Corporations/Execs

How much can a corporation give as a charitable gift?  Ask it!  Or rather...the people who work there.  “Do you have a charitable giving program or person in charge of charitable giving?”  Most larger corporations have a corporate giving program and guidelines similar to foundations.  Here are a couple of examples:

A survey of global corporate giving by the world’s largest companies found that charitable giving was about 0.13% of revenue in 2014.  US companies give about 0.1% of revenue or 0.7% of pre-tax profits.  The Foundation Center includes information about corporate giving programs in its subscription-based Foundation Directory Online.  Your library may have other resources.

Public vs. Private Companies

What’s the difference?

  • Public companies offer shares on public markets (e.g. NYSE, NASDAQ) to any member of the public who can pay the share price.  Those who purchase shares become owners of a peice of the company. 
  • Public companies are required to file regular reports and disclosures with the Securities and Exchange Commission (SEC).  These documents are available online from the SEC’s website for to public inspection.
  • Private companies also issue shares, but they are held by a small number of owners or investors.  Thus they are frequently referred to as “closely held”.
  • Private companies are not required to disclose ANYTHING to the public (with exceptions noted below), though a very large proportion of them voluntarily provide data to business directories such as Dun & Bradstreet/Hoovers, Standard & Poors, and others.

When do private companies have to make public disclosures?

  • A private company must file the same documents (10K, 10Q, 8K) as the public companies when:
    • It has assets >= $10 million
    • The number of investor shareholders exceeds
      • EITHER 200 accredited investor shareholders (defined as a corporate entity with at least $5 million in assets OR an individual with a personal net worth of $1 million - exculding the value of their primary residence - or who earns $200,000 or more annually)
      • OR 2,000 individual share holders of any kind
  • There is a speical rule for private banks, bank holding companies and savings and loans: they must file with the SEC  when their assets >= $10 million and they have at least 2,000 shareholders regardless of accredited investor status.
  • For more information on the rules governing when private companies must make public disclosures, see this excellent summary.

What about Form D?

This is also known as the “Notice of Sale of Securities”.  Privately held companies that raise capital from outside investors are required to file a Form D with the SEC to declare an offering of securities. Many of these filings show investments in small, growing companies through venture capital and angel investors, as well as certain pooled investment funds.  (from Wikipedia)  

The purpose of this regulation is to allow private companies to raise capital without the burden of an expensive public offering, while still notifying the SEC that they are diluting their ownership with more investors.

Why should you care about Form D?  

  • It notes the value of investments made by outside investors in your target company.  
  • Those investments represent a dilution in your prospect’s ownership (i.e. the owner trades shares in the company for the investment, giving up some part of the ownership).
  • At least some of the officers of the company are listed on the Form D.
david.lamb@lambresearch.com © David Lamb 2020