Bay Area Foundation Criticized for Not Doing More for Area’s Poor

When Mark Zuckerberg and his wife, Priscilla Chan, last month donated $5-million from their fund at the Silicon Valley Community Foundation to help build a new health clinic in East Palo Alto, Emmett Carson appeared at the groundbreaking to announce the gift.

As head of the community fund, Mr. Carson was quick to note that the couple is “very involved in any and all opportunities to solve and better the community.”

Such opportunities have become an increasingly important moment for Mr. Carson and the community foundation to mark as they fend off criticism that it gives too little to local groups at a time when the divide between the Bay Area’s rich and poor is growing.

Most of the concerns center on the fund’s expansion of its focus beyond San Mateo and Santa Clara counties, Silicon Valley’s traditional boundaries.

Delicate Balance

While the foundation awarded 54 percent of its total grants last year, or $197-million, to groups in the Bay Area, another 45 percent, or $170-million, went to charities in other parts of California, across the United States, and around the world.

“Maybe they should drop 'community’ from their name, because their local giving is not very robust,” says Bill Somerville, a former executive director of the Peninsula Community Foundation, one of the two predecessor groups whose merger formed the Silicon Valley fund. (Several other nonprofit officials have also expressed such concerns privately, but asked not to be quoted by name for fear of losing out on winning grants in the future, a common worry among nonprofits when asked about grant makers.)

Mr. Carson is well aware of the tricky waters he must navigate as he seeks to raise money in a region where many donors are from somewhere else and their companies serve national and international markets.

The bulk of the foundation’s $4.7-billion in assets, including $1.5-billion from Mr. Zuckerberg and Dr. Chan, are in advised funds whose spending is directed by the donors, either individuals or corporations, toward whatever philanthropic missions they prefer.

“We are in every respect a local community foundation, but we’re also a national, global community foundation,” Mr. Carson says. “Our challenge moving forward is understanding what that means and how to balance those interests.”

A Bigger Brand

One sign of how the foundation is moving to strike that balance can be seen in its branding.

It removed mention of San Mateo and Santa Clara Counties—the two traditional “Silicon Valley” areas it was founded to serve—from its logo and mission statement. And it opened an office in San Francisco, often considered to be part of Silicon Valley. “We reached a point where we looked at the work and said we’re serving a lot more than the two counties,” Mr. Carson says.

He also discontinued the grant-making practices of the predecessor groups, which provided small grants to an array of organizations.

Instead, the foundation now makes larger grants, directed primarily to efforts in five areas: education, economic security, immigrant integration, regional planning, and time-sensitive community concerns such as hunger and shelter.

The foundation has spent an average of $9-million each year from 2007 to 2013 from the $175-million in its endowment that is unrestricted and has channeled it to groups working on those five issues in San Mateo and Santa Clara counties.

-The foundation does not have breakdowns showing the county locations of its beneficiaries for the past two years, but in 2011 the fund awarded $80-million in grants ($71-million from donor-advised funds; $9-million from the foundation) to those two regions. That total made up 33 percent of the foundation’s $238-million in grants in 2011.

While Mr. Carson defends the foundation’s efforts to streamline the causes it supports with its unrestricted dollars, he understands why the fund has angered many of its former grant recipients.

“If I was a hospital, an environmental fund, an arts fund—suddenly I used to be able to apply and now I can’t. I’m angry,” he says.

Local Disappointment

But that doesn’t ease the concerns of people like Mr. Somerville.

He and others say the foundation’s distribution of its unrestricted dollars exacerbates the image that techno-philanthropists are detached from Silicon Valley community ills such as soaring housing costs, homelessness, and clogged highways and inefficient public transit, which employees of Apple, Facebook, and Google can avoid by taking private buses.

“I’ve talked to dozens of people that are really sad, disappointed with being told that they don’t fit into the community foundation,” Mr. Somerville says.

Such criticism about the foundation’s local giving spilled into public last year in two essays in the Stanford Social Innovation Review, one by Mr. Somerville and another by Alexa Cortes Culwell, founder of Philanthropy Futures, a Silicon Valley adviser to philanthropists.

Ms. Culwell raised the issue of how the $80-million in grants to San Mateo and Santa Clara counties represented “only 33 percent” of total grants in 2011.

“Giving to local causes from donor-advised funds averaged 68 percent nationwide—more than double Silicon Valley’s rate,” she wrote.

Nicole Taylor, former chief executive of the East Bay Community Foundation, in Oakland, says Mr. Carson’s organization was bound to expand its giving area beyond the two counties as it added 136 advised funds last year, bringing its total to 1,650.

Many of those donors consider the entire Bay Area to be Silicon Valley, and have giving interests that go well beyond the regions where