News and analysis
February 08, 2015

More Tech Entrepreneurs Inclined to Give Now Instead of Waiting

Alain Jocard/AFP/Getty Images

Lynne and Marc Benioff gave $154-million last year. Mr. Benioff scoffs at money in donor-advised funds, saying, "What good is it doing now?"

In February 2014, the tech entrepreneur Jan Koum sold his mobile-messaging company WhatsApp to Facebook for $21.8-billion. Four months later, Nicholas Woodman took his wearable-camera company GoPro public, with his share at the time valued at $1.6-billion.

By October, the two entrepreneurs had each donated stock worth at least $500-million to the Silicon Valley Community Foundation. The donations landed them at No. 4 and No. 6 on The Chronicle’s list of the 50 most generous donors in 2014. The gifts also put them squarely in a new class of tech entrepreneurs who are giving to charity while building their businesses.

"Even Bill Gates waited until he was pretty much saying, ‘I am done with the active management of Microsoft,’ " said Emmett Carson, executive director of the Silicon Valley Community Foundation.

Lingering Concerns

Still, the tech sector is not baptizing major philanthropists as fast as it is minting 1 percenters. Those who are giving aren’t necessarily doing so at home. Nearly half of Silicon Valley Community Foundation grants went to charities outside the region in 2013, for example, and Mark Zuckerberg grabbed headlines last year when he steered $25-million from the more than $1-billion he has housed at the foundation to fight Ebola.

What’s more, donations like those of Mr. Koum and Mr. Woodman have come at a time of soaring living costs and the displacement of some nonprofits in the San Francisco Bay Area. And although the numbers and the attitudes in regard to giving appear to be headed in the right direction, questions remain about whether enough is being done.

"There is a lot of hand-wringing going on and a lot of anxiety about what kind of region this is going to be end up being," said Fred Blackwell, chief executive of the San Francisco Foundation.

Other tech entrepreneurs on the list of top donors include Google co-founders Sergey Brin, No. 9, and Larry Page, No. 13. In 2014 they injected $382.8-million and $177.3-million, respectively, into their private foundations. Pierre and Pam Omidyar, long-established and highly visible tech philanthropists, landed at No. 12, with $180-million in new giving. Marc Benioff and his wife, Lynne, ranked No. 14 on the list by donating $154-million.

Exclusive Club

Of the top 10 most generous American philanthropists in 2014, four hail from Bay Area tech companies, up from three in 2013 and two in 2012. Of the total $10.2-billion donated by the top donors, more than $2.3-billion came from six Silicon Valley entrepreneurs under the age of 50.

Even within the rarefied world of big-ticket philanthropy, these donors form an exclusive fraternity. It is defined by its members’ relative youth, assiduous study of causes and charities, and intense interest in organizational innovation, according to people who work closely with them.

"What I do think is a uniquely Silicon Valley dynamic is that they want to be intricately involved in understanding the business of the nonprofit," Mr. Carson said. "They want to understand the how, the why. That is a new and higher level of involvement than a lot of nonprofits are used to from donors who traditionally write a check and say, ‘See me in a year and tell me how you did.’ "

When she helped Marc Benioff found the Salesforce Foundation 15 years ago, said Suzanne DiBianca, the attitude of many Bay Area entrepreneurs was that they would get around to supporting charity after their business careers had peaked.

Now, giving early is part of people’s psyche, said Ms. DiBianca. She points to new classes in social entrepreneurship at Stanford University, a breeding ground for industry leaders. "It’s not compartmentalized as something I am going to do later in life. It’s ‘I just went public, I have all this money. I am going to do it now.’ "

Today’s tech donors are also distinguishing themselves from earlier generations by braiding charitable giving with personal-wealth management and corporate mission.

"More and more what we are hearing is folks are expecting their wealth advisers to be well versed in impact investing as a new innovation approach to social change," said Jen Ratay, executive director of the Silicon Valley Social Venture Fund. "[They are] thinking about, where does money sleep at night? Does it align with one’s core values?"

