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March 2, 2016updated 05 Sep 2016 7:58am

Tech philanthrophy: Charity allies with startup accelerator MassChallenge

News: Start-up founders are encouraged to donate when they are acquired.

By Alexander Sword

A partnership between a fast-growing start-up accelerator and a charitable organisation aims to see tech entrepreneurs donating millions to charity.

MassChallenge, which has worked with internet start-ups including Shoot.com and Pronto, will now work to encourage its 835 alumni and future founders to pledge at least a 2 percent of their exits from their start-up (the money made by founders from a successful acquisition) to charity by undertaking the Founders Pledge.

Some participants have pledged as much as 25 percent, and founder David Goldberg says that the average is 4 percent.

Making the pledge will not be obligatory to participants in the accelerator.

The Founders Pledge has been undertaken by many big names in the tech sector, including Brent Hoberman, founder of Made.com and co-founder of lastminute.com, as well as Andy McLoughlin from Huddle, Alex Depledge from Hassle.com, and Ambarish Mitra from blippar.

Swiftkey co-founder and CTO Ben Medlock has also undertaken the pledge, with his company recently being acquired by Microsoft.

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Within the ranks of MassChallenge alumni, Nicola Gammon and James Roy Poulter, founders of Shoot.com and Pronto have made the pledge, as have BovControl and Zipcube.com.

Some of the biggest names in business philanthropy come from the tech sector. Ben Medlock of SwiftKey said that his role model for charitable giving is Bill Gates, fittingly the founder of Microsoft itself.

Gates, who has often been ranked the richest man in the world, is well known for his work with the Bill & Melinda Gates foundation, which as of the end of 2014 had a $44.3 billion endowment.

Mark Zuckerberg, Facebook founder and CEO, also made headlines recently when he pledged most of his Facebook shares to a limited liability company to undertake charitable activities.

"It’s not anti-money, it actually works out that it’s better for everybody," said John Harthorne, CEO and founder of MassChallenge, at a roundtable event, saying that businesses need to take a more altruistic and long-term attitude in the wake of the "greed" that caused the 2008 crash.

"It’s more inclusive, enjoyable, inspiring and speaks better to your soul as a person and what you want out of the world. But you also get all the strategic benefits of the hoarding mentality, or even better, because if you can double the size of GDP then there’s a lot more to go around."

One of the novelties of the Founders Pledge is its tying together of these two outcomes. Because as David Goldberg, co-founder of Founders Pledge explains, the donation is only triggered upon a liquidity event, the eventual charitable donation is very tied up with the success of the company.

"The idea is that founders are potentially worth a lot of money on paper but have very little material wealth until they actually get a cheque or a wire [at the exit point]," said Goldberg. "We’re not trying to squeeze founders until they’ve had their great success."

Some large tech companies have faced criticism over the ethical standards in their supply chain or suppliers but are simultaneously involved in large-scale charitable work.

This sort of combination led Peter Buffett, son of famous investor Warren Buffett, to lament that corporate philanthropy meetings entailed people "searching for answers with their right hand to problems that others in the room have created with their left".

This is why before the point the pledge is fulfilled, Goldberg suggests that an all-out drive for growth is not the answer; the companies undertaking the pledge should nonetheless grow their businesses in an ethical way.

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