Gerry Pond, one of the region’s leading tech investors, has been named to the board of directors of a national foundation that encourages startups to donate some of their equity to charities.

The Upside Foundation is a new philanthropic body that asks startups to commit options to national charities, so that when the company exits, society as a whole will benefit from the company’s success.

“Good entrepreneurs and venture capitalists have always given back to the community,” Pond, a co-founder of East Valley Ventures in Saint John, said in an interview. He added the Upside Foundation “is really another vehicle for contributing. It links just a little bit more the people in the startup community with the social community.”

Based in Toronto, the Upside Foundation is modelled on successful U.S. and Israeli organizations that have channelled the proceeds of exiting startups into charities.

“The model is based on the recognition that startup entrepreneurs have no cash and no time,” said executive director Janie Goldstein. “The options at the outset are not worth very much, but we know that as the company grows their value could be substantial.”

The idea is simple: a young company commits options to charity and then just goes about growing its business. When the company is sold, the charity cashes in. Goldstein said the group prefers options rather than stock because the foundation wants no voting rights or anything to do with the running of the companies.

The foundation hopes to receive its charitable status soon, after which it will begin its drive in earnest to enlist companies. So far, it has been talking to venture capital firms, angel groups and other support bodies, to make sure they support the foundation’s work. In particular, it wants venture capitalists to ensure startups that they will not jeopardize future funding rounds by committing options to charities.

The Upside Foundation has not yet selected specific charities, but it has identified three target sectors: poverty reduction, education and technology (such as programs to encourage women or immigrants to embrace careers in tech). Goldstein said the charities will be national, so all parts of the country will benefit from the program.

She added that she’s noticed the growing presence of Atlantic Canadian startups on the national stage and she hopes that will translate into a substantial commitment from new companies in the region. “It is a chance to have a large number of Atlantic Canadian startups pledging and showing the startups in the rest of Canada what Atlantic Canada can do.”

For his part, Pond’s work with the foundation is in line with his own efforts to do more work for philanthropic causes in recent years, along with his work as an entrepreneur and investor. He has taken part in New Brunswick’s poverty reduction initiative. And through his partnership with Boston investor Gururaj Deshpande (the two men founded the Pond-Despande Centre for Innovation and Entrepreneurship at the University of New Brunswick), he has learned the value of social entrepreneurship — the application of entrepreneurial practices to solve social problems.

“I became very involved in being a practising social entrepreneur,” he said with a chuckle. “I’m afraid I’m not as good at it as I am as an economic entrepreneur but I’m getting there.”