Join a Select Group of Donors.  Since 1999, more than 175 emerging companies in Central Texas have donated equity in order to share the upside of their business successes with the community-at-large.  So far these donations of equity from predominantly venture capital-backed companies have created approximately $1.4 million in cash and marketable securities for local nonprofits.  Our current portfolio includes equity from over 100 active companies.

• Click here for a list of our member companies.

Growing companies, particularly within the technology sector, are uniquely positioned to benefit their community.  Early on, startups face constraints of time and funds, but the upside to their business success is boundless.  With a contribution of corporate equity to the Entrepreneurs Foundation of Central Texas, a company creates a nest egg that can fund its future community investment without impacting future corporate earnings or operating cash.

Create a Corporate Charitable Giving Fund Supported By Equity. The process for donating equity is simple. We provide the necessary documents and administrative support.  We liquidate the donated equity when it has cash value to create a donor-advised fund.  The company advises us on the distribution of up to 80% of the proceeds, recommending charity beneficiaries on its own schedule.  We retain 20% of the proceeds to support our operations so that we may continue to coordinate and promote corporate giving and community involvement activities for participating companies that want assistance.

Realize Potential Financial and Tax Benefits.  We can accept shares of stock or stock options/warrants to purchase stock.  Traditionally, most of our equity donations have been stock options or warrants due to the opportunity a company has to defer a charitable tax deduction until the shares are exercised.

• If a company donates shares of stock, it takes a tax deduction at the time of its donation equivalent to the fair market value of the stock at the time of donation.

• However, if a company donates stock options or warrants, the company gets a tax deduction when the stock options or warrants are exercised.  Through a letter ruling the IRS has indicated that a company does not take a tax deduction at the time of its donation of stock options or warrants (a deduction is often of limited utility since the company may not have any income tax liability at that time).  Instead, the company gets a deduction at the time of exercise.  The tax deduction is calculated by taking the “spread” on the date of exercise of the stock option or warrant – the fair market of the shares at the time of exercise less their exercise price.

• In each case, the tax deduction cannot exceed 10% of the corporation’s taxable income in the applicable period.

Note: Donors are advised to seek advice from their legal and tax advisors and/or auditors with regard to their specific situation.

Regardless of the type of equity companies donate, the primary benefit is being able to create a nest egg to eventually fund the community activities of their choice without impacting future corporate earnings or operating cash.  The earlier a company takes advantage of this unique financial vehicle, the greater the upside is for the company and for the community-at-large.  Here’s an example:

If your company is interested in becoming a member company of the Entrepreneurs Foundation of Central Texas with a contribution of equity, please contact Eugene Sepulveda for more information.