News and analysis
February 09, 2014

Gifts Surge From Rich U.S. Donors

Rick Wilking/Reuters/Newscom

Mark Zuckerberg, co-founder of Facebook, and his wife, Priscilla Chan, led the philanthropic pack in 2013 with a nearly $1-billion gift to the Silicon Valley Community Foundation.

America’s most generous donors are ditching the caution that marked so much of their giving as the economy stalled and are roaring back with a bevy of multimillion-dollar contributions to colleges, hospitals, and other causes.

The Chronicle’s ranking of the 50 donors who give the most to charitable causes shows that the wealthy contributed $7.7-billion last year. That’s 4 percent more than in 2012.

Because that figure includes some sizable bequests—such as $750-million for an environmental foundation—signs of a surge in donations are clearest in the giving records of living donors: The $6.2-billion they pledged last year was nearly equal to the sums such donors provided in the previous two years combined. It’s also more than living donors have given since 2008, and the $86.1-million median gift in 2013 set a record.

Last year’s stock-market surge was behind the boom, but one expert also suspects the intergenerational transfer of wealth is kicking into high gear and that charities can count on getting lots of big gifts in 2014 and beyond.

“There is a glut of money out there,” says Claire Costello, a philanthropic executive at U.S. Trust.

$1-Billion Tops the List

Mark Zuckerberg, co-founder of Facebook, and his wife, Priscilla Chan, led the philanthropic pack in 2013 with a nearly $1-billion gift to the Silicon Valley Community Foundation, helping to catapult the organization to the ranks of the biggest foundations in the United States.

The California couple was followed by the Texas energy tycoon George Mitchell, who pioneered hydraulic-fracturing for finding natural gas.

When Mr. Mitchell died in July, he left an estimated $750-million to his family foundation, which supports conservation and sustainability. A key goal for the foundation: to make sure the fracking technology he created doesn’t cause serious environmental damage.

And Nike co-founder Phil Knight and his wife, Penelope, gave $500-million for cancer research at the Oregon Health & Science University Foundation. The gift came with one major, anxiety-inducing stipulation: The institution has to match the gift in two years or lose it.

Youngest Donors in First Place

Even though the couple at the top of the list is the youngest ever—Mr. Zuckerberg and Dr. Chan are both under 30—that doesn’t mean that the list demonstrated a surge in young donors. In fact, the median age of donors was 72.5.

Most of them were men; 23 earned their wealth in either finance or investments, 12 in real estate, six in technology, and the rest from a mix of other pursuits or inheritances.

The causes that received the most support were very conventional.

Colleges, foundations, and hospitals received the most gifts worth $1-million or more in 2013, followed by medical research facilities, arts organizations, and human-service groups. Causes for children and youths, the environment, religion, and public broadcasting took in the fewest gifts and the least money from the biggest donors.

While many people credit the Giving Pledge, an effort by Bill and Melinda Gates and Warren Buffett, for inspiring big philanthropy, only 19 people on the Philanthropy 50 are among the 122 individuals or couples who signed the pledge

Winning the Lottery

Charities are eagerly awaiting news of how Mr. Zuckerberg and Ms. Chan will spend the 36 million Facebook shares they donated to the Silicon Valley community fund over the past two years, valued at about $1.5-billion.

So far, they have held true to their slightly vague comments about giving to education and health. They donated $100-million in 2010 to schools in Newark, N.J. Their Silicon Valley advised fund distributed $4-million last year to a Boston education start-up that gathers data to assess progress at public schools and $5-million to a community health clinic for low-income families in East Palo Alto.

Despite a barrage of questions about the gift, the community foundation will say nothing. “It’s like being a lottery winner,” says Mari Ellen Reynolds Loijens, one of the foundation’s top executives. “People hear Mark Zuckerberg gives a gift, and I can’t leave this room without someone asking me what he’s going to spend that money on.”

$600,000 a Day

While education, health, and other nonprofits still have time to make a play for Mr. Zuckerberg’s money, the fundraisers at Oregon Health & Science University Foundation are in a time crunch. They know exactly what Mr. Knight wants from his September pledge: They must raise $500-million more by the end of next year to get the gift.

“I have no intention of leaving $500-million sitting on the sidelines come December 2015,” says Keith Todd, president of the university’s fundraising arm. Criss-crossing the country has helped him land 1,600 donors from 43 states and 13 gifts of $1-million or more.

