One More Year Effort Becomes “Angel Fund”


For those of you who have been following since early last year, you know about our plan to devote all of our final year’s paychecks and bonus to a good cause. We first wrote about our “One More Year” fund last April and gave more detail on the background on the idea and an update in December.

To make us feel like we were in good company, a few readers also directed us to great stories that showed how Benjamin Franklin, Sean Connery, and David Beckham did similar things – in a sense “working for giving”.  It was great to read these approaches to giving, although we didn’t spend much time thinking about what we would do with the money.  We figured that this would be a good thing to keep us occupied in early retirement – meeting with folks and deciding what to do with a healthy six-figure amount.

As next week looms as my final day in the office, we have started to formulate an approach for the money.  Our first thought was just to find some charities to give the money away to.  There are many good organizations in our metro area (and others around the world) that can take the money and put it to good use.  That said, many readers suggested we don’t just GIVE the money away quickly, but rather INVEST the money and donate the proceeds or build up a bigger endowment of sorts over time.

After almost a year’s consideration, I think we have found away accomplish most of these goals.  A way to focus on doing work that is good for society, allow ourselves to get involved in some causes, and at the same time – leverage my 25+ years of business experience to grow the impact and ultimately build something bigger.

The approach we are planning is to participate as angel investors in early-stage companies that need investment to get off the ground and accomplish social good.  Ultimately, we see this as an opportunity to build a bigger charitable ‘endowment’ that will benefit more people over the course of more years, before it is finally disbursed.  

While many angel investors are focused on discovering the next Apple, Google, or website to make money, our approach will be to restrict our investments to young companies that we think can make a clear difference in the world.  We will reinvest profits into more giving in the future.

Some of the areas I can see focusing on would include: businesses that enhance health & safety, organizations that promote education & human development, products that improve conservation & use of natural resources, and initiatives that benefit economic development in underdeveloped communities/countries.

If you are not very familiar with angel investing, here is an overview and how we will approach it …

  • SHARK TANK – Young companies that need capital investment to get to the next step in their growth introduce their business case (often pre-commercial) to angel investors in presentations that are conducted in a ‘Shark Tank’ like fashion.  What’s different than the TV show is that we’ll be working with (not against) other angel investors to assess and do due diligence on our investments.
  • DISCIPLINED – No decisions are made on investment at the initial pitch.  Instead, interested angel investors meet with management to understand the company in detail, negotiate an agreeable terms sheet, and conduct disciplined due diligence before investing.  In the angel group we are joining, each investor makes his/her investments individually.  We’ll do it through our LLC.
  • SOMETHING FOR EVERYONE – On a typical presentation night, angel investors will see companies from a wide range of industries – fashion brands, websites, financial services, medical devices, and retailing.  Our goal will be to focus only on potential investments that produce a clear social good.  In the first meetings I attended I saw a number of companies that focused on things like improving healthcare and serving financially underserved populations.
  • RISK / REWARD – The risk level for these types of investments is relatively high – more than 80%.  Many companies never get past their early stages of growth and do not return anything to investors.  At the same time, the ones that succeed payoff big – both for their investors and the community.  The deals are structured such that the ones that are successful more than make up for the ones that fail.  Studies show that angel investors (adequately diversified in their bets) produce 20-30% annual returns.
  • ACCREDITATION – Because these are higher risk ‘bets’ that aren’t available to the public, angel investing groups require their members to be SEC accredited investors.  That is, investors must have a net worth over $1M or annual income >$200K, so that they can afford the risk that comes with angel investing.  Additionally, angel groups are typically exclusive in their membership and are open only to those who are invited to apply by other members.
  • GET INVOLVED – Just as on TV’s Shark Tank, young companies are often looking for more than just financial help.  Many of them are looking for strategic investors with knowledge or connections in a particular industry.  I also hope that I can play a role as an executive advisor to some of the companies that we invest in and help them grow with the knowledge I gained in my career.
  • TAX BENEFITS –  Our state has a Angel Tax Credit that provides a 25-percent credit to investors that put money into startup companies focused on high technology, new proprietary technology, or a new proprietary product, process or service in specified fields.

All together, I am excited to embark on this path to make the most of our “One More Year” savings.  I think it can a fun and profitable (for good) undertaking that will be very rewarding for all involved.  

There are some definite high-rollers in the angel group I am joining, but my goal will be to focus on our charitable mission and not get caught up in investing money just for money’s sake.  I’m thinking of it as ‘Capitalism with a heart.”

What kinds of companies would you invest in to produce a social good?

Image Credit:  Rheims Cathedral, Pixabay

13 thoughts on “One More Year Effort Becomes “Angel Fund”

  1. I may have misunderstood, but this seems to be a departure from I perceived to be your initial purely philanthropic intentions. Investing in companies producing social good is better than investing in startups that promise to pollute or make assault rifles, but it’s still investing, which is not the same as giving to charity. The usual goal of investing is to grow the size of the initial investment.

    If your intention is to grow the OMY fund to double or triple, and then donate the money to charitable causes, doing so in a socially responsible manner is laudable, and I would make your intentions known in this post. I think your readers would want to know what the ultimate plan is for the fund.

    I have stated plans to do something similar to you OMY fund. I’ll be working an extra 18 to 24 months to reach my financial goals by building up a Donor Advised Fund to equal 10% of my invested nest egg. Once the money is in the DAF, it can only go to bona fide 501(c)(3) charities. That could be seen as a benefit (you’re committed to giving) or a downside (you can’t get your money back or use it for an alternate purpose).

    I do think the angel investing concept is really interesting, and I think would be fun to be involved in startups that are serving a public good. Let us know how it goes!

    Liked by 1 person

    1. Good thoughts. Yes, the intention is to keep the philanthropic goal – “INVEST the money and donate the proceeds or build up a bigger endowment of sorts”. Sorry if that was not clear. At your suggestion, I did update the post to ensure that is well understood.

      I like your approach to using a DAF, but that would limit our ability to fully donate the money in a tax-advantaged way at this point (Google ‘Pease Amendment’). In a few years we will be able to do this, so for now we will put the money to work.

      I guess our approach is similar to what has been in the media regarding the Steve Jobs estate and massive Zuckerberg philanthropic fund – using an LLC to have more options in how the money can be exercised for social good (although we will stay away from political donations).

      Liked by 1 person

      1. I like the clarification and bold print. It gets the point across and I’m glad to see you haven’t altered the ultimate goal of philanthropy.

        The Pease provision is really just a surtax on income for high earners and should not discourage charitable giving. It’s a lot to wrap my head around, but the explanation is laid out pretty clearly here:

        The DAF does limit you to donating 50% of your AGI in cash or 30% of AGI when giving appreciated assets, so you wouldn’t be able to fully fund it with all of your take home pay in one calendar year. I’ll be spreading out my giving over several years as I approach my target date.

        The Jobses and Zuckerbergs are in good company now. Best of luck in this venture!


        Liked by 1 person

  2. Sounds like a great way of giving back. I like the idea of investing in companies that are trying to help and educate. I have been volunteering for close to two years now on my local school board and we really need to better preparing our children for careers, finance, and life in general coming out of High School. I’d would look to invest money or time in companies that are focused in that area.

    Liked by 1 person

    1. Yes – projects that promote education benefit society in so many ways. Many companies focus on products that help schools and teachers enhance their educational outcomes.


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