Volatile charity – Stock option gifts on rise

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.

The Community Foundation Silicon Valley has also received stock option contributions from eBay, eLoan and AltaVista, the Times reports.

“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.

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