Successful UK tech entrepreneurs are giving 2% of their exit proceeds to charity

David GoldbergMassChallengeDavid Goldberg is cofounder of Founders Pledge.

“Giving back” is something that Silicon Valley prides itself on, with many of the region’s tech billionaires and millionaires giving vast sums to charitable causes on a regular basis. Facebook CEO Mark Zuckerberg, for example, vowed to donate 99% of his Facebook shares (worth $45 billion [£32 billion] at the time of the announcement) to charities during his lifetime. Microsoft cofounder Bill Gates, meanwhile, has given away $28 billion (£19 billion) to charity and has no plans to stop.

Now a new initiative that went public less than a year ago is aiming to encourage similar philanthropy values across UK technology companies.

The initiative — dubbed “Founders Pledge” — encourages entrepreneurs to donate at least 2% of their personal proceeds to charitable causes when they exit, although many are choosing to donate more than that and some have even committed to donating 25%.

Unlike the Salesforce “1-1-1” philanthropy model, which has been embraced by the likes of Google and enterprise software firm Sage (the UK’s largest technology company by headcount), those that sign up to Founders Pledge aren’t required to donate anything until they exit. They also only donate personal capital, whereas the Salesforce 1-1-1 model involves donating company capital, time, and resources.

So far, there have been 329 pledges across 249 businesses that have combined valuations of $18.2 billion (£12.9 billion). Founders Pledge claims the commitments are worth $71 million (£50 million) in total, adding that donations of $1.8 million (£1.2 million) are currently being processed.

David Goldberg, cofounder of Founders Pledge, told Business Insider that his initiative is “very aligned” with the Salesforce 1-1-1 model in terms of “mission” but “radically different” in execution.”We focus on one component of their three and do it really, really well,” he said. “Individuals can join [Founders Pledge] on a personal basis. It takes five minutes to sign up. That’s not the process for others as far as I’m aware.

“The idea behind Founders Pledge was to empower the best entrepreneurs to solve the big problems. There wasn’t a thing that allowed people to grow a successful business and give back.”

DeepMind Mustafa SuleymanGoogle DeepMindDeepMind cofounder Mustafa Suleyman has signed up to Founders Pledge.

Among those that have committed to donate through Founders Pledge are:

  • Mustafa Suleyman, the cofounder of AI startup DeepMind, which was bought by Google for a reported £400 million in 2014
  • Alex Depledge, the cofounder of on-demand cleaning startup Hassle, which was bought by German rival Helpling last year for a reported €32 million (£25 million)
  • Andy McLoughlin, the cofounder of enterprise collaboration platform Huddle, which has so far raised $89 million (£63 million)
  • Brent Hoberman, cofounder of deals website Lastminute.com, online furniture retailer MADE.com, tech accelerator Founders Factory, and other companies
  • Ben Medlock, the cofounder and CTO of smartphone typing startup SwiftKey, which was bought by Microsoft in February for $250 million (£178 million).

Speaking at the same event as Hoberman, Medlock said:

I grew up in a pseudo-religious fanatical environment and giving was very much part of the DNA of my childhood. Everyone gave 10% to the church. That was just how you did things. Moving away, it was natural for me to think about what you do with the resources you have.

I was really inspired by Bill Gates and the concept of using the wealth that you create in your lifetime to do good. You should use it in your lifetime rather than accumulating it and passing it on to your kids.

When we started, we spoke quite a lot about what we would do if we made cash from the company.

Medlock continued to say that it’s important entrepreneurs think carefully about the impact of their pledges and use their minds to ensure the cash is utilised in the most effective way possible.

MassChallenge

Founders Pledge received a boost this week as MassChallenge, a non-profit startup accelerator, signed a global partnership to encourage its 835 alumni and future founders to pledge a portion of their exits to charity.

Two MassChallenge alumni have already signed pledges. They are Nicola Gammon, founder and CEO of gardening website Shoot, and James Poulter, cofounder and CEO of food delivery service Pronto.

MassChallenge’s alumni have raised over $1.1 billion (£780 million) and the company said that if all MassChallenge alumni pledged 2% of their personal exits then they would contribute millions to charity.

“We all are better off when we give back,” said MassChallenge CEO John Harthorne. “There are some similar programmes but this is the best one we’ve seen. We’re really excited about the partnership.”

NOW WATCH: This brilliant colour-changing toilet light solves a lot of nighttime problems

NOW WATCH: Tech Insider videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.