“It’s the most money we’ve raised in a six-month period,” he says.

Without enough time to hire new fundraisers, Mr. Todd had to work with other deans and program leaders at the university to borrow development staff to build a team of 25 for the cancer center’s fundraising effort. “It creates a crisis internally, which we then had to manage our way through and build confidence and faith that we’re not abandoning the rest of the university,” he said.

But everyone was eager to pitch in, he said, as they saw how the effort has the potential to raise the entire university’s standing. He’s also recruiting board members from across the nation to boost the effort. “I tell everyone I have to raise $600,000 a day,” he says. By that math, he says with a laugh, his interview with The Chronicle “just cost me $12,000.”

Bloomberg’s Focus on Cities

Mr. Knight isn’t the only impatient philanthropist on the list. Michael Bloomberg (No. 4) was barely out of New York’s City Hall last month when he kicked off his post-mayoral philanthropic life.

He announced a $53-million five-year project to help replenish fish populations in Brazil, Chile, and the Philippines. His foundation is spending $4.6-million to spin off its Cities of Service program into a stand-alone nonprofit that helps mayors and local nonprofits establish volunteer programs. And he started Bloomberg Associates, a consulting group for cities.

“He has realized that cities are where it’s happening,” said Patricia Harris, chief executive of Bloomberg Philanthropies. “He can make a difference at the local level.”

Saving Government Money

Other big donors focused beyond the local level.

John and Laura Arnold (No. 5), who gave $296.2-million in 2013, loaned $10-million to the National Head Start Association in October to keep 7,000 children in programs that have either closed or were set to be shuttered as a result of the federal-government shutdown.

Improving government accountability and efficiency is one of the Arnolds’ main missions, and they are especially focused on education and criminal justice. They are major players in supporting pay-for-success programs, also known as social-impact bonds. Such efforts seek to attract private investors to pay the costs of spreading programs that have proven successful at reducing the cost to society of vexing problems, like the number of people in prison.

The foundation provided a $3.7-million grant last month to finance a recidivism project in Massachusetts that will also be supported with $18-million in private investments, including from Goldman Sachs. Investors will be paid back with a profit if the program saves the government money by reducing incarceration rates.

Profits or not, the Arnolds are going to reinvest whatever money they get back getting other social-impact bonds off the ground, says Josh McGee, the foundation’s vice president for public accountability. “We think it’s a really good tool to facilitate government trying promising innovative approaches to social programs,” he says.

Dollars for Sustainability

Pursuing policy changes is a trend among philanthropists who “want to have the most bang for their buck,” says Katherine Lorenz, president of the Cynthia and George Mitchell Foundation and Mr. Mitchell’s granddaughter.

Although top donors in 2013 gave little to environmental causes, the Mitchell foundation counts among its assets a 5,600-acre preserve in the Piney Woods of East Texas and supports water quality and conservation programs in Texas to influence new policies at a time when drought has become a crisis in the West.

It supports the nonpartisan Texas Clean Energy Coalition and other groups that run advocacy campaigns to protest traditional coal-plant construction.

The mission of the foundation stems from Mr. Mitchell’s view that good environmental stewardship is also good economics, says Ms. Lorenz. The foundation’s natural-gas sustainability program aims to uncover the science behind harmful methane gas leaks from natural-gas exploration and is trying to use that science to spur more regulation of the industry.

Budding Entrepreneurs

Irwin and Joan Jacobs (No. 8) also are using their philanthropy to spread real-world applications from science, hoping their biggest gift of 2013 will spur the creation of new companies and new jobs.

The Jacobses provided $133-million to create the Jacobs Technion-Cornell Innovation Institute at Cornell NYC Tech, which will promote business ventures between academe and industry.

Mr. Jacobs is well acquainted with that intersection. The 1954 Cornell graduate in electrical engineering was a professor for nine years before he became one of the founders of Qualcomm, a wireless-communications company. “It’s a very exciting approach being able to train more students and encourage them to become entrepreneurs,” Mr. Jacobs says. “Hopefully there will be many companies that come out of this and create jobs.”

Such scientific and business prowess is often why universities attract the biggest charitable gifts.

“When you look at what’s driving innovation in our society, much of it is coming from higher education,” said John List, a University of Chicago economist who studies fundraising. “Many state universities are facing crippling budgets because state legislatures are cutting funds. They have to rely on private donors to keep programs going.”

Send an e-mail to Doug Donovan and Maria Di Mento.