Internet start-ups are setting a new charitable precedent by giving stock options to charities, the New York Times reports.
For example, Snowball.com, a teen-age focused Web site, donated $1 million worth of pre-IPO shares to a Silicon Valley charity so the community could benefit from the accelerated stock market, the Times says.
Traditionally, companies wait until they reach a certain size before donating profits to charity, the Times says.
“These gifts take advantage of the financial structure of young, fast-growing Internet companies,” Susan Luenberger, vice president of development and marketing for the foundation, told the Times.
A stock option gift of $1 million could be worth ten times that much after the company goes public – providing huge leverage to charity, Luenberger explained.
Companies that set up a pre-IPO charitable fund attract socially minded employees and bolster relationships with their customers and communities, the Times reports.