, we can issue founders a donation receipt for the assets at their current valuation (if they have an externally validated valuation, such as would be determined in an external capital raise), however most founders choose to forego this option due to its implications of having to claim capital gains on the donated amount.
When the donation is a pledge of personal proceeds, the donation technically occurs when the cash is donated following a liquidity event. This looks like a more typical donation, where you will be fully taxed on your personal capital gains and are making a donation of post-tax dollars, after which a donation receipt will be issued.