US companies cleaning up their shareholder registers have a new, CSR-friendly option in ShareGift USA. This British import, established in 1996, is based on a simple but effective idea: companies invite investors with a small number of shares to give those shares to ShareGift, then ShareGift bundles up the shares and sells them to raise cash for charity.
‘It’s not that we’re Robin Hood – this is win-win-win. ShareGift helps individual investors, it helps corporations, and it helps charities.’ So says Margie Thorne, who, along with Barbara Vogelstein, took inspiration from ShareGift’s founder, Lady Claire Mackintosh, and launched ShareGift USA in 2004.
Vogelstein points out that ShareGift raises around $5 mn a year in the UK, a market one fifth the size of the US, so the potential here is huge. She emphasizes that 100 percent of the money goes straight to charity: ‘We’re as lean and mean as we can possibly be.’
The two founders both come from the Street. Vogelstein has 25 years of experience in venture capital, while Thorne worked in corporate lending at Citibank. They have selected a group of charities in key areas, and they’re open to adding to or omitting from the list for a specific corporate program.
No offense, but…
Odd-lot shareholders are those with less than 100 shares, usually from an inheritance, merger, spin-off or stock distribution. They’re rarely active investors, tend to ignore shareholder communications, and may only be holding onto their shares because a broker’s fee could be more than they’re worth.
Odd-lot holders can represent less than 2 percent of shares outstanding but half the total number of holders, and each shareholder can cost around $19 to maintain and service, according to a study by the NYSE in 1997. DF King’s Gordon Stevenson reckons that dropping a single registered holder saves a company an average of $12. Any company with 5,000 to 10,000 odd-lot shareholders can do the math.
One solution is to get odd-lot investors to increase their holdings, which makes for a straightforward message: ‘Here’s an easy way to buy more shares.’ This is usually choice number one in any odd-lot program. The IR challenge is how to communicate choice number two: ‘If you don’t buy more shares, then we’d rather you sell out and go away.We’ll foot the broker’s bill.’ As a new, third choice, ShareGift softens that potentially harsh message.
ShareGift USA’s two programs completed to date were for Gannett and Circuit City. The latter, after more than 20 years on the NYSE, had amassed more than 3,000 odd-lot accounts, and when it was time for a cleanup, a board member suggested ShareGift. ‘It’s something a little bit different – not just a purchase or a sale but an opportunity to donate to a cause,’ says Bill Cimino, Circuit City’s director of corporate communications. ‘It’s not that we didn’t want people to continue to be shareholders, but for some, the shares were just sitting there, stuck in limbo.’
ShareGift’s big gift could come from post-merger cleanups, which target the acquired company’s registered shareholders who haven’t exchanged their old stock certificates a year after a merger. Telecoms giant AT&T should by now be thinking about a cleanup, which could give ShareGift USA a huge boost. AT&T would benefit, former AT&T shareholders would benefit, but, above all, charities would benefit.
