Why most public-benefit structures fail.
There is a familiar pattern in corporate philanthropy. A company makes money for a decade. The founders make money. Eventually a foundation is created, funded with a portion of the founders' personal wealth, and run as a separate institution that supports causes the founders care about.
The pattern is well-intentioned and frequently produces real public good. But it has three structural problems.
It is voluntary at every stage. The decision to fund the foundation, the decision to keep funding it, the decision about how to direct it: all of them sit with the same people who control the company. A change of heart, a change of leadership, or a change of fortune can dissolve the commitment.
It is downstream of operating decisions. The company's day-to-day choices (what to build, who to hire, where to compete, when to exit) are made without reference to the foundation. The foundation receives whatever the company chooses to allocate to it after the operating decisions are already final.
It is governed by the same people. The foundation's board often substantially overlaps with the company's board. The check is internal.
We wanted a structure with none of these properties. We wanted the public-benefit commitment to be upstream of operating decisions, governed by people whose interests are aligned with the charitable mission, and difficult to unwind.
The instrument that does that is a share class.
How Class C works.
Our capitalization table has three share classes. Class A is held by the founder. Class B is held by partners and operators. Class C is reserved for a 501(c)(3) charitable partner. Class C has the same economic rights as the other classes, on a per-unit basis. It receives its proportional share of distributions when distributions occur. It has limited voting rights, designed to protect the class from being diluted, repurposed, or stranded by a future change in control.
Class C is not an amount of money set aside in a foundation. It is a permanent claim on the upside of the holding company itself.
When Human Centered Holdings produces a return, through an investment exit, a recapitalization, or an operating-company distribution, Class C participates pro rata. When the holding company does well, Class C does well. When it does poorly, Class C bears its share. The economic alignment is structural, not promotional.
What "mission lock" means here.
Several mechanisms in our operating agreement keep Class C from being repurposed.
The class cannot be redeemed without supermajority consent of Class C. A future controlling owner cannot simply buy the class out and end the commitment.
The class cannot be diluted faster than the other classes. Any new issuance that would dilute Class C disproportionately requires the same supermajority consent.
The 501(c)(3) eligibility requirement is in the operating agreement. The holder of Class C must, at all times, be a U.S. 501(c)(3) charitable organization in good standing. If the holder loses that status, the units revert to the holding company at no consideration and are reissued to another eligible 501(c)(3).
The class survives change of control. If the holding company is sold or merged, the acquirer takes the entity with Class C still in place. Selling out of the public-benefit commitment is not on the table.
These provisions are not hypothetical. They are written into the operating agreement that governs the entity, under Delaware law that has well-developed case law for enforcing exactly this kind of provision.
Who the partner is.
Naming the Class C partner is a serious commitment, and we are taking the time to do it carefully. We will publicly name the 501(c)(3) holder of Class C before the .human gTLD application window closes in 2026, and we will name them on this site at that time.
The criteria we are using to select the partner:
- The partner's mission must be substantively aligned with stewarding the parts of the internet that serve people first.
- The partner must be operationally mature, with a clean audit history and a board independent of HCH.
- The partner must be capable of receiving and managing a long-horizon, illiquid allocation that may not produce annual cash distributions for many years.
- The partner must be willing to publish their use of distributed proceeds annually, in a form readable by the public.
We will publish the diligence we ran on the partner at the time of the announcement.
What this commits us to.
A standing public-benefit share class commits us to a few things that are uncomfortable, by design.
It commits us to producing returns large enough to be meaningful to a charitable partner. There is no "we tried" credit. Either the holding company performs and Class C benefits, or it does not.
It commits us to publishing distributions and allocations. When Class C receives a distribution, the amount is disclosed in our annual letter.
It commits us to operating with mission visibility from the beginning. Class C is on the cap table from day one. Every operating decision we make is made in the presence of a charitable shareholder whose interests we are bound to consider.
These are constraints we have chosen. They are also the constraints we believe a holding company of this kind should operate under.
An invitation.
If you lead a 501(c)(3) whose mission overlaps with stewarding the parts of the internet that serve people, and you are interested in understanding the Class C structure in more depth, we would welcome the conversation.