December 17, 2020

Stock IPO Pays Philanthropic Dividends

By. Tim Nicol, Senior Finance and Investment Analyst

On August 26, 2020, at 9:30 AM, the Nasdaq opening bell rang out in traditional fashion to announce the start of trading for the day. For FJC donor John Herzog, however, the ringing of the bells indicated something particularly meaningful: a more robust and active phase of his philanthropy with FJC.

On this morning, the ceremonial bell-ringing duties were being performed by Mr. Herzog’s colleague and friend Mr. Ronny Yakov to commemorate the public offering of The OLB Group, Inc., an e-commerce company for which Mr. Yakov acts as Chief Executive Officer. OLB operates in the FinTech space specializing in payment processing solutions. The firm, based in New York City and founded in 1993 initially to provide creative and marketing services to larger companies, has pivoted over time towards e-commerce, and now offers a suite of private-label services that includes business management and crowdfunding platforms, along with their proprietary payment gateway. In addition to being a longtime investor in the company, Mr. Herzog also sits on the firm’s advisory board, and he witnessed first-hand the growth and maturation of The OLB Group in recent years.

Mr. Herzog had generously donated shares in The OLB Group to his account at FJC in 2019, in anticipation of this public offering. He had experienced success working with FJC in the past on similar transactions, and he reached out to see how FJC’s services could be leveraged to help convert this financial opportunity into philanthropy. By first donating the shares to FJC and then selling them, the capital gains taxes that would normally be applicable to an individual selling the stock would be foregone (due to FJC’s tax-exempt status), meaning the money saved in taxes could be utilized for philanthropic purposes. At the time of the donation, The OLB Group’s stock was still traded on the OTC markets, and the thinness of trading volume meant that it would be incumbent upon FJC to hold the stock until such a time when liquidating the shares would be feasible. This customized transaction required approval of FJC’s Investment Committee, which also considered the appropriate pace at which FJC would liquidate the stock.

Mr. Herzog has a long and active history supporting the nonprofit sector with his philanthropy. In 1988 he founded the Museum of American Finance, a 501(c)(3) organization in downtown NYC dedicated to educating the public about the history and impact of finance through exhibits and public events. The Museum, established as a response to the market crash of 1987, houses collections that span from U.S. Treasury bonds issued in the 18th century, to Depression-era scrip, to personal correspondence of influential persons such as Benjamin Graham (author of the seminal The Intelligent Investor). Virtual events featuring expert panelists on finance and financial history have also been added to the programming. Mr. Herzog himself has long been involved in the finance industry, and was formerly CEO of Herzog Heine Geduld, Inc., a leading market maker which was purchased by Merrill Lynch in 2000. By coupling his own charitable instincts with FJC’s expertise, Mr. Herzog will be able to roll a portion of his interest in The OLB Group into material financial support for both the Museum and other non-profit organizations.

“It has been a great experience working with FJC on this stock donation,” says Mr. Herzog. “FJC was patient while we sorted through the IPO process and the subsequent lock up period, and their flexibility is allowing me to be especially charitable from my account now that the stock is liquid.”