Local tech company Brandfolder turned an acquisition into a chance to deepen its giving and build diversity in the tech field.
In 2020, collaboration software company Smartsheet paid $155 million in cash and stock for Brandfolder, a Denver-based company that helps companies manage and share digital assets. While it might have seemed like just another tech sector acquisition, for Brandfolder, the windfall opened an opportunity to advance the company’s philanthropic goals while powerfully engaging its staff.
From its inception, Brandfolder has embedded charitable giving in its culture. On launching in 2012, the company signed Pledge 1%, a movement to encourage enterprises of all types and sizes to donate 1% of their assets—whether cash, employee time, products, or stock—to the organizations and causes they care about.
With cash proceeds from the sale, Brandfolder now had greater potential to support charitable causes, and the first step was to find the right vehicle for its philanthropic grantmaking.
The company decided to set up a donor-advised fund (DAF) at The Denver Foundation. Through a DAF, a gift’s charitable tax deduction is available immediately, but donors can distribute the funds later, giving them time to grow the fund and be more strategic. They also have the option of investing the money to generate returns.
“It’s a great investment vehicle if you are planning on giving to charity or being philanthropic,” explains Steven Baker, Brandfolder’s former President and CEO, now general manager at Smartsheet. “We invest in an index fund, the fund grows over time and all the capital gains from that fund go to charity.”
The acquisition enabled Brandfolder to retain 90% of its staff, one of the requirements of the deal made by Smartsheet, which understood the importance of retaining the talent behind a successful company. “They wanted to keep the band together. That was a real validation,” says Baker.
This meant gaining buy-in from all staff for the acquisition. “If the employee base didn’t want to move forward, we wouldn’t have moved forward,” explains Baker.
This is not the only example of the way Brandfolder involves staff in important decisions. When it comes to philanthropy, all employees are active participants.
This is partly because so many devote their time and skills to charitable causes; Brandfolder gives everyone paid days in which to do this. “We have an employee-volunteering culture,” says Baker. “It’s all employee-driven and anyone can join in.”
Meanwhile, the company has an employee-run committee that is not appointed by the management team and that makes decisions on where grants should go and how those grants should be structured. The two initial grantees are the Colorado Healing Fund and Chinese for Affirmative Action.
“What’s interesting to me is how deeply involved their employees are,” says Matt Zwiebel, director of Pledge 1% Colorado, which is housed in the offices of Community Foundation Boulder County. “They really try to lean on the employees versus doing it from the top down.”
What has emerged from this collaborative approach to grantmaking is a strong commitment to increasing the number of people with low incomes in technology. “As a theme, that really rose to the top when we polled the group,” says Baker.
Brandfolder also uses its funds to address immediate local crises, such as last year’s shootings in Boulder and the Marshall Fire in Boulder County.
To encourage individual giving across the enterprise, Brandfolder also uses its funds to match employee gifts. “That doubles down on the giving power Brandfolder can bring to the table,” says Baker.
While its philanthropic strategy allows Brandfolder to support groups and causes it cares about, it also serves another important purpose: creating a giving culture among the next generation of employees, who may then go on to found their own companies.
“It’s an opportunity for employees to learn about what’s going on in the community,” says Zweibel. “And it’s incredible when an entry-level employee sees the power of donating for the first time.”
Ultimately, the strategy also benefits the company itself by providing an employee engagement tool that fosters internal collaboration and staff loyalty. “Team-building events are great,” says Baker. “But when you are giving back to the community and team building at the same time, it’s a double win.”
Would you like to learn more about business donor-advised funds at The Denver Foundation? Visit our website or call the Engaged Philanthropy Team at 303.300.1790.