Charitable Giving 101 for Startup Founders and Early Employees

Most founders and early employees chose the startup world for a reason: they want to use their innovative mindset and hustle to make a positive impact.

The mission and vision of your startup will often involve disrupting or redefining an industry. Your product or service is designed to save your customers time and money, and ultimately make life easier. 

Startups with a meaningful vision and mission are sometimes more likely to encounter financial success along their journey. This successful scaling presents another opportunity for startup leaders to make an impact: through charitable giving.

Recently, we held a webinar as part of our “Moonshot Series,” with the intent of educating startup founders and employees on managing their wealth. The panel included Margot Navins, Vice President of Corporate & Executive Giving at Fidelity Charitable, who gave insights into how startups can build a charity strategy as they grow.

Startups are synonymous with slim budgets and limited runway. However, startup leaders can use innovative strategies to make an impact without opening up their checkbooks. Additionally, a strong link to charitable organizations can draw prospective employees who align with the mission.

Navins said that entrepreneurs are naturally great givers. Their attention to detail and proactive nature gives them an opportunity to be impactful.

“Entrepreneurs approach their giving in a really hands-on way,” Navins said.

“They want to be involved with the nonprofit they're giving to, in the decisions that are being made, and how the funds are being used. That really mirrors the way those entrepreneurs are approaching their business.”

Here are three tips for startup leaders looking to make a charitable impact:

1.) Remember: your time is as valuable as your money.

Charitable giving isn’t restricted to financial gifts. Startup founders and early employees often bring unique skills to the table; use those to help your favorite charitable organizations.

If you have a finance background, perhaps you could become the treasurer of a local charity. A developer could offer a coding workshop at an after-school program. Marketers can help non-profits write press releases or grow their social media following.

Plus, don’t be surprised if you encounter like-minded individuals during your volunteering activities. You might just meet your next investor, customer or business partner.

“Volunteering helps entrepreneurs expand their networks,” Navins said.

“They're learning from others, they're building awareness of their brand, and it can be a really meaningful way to add value to the organizations that they care about.”

2.) Think outside the checkbook/credit card.

When thinking of financial and time-related donations, it’s important to explore your giving options.

“I am constantly encouraging people: step away from your checkbook, put down your credit card, work with your advisory team and identify a more efficient way to give,” Navins said.

Navins mentioned a few options beyond a cash donation:

• A matching gift program for employees
• Paid time off for volunteering
• Donating a percentage of company profits to charity
• Making charitable donations in the name of an employee to recognize outstanding service

As you can see, being charitable as a startup leader can take many forms.

3.) You don’t have to wait for a liquidity event.

You might think charitable giving isn’t realistic until your company hits some large milestone such as a fundraising event, acquisition or IPO. Navins says it’s possible to start sooner.

“Founders don't think about the ability to be very charitable until after the sale of their company,” Navins said. “The wire comes in, the cash is in their hand, and then they think, okay, this is a great opportunity for me to give back.”

Navins suggests exploring a different tactic: gifting a charity a stake in your company while you’re still private. Unlike cash, this form of giving has the potential to grow substantially as your company continues scaling. Plus, your charity may reap tax benefits that allow your dollars to go farther.

Added Navins: “Startup leaders have the ability — with the right planning — to actually take their private business interest before the exit and use it as a way to fund their charitable giving in a way that is really tax efficient. It allows them to give more to the causes that they care about.”

If you’re a startup leader with a mission-driven mindset, start planning your charitable giving strategy today. With some creativity and strategic oversight, you can amplify your impact as your company grows.

Third parties mentioned and Fidelity are not affiliated.