Shares and sharing alike

The other day in London I spent some time with Richard Bernstein, the brilliant CEO of Eurovestech, a fund investing in tech startups in Europe.

But we didn't only discuss tech ideas and entreprises: we talked charity. Richard is the man behind an intriguing new form for making donations to non-profits. I first learned about it last December, when 100'000 shares of Eurovestech were donated to the small non-profit I co-founded, Friends of Humanity, in Geneva.

The principle is simple: instead of donating cash, Eurovestech -- which is publicly listed on the London stock exchange -- issues new company shares in batches of 100'000 and gives them to charitable organizations. They are then of course free to sell them immediately or hold on to them waiting for a higher valuation. From Eurovestech's point of view, it costs only a fraction of what it would have cost to give the same amount in cash. From the recipient's point of view, it's a significant amount of money with a potentially interesting additional upside, depending on the share's value evolution.

There is, of course, a "hidden" cost: dilution. Simplifying, it means that every time the number of shares of Eurovestech grows, all shares are worth a bit less. A tiny bit less, actually: 100'000 extra shares are almost negligible compared to the 344 million shares that comprise Eurovestech's capital. "I believe that a dilution of 0.2 % per annum is absolutely invisible: it's basically a rounding error", Richard told me.

Over the last 7 years, Richard's company has donated a total of 8.2 million ordinary shares to some 73 different charitable and non-profit organizations, amounting to a stock market value of roughly 1.9 million euros.
And Eurovestech is just a small company. But Richard wants now to encourage other companies to do the same. He's done the maths: "If all the companies on the FTSE-100 gave 0.1% of their shares every year, that would amount to almost 1.8 billion euros", he says. "Now apply that to all the other listed companies".

He is a believer in corporate responsibility not as a marketing tool but as "an intrinsic duty to be a good citizen and do the right thing". Richard has already convinced other companies to follow suit -- one of which has already allocated 5 million euros worth of shares for charity. He is now in the process of setting up an organization, called Share And Share Alike, which will raise awareness of and promote this approach, centralize share donations, and distribute them. He hopes to be able to convince companies all over Europe to start donating shares.  "I'm ready to go to see any CEO, in any company, anywhere in Europe to explain how it works and show how easily it can be done from the company's point of view", he said.

Legally, he says, for listed companies this is easily done. The Board can issue shares. The decision must be communicated to the markets and be filed according to regulations, but that's pretty much it. Although legally this is not necessary, some companies may chose to get shareholder approval at the annual meeting -- to make it into a shareholder-approved policy.

Richard: "I want to get to the point where it's embarrassing for a company not to be "sharing alike"...".

Comments

[Sheena]

I have had the personal pleasure of meeting Richard, and his sincerity about philanthropy is inspiring. His call to action should not be ignored by those with the means to enhance the lives of others. Thank you for your coverage of this truly amazing man.

[Massimo D'Onofrio]

Inspiring!

max ;-)