Closer Tracking

Colin Lacon, named in October to a position in the San Francisco Mayor’s Office that was newly created to attract private money to city projects, said he sees today’s top-tier donors focusing on a narrower band of issues, but also carefully tracking outcomes and tailoring their philanthropic investments accordingly.

"Individuals who have great wealth, like a Mark Zuckerberg, do have influence," said Mr. Lacon, who previously served as head of Northern California Grantmakers. "It challenges others who are in the same position, whether they are young or just wealthy, to say, ‘What are you doing with all of that wealth? Can you do it in a way that is bringing about change to the community?’ "

To be sure, Bay Area tech philanthropists could be doing more, particularly in their own backyard, many people in and out of the Bay Area nonprofit world say. They note that some major givers direct their charity overseas, where they believe their dollars deliver bigger impact. Moreover, these observers point out, there are newly wealthy people who have the means to be major donors but aren’t.

There were 55 initial public offerings by tech companies in the United States in 2014—GoPro was one—that raised a total of $32.3-billion in capital, according to data from the financial-research firm Renaissance Capital. And the IPO docket for 2015 is crowded with Bay Area tech companies, including Uber, Box, Dropbox, and Airbnb.

Some of the criticism about how much the tech world’s wealthy individuals are giving, and how they are giving, has come from within the rank and file.

In an interview with San Francisco magazine published last spring, Marc Benioff dismissed the Silicon Valley Community Foundation as a collection of donor-advised funds where philanthropists can go to "get your tax write-off for the year."

He didn’t shy away from commenting on Mark Zuckerberg’s billion-dollar-plus donations to create a fund at the foundation.

"Where’s it gone? What good is it doing now?" Mr. Benioff said of the money. "I’m sure his intentions are positive, but we need to see that money get distributed. What are his targets? What are his philanthropic interests?"

Mr. Carson of the Silicon Valley Community Foundation described such criticism as "unfortunate," adding that it is ridiculous to expect wealthy people to shovel out money without careful consideration. What’s more, he says, several studies have found that donor-advised funds distribute a bigger share of assets than private foundations.

"We have created a lot of hypotheticals about people parking money and not spending it, but I have not been told one example where monies didn’t go out the door," Mr. Carson said. "Not one example where, ‘Oh, they hoarded for generations over generations.’ "

Spurring Interest

If nothing else, the public discourse about income inequality and other social issues in the Bay Area has played a role in sparking important conversations, and at least some action, among donors in the region, many said. They point to efforts such as SF Gives, headlined by Mr. Benioff, which raised $10-million from local corporations to support poverty-fighting nonprofits.

"I feel like there has been the beginnings of a serious response," said Jacob Harold, the chief executive of GuideStar and a former staff member at the William and Flora Hewlett Foundation.

He would like to see every Silicon Valley-minted billionaire sign the Giving Pledge, Mr. Harold said. (At least a dozen company founders and venture capitalists, including the Omidyars, Sheryl Sandberg, and Mark Zuckerberg, already have.)

Ms. DiBianca wants to see half of the tech IPOs in 2015 include the earmarking of equity for philanthropy. She points to the historic $22-billion Alibaba IPO as an example; founders Jack Ma and Joe Tsai designated 2 percent of the company’s equity at the time for two charities focusing on the environment, medicine, education, and culture.

Mr. Carson, who has expanded the Silicon Valley Community Foundation into the nation’s largest, with $4.7-billion in assets, by courting donors like these, notes that many are still in their 30s and 40s. They are laying the groundwork for decades of giving, which he says will prove to be a Renaissance in the field.

"I see a transformation of the landscape in every sphere," Mr. Carson said. "These are people who are going to take their knowledge of technology and social media, and blend that with core problems, and come up with new ways of thinking about problems and new ways of advancing solutions that we can scarcely think of."

Send an e-mail to Megan O’Neil.