Charity · Growth

How can a startup grow and be charitable?

Arpi Narula Keen tester | Agile Promoter | Newbie developer | Chatbots and AR lover | New technologies explorer

April 17th, 2017

A few years ago, when companies like Warby Parker were first getting major buzz, the idea of being a “charitable startup” was all the rage. I too have some philanthropic urges but I have no clue how my (or any other) early-stage startup could afford to give away some of our money. All of our paltry revenue goes into hiring engineers so we can grow — and I suspect that it’s like this for most early-stage startups. So is the charitable startup something that only happens when you’re older and better funded? How do companies make this business model work for them when they’re young?

Jeff Loether Event & Entertainment Technology SaaS

April 17th, 2017

The best resource I've found for exactly this question is Yanik Silver's "Evolved Enterprise" that teaches how and why charitable startups can be explosive in their growth. Go dot com.

Brandon Dixon

Last updated on April 17th, 2017

Don't sacrifice runway for charity. It may sound harsh, but a startup shouldn't be putting its future in jeopardy so that the owners can feel warm and fuzzy.

Do partner with a charity if it has a net positive effect on the bottom line. For example, if you can generate new business by donating a % to charity, then it's a win-win.

When I donate to charity (my favorite is music programs), I'm giving away money that would have otherwise ended up in my pocket. I'm not putting the companies well being in jeopardy.

Paul Benedetto Many time entrepreneur, advisor and financial guy

April 17th, 2017

I've seen several approaches to bringing charitable elements into a growing business. Before you go down that path though, I suggest evaluating the purpose for doing so. If there is not a clear correlation to your company's mission, I suggest leaving charity out of the early stage(s), keeping your valuable cash flow for operations and growth. Then, as sustainable profits come, you can decide at the company and/or personal level where to focus your charitable efforts. Make sure you are transparent with you investor base if supporting charities at the company level, not making such decisions on your own.

However, If your company mission ties closely to a particular cause (say for example you are making apparel from recycled water bottles, with one of the benefits of sourcing and manufacturing in this manner leads to a reduction of plastic being diverted from landfills and oceans), then it may make sense to use your influence in this area to promote and donate to related conservation efforts. This approach could assist with the story you are trying to tell your audience and get them join you in some way, thus potentially driving your sales growth.

Another angle could be to start a separate non-profit entity that focuses on a charitable aspect, which is somewhat tied to your main business. If it provides adequate goodwill and marketing throughput, then you might be able to better justify the spend in this area, even early on.

Third, if your company foundation (reason for being) is firmly aligned with the triple bottom line, you may want to look into becoming a "B-Corporation." One of the tenets of this organizational type is designating a certain % of profits to xyz; which would be codified into your company legal bylaws.