Giving 10% of a company's founding stock to a worthy cause is in a different class from most corporate donations or "cause-marketing" programs. It is less about something your are doing, and more about who you are—part of the root structure of the tree you are growing, not a grafted-on branch. The model is indeed noteworthy for entrepreneurs wishing to help support the less fortunate while also pursuing business success.

Many people are familiar with the idea of tithing—it is a principle common to several faiths. The suggested giving amount of 10% was set forth as a wise mechanism for supporting the poor (see more below), and it is held that if you give, it comes back, perhaps in financial terms but maybe in other, more important ways.

The stock-tithe updates this principle—typically applied to individuals, or people—to today's world of commerce. Every entrepreneur should consider it. In addition to helping worthy causes, the business case is irrefutable.

Do good things and good things happen:: The first reason is the (only) obvious one—people seeing others do good, tend to want to respond positively if possible. When those who share a cause support each other's undertakings, both gain.

You'll still have to work hard and deliver excellence at a fair price. Making a stock-tithe commitment is not like turning on a faucet of business, but it can help generate sales by (a) opening doors that might otherwise be closed, and (b) acting as a tie-breaker in your favor in parity selling situations. Anyone who has sold in the trenches knows this covers a lot of ground.

Sense of purpose:: People commit most wholeheartedly when their sense of purpose is elevated. This is human behavior 101. We all want to be part of something special—something that takes us beyond ourselves, the next paycheck, or promotion. Mission statements are a start, but apple pie credos that all look alike hardly inspire. When you embed a social enterprise component into the DNA of a company though, you credibly set it apart. Your mission statement can take on a unique and genuine tone that adds meaning to the work lives of the people on your team and elevates accountability standards throughout.

It also gives the leader a deep confidence that the forces of good will are allied in the endeavor. There is no better time than during the stressful days of a startup to tap into the oft repeated covenant that those who tithe will be rewarded (see inset).

Price unchanged:: The price to the customer is not raised to support a charity as is often the case with revenue-sharing models, nor is the ongoing return to shareholders reduced as with profit-sharing models. The tradeoff is that the stock-tithe is a longer-term proposition. The advantages offset this. models compared

Up front:: It is, perhaps counter-intuitively, easier in some ways to give at the starting gate when the value is more abstract, than after the value is created. If you don't believe this, go create a company worth $100 million and then try to give 10% of the stock to a charity.

Most entrepreneurs think: "I'll make my money first and then decide how much to give away." But if you are going to give, why not do it up front, so people can respond with their support and thus increase the value of what was given—maybe by a lot. So wait a minute—the "first fruits" idea may make business sense, too?

Consider your breakeven:: The recommended structure is an "irrevocable pledge" in which stock transfers to the non-profit at a future date. If the stock value appreciates significantly during this time, the tax benefit could offset a good portion of the initial pledge. This, combined with expected value considerations, brings the increase needed to break even well below 10%—let's say to 6%.

The average American gives about 3% to charitable causes; let's say you would, as a successful entrepreneur, give away 4% of the value created in your venture. This means the value increase need only be 2% or more to make the up-front pledge model pay back (the difference between the 4% you would give anyway, and the 6% required for breakeven).

It is a no-brainer. No rational entrepreneur or investor would argue that all of the factors listed above combined would not add at least 2% to the value of a new venture. And then there's the "gravy"—the long-term value of support of good causes. Some gravy.

Partnership benefits:: The alliance of a nonprofit and a commercial enterprise can enable mutually supportive activities not possible for either organization alone, including knowledge and point-of-view exchange, scale, and brand enhancement. Sometimes a cross-sector partner can more credibly speak about the other than when promotion is purely in self-interest.

New paradigm:: Economists typically caution against corporate philanthropy on the basis that it amounts to management choosing charitable causes for the shareholders. More appropriately, they assert, management should maximize returns and leave donation decisions to shareholders. The pledge model reverses the paradigm. Founding shareholders do make the decision—up front. The very act of giving can then come back on itself when others respond, increasing the value of what was given.

Why would an entrepreneur not do this?

Lastly, and perhaps most importantly, (a) the financial scale of serious poverty around the world is minuscule compared with the value created in corporations each year, and (b) every business without exception was once a new venture. The stock-tithe is the way to get corporations engaged in the long-run. If a modest number of successful entrepreneurs were to follow this model, the problems of poverty and hunger would be substantially diminished in a matter of a few generations. This is an idea worthy of support. Actually, this is the idea of the tithe, updated to today's reality.

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