Worthington-based coworking company COhatch wants to help startups grow.
Matt Davis, the company’s co-founder and CEO, told Columbus Business First he has created the COhatch impact fund, where he and his wife will give away 10% of their shares of COhatch into a donor-advised fund and then convince other CEOs and donors to donate to the fund as well.
Davis said Commonwealth, an impact investing program, will manage the fund
Jay Hein, Commonwealth's managing director, said donor advised-funds are charitable vehicles, that work in place of a foundation.
In this case, donors can donate money to COhatch's impact fund as a charitable donation, Hein said. Then Commonwealth will invest the money into companies that Davis and other donors want to back.
"(Davis) is giving his charitable donation to Commonwealth so we can make impact investments," Hein said.
Legally, Commonwealth does not have to take the donors' advice, but Hein said this fund is set up to follow Davis' investment strategy.
"We'll follow his wishes," Hein said. "But it's our job to keep things safe and legal and best practice."
This fund will invest directly into startup companies, Davis said. The donors will receive no profits — the sole intention is to give.
Davis did not disclose how much his 10% of COhatch is worth.
"It really is (about) how do you make this thing grow, how do you fund more companies?” Davis said. "We will choose to invest in social enterprises, diverse companies, minority companies, there's impact there."
Hein said when Davis gives his shares to the donor-advised fund, he has made a charitable donation that will only ever be used for charity. There is no way for him to make a private profit off of it.
If the impact investment generates revenue, Hein said the donor has the option to reinvest or donate it.
"The money can go back to your charitable pocket, but never your private fund," Hein said.
According to an information sheet from Commonwealth, tax benefits of donor-advised funds are immediate income-tax deduction with a five-year carry-forward, tax-free growth as impact investments are repaid and the avoidance of capital gains tax on appreciated assets.
Davis said there is a need for startup capital worldwide, and the fund would work like a foundation. He said it has already invested in four minority-owned companies as of Tuesday.
"This is a way to use what we're really good at, building things, to help other start ups build things. We'll measure success by how many companies we help get started and how many charities we gave to," Davis said.
He said when the fund invests in companies, the companies will receive scholarships to COhatch, education programs and other tools.
"That's my purpose," Davis said, "to help change the world through COhatch.”
Davis also recently announced his plans for the company’s expansion throughout Ohio, which include putting a COhatch in every Columbus neighborhood and then in small towns across the state.
The company currently has locations in Delaware, Upper Arlington, the OSU Gateway area, Worthington, Easton and Polaris, with construction underway in Dublin and Westerville, according to its website. It has also expanded into the Cincinnati, Indianapolis, Cleveland and Tampa, Florida markets.
“I want to be known for doing it the right way, not the most profitable way,” Davis said. “I want to do it the right way and that's community, that's putting people first, that's having that type of legacy.”
