Silicon Valley is churning out millionaires every day. But how do they reinvent themselves as philanthropists?
Silicon Valley is not only home to technology: It is also where old and new money grows, and sometimes replicates, as a new generation of philanthropists is born.
While tech billionaires make up only 5 percent of the total billionaires worldwide, according to the 2017 WealthX Billionaire Census, they are some of the most meteoric and headline-grabbing givers. Notably, the U.S. is home to almost two-thirds of the world’s ultra-wealthy millennials, who are proving to be the most globally and socially concerned so far, giving far more than their older counterparts.
Perhaps it’s the high bar and humanitarian example set by Bill and Melinda Gates, Mark Zuckerberg and Priscilla Chan, Pierre Omidyar and Laurene Powell Jobs, but today’s new crop of givers is participating in philanthropy at a scorching pace. The Silicon Valley Community Foundation, a go-to for tech titans exercising their philanthropic efforts, donated a total of $1.3 billion in grants in 2017.
That’s been a sea change in strategy, says Alison Powell, senior director of philanthropy at The Bridgespan Group. Now, the largest and most consistent recent giving is coming from big individual names such as Michael Bloomberg, Zuckerberg and Gates and the individual initiatives and foundations they’ve created.
“I think all of that is changing the landscape of philanthropy pretty dramatically, and I think we’re just at the front end of it,” says Heather McLeod Grant, co-founder of Open Impact. “In The Giving Code, we talk about the mindset of these new donors. Every generation wants to create its own mark.”
She says even the term philanthropist is “a throwback to the turn of the century. Some women and some of the younger generation say it’s not necessarily a term that resonates.” Grant adds, “They think of it the same way they think of their companies. In some cases, they are literally disrupting entire industries.”
The example of history’s biggest givers are noble shoes to fill for a new tech mogul. It’s not always an easy transition. Big wealth adds additional responsibility for these newly minted players, including a drive to wonder whether or not they can make an impact for the better via philanthropy — and where to even begin.
Powell muses that many of their clients are stunned by their own success, having never expected to have such fortune, and are now humbled by their opportunity to give back but over-whelmed by the options. She says she finds their happiness is often tempered by concern; many have found that finding a way to contribute philanthropically is a bigger challenge than building their initial wealth.
Barriers to entry can be immense, particularly when new donors are attempting to bring about big, sweeping social changes. Bridgespan data shows that over the past decade, only 20 percent of the “big bets” (gifts of $10 million or more) were going toward social change.
Powell points out that when they then looked at the public statements of some of the biggest givers, 80 percent had highlighted social change as a goal, indicating that their top objectives were causes like supporting women and girls or ending homelessness.
Many of the Silicon Valley entrepreneurs with new wealth are still fresh in their careers and young, rarely over 40. Most haven’t ever had financial advisers, nor do they have any experience with managing such large amounts of personal capital.
It’s not for lack of drive: Studies have shown younger donors are giving a greater amount of their worth to philanthropy than those from an older crowd who are saving their philanthropic career for after they retire. Powell notes that many donors are now signaling an interest in spending down their resources and being the driving force behind giving in their lifetimes.
Traditional philanthropy originated with family foundations based on generational wealth, like the Rockefeller Foundation, MacArthur Foundation, Carnegie Corporation and later, Hewlett-Packard. But in the 1950s, the altruistic pursuit of giving money away ran headlong into the McCarthy era, when many foundations were called before the infamous House Un-American Activities Committee to answer detailed questions about their operations. After that harrowing period, Carnegie, Rockefeller and other prestigious philanthropic institutions created The Foundation Center in 1956 to act as a sort of watchdog.
Michele Dilworth, the director of Foundation Center West, says one of its core values is transparency, an aim that serves more than one purpose.
“With a foundation structure we’re able to see how they’re giving that money away, and that helps us all,” she explains. “It helps the nonprofits who are looking to align partners in tackling an issue because they know that ‘X foundation gives to X cause.’” Another consideration? Philanthropy is considered risk capital, and, as such, can sometimes inspire a donor’s “wild abandon,” cautions Powell.
“You hear Bill and Melinda Gates talk about being impatient optimists,” which she says are donors who want to solve a problem and will maneuver whatever it takes to achieve it. They are entrepreneurs who built their own fortunes, using their specific skill sets that helped them succeed and they now want to translate that and their resources into the social sector.
Still, social change gifts tend to face higher hurdles than simply applying business acumen to giving. Traditional institutions don’t need to jump through as many hoops. Public opinion also makes these gifts subject to more scrutiny. Most nonprofits aren’t even aware that they can ask for big gifts. Traditional institutions tend to run in the same circles as big donors and so relation-ships are more easily built. When a donor wants to offer up a big gift to a social change area, a specific beneficiary is often difficult to find.
Homelessness, the continuing bête noire of our region, has been stumping government, nonprofits, foundations and individuals of every echelon. Thirteen years ago, Daniel Lurie, the CEO and founder of Tipping Point Community, want-ed to help fight poverty in the Bay Area. He built a platform for the next generation, and now 43 non-profits exist for that purpose.
An option for early-career San Francisco Bay Area and Silicon Valley locals is to volunteer for those nonprofits, sit on their boards, or give smaller dollar amounts. There isn’t always a high-end requirement for giving and engaging, because the diligence of an earnest volunteer working one-on-one with the homeless offers another value.
Success is tricky, though. Non-profits often oversell the problem they are trying to solve and undersell themselves as the solution. Donors hear about the social need and challenges, but they don’t get a sense of how their dollars will help. The solution? Nonprofits that spell out how the gift will get them on a credible path and why philanthropy is required as opposed to other types of gifts.
Without analyzing a spread-sheet or passively consuming sporadic or cryptic updates from eager-to-please nonprofit organizations, donors need to learn to hold themselves accountable. Liz London, the director of media and conferences at Bridgespan, adds that there is a power imbalance that exists between donors and grantees that needs to be acknowledged, accepted and dealt with accordingly.
The quickest route to giving wisely is to simply do one’s homework. Donors can visit circles to speak with others who have contributed to their issue area. Talking with nonprofit leaders is ideal as they are the real experts in the field. It wouldn’t be advised to start a nonprofit blindly, as five of the same ilk may have already been established. Giving small gifts is a good way to test the waters.
Another bit of solid guidance? Jump in and get started. Powell says her best advice to aspiring givers is “getting in there and rolling up your sleeves and learning as you go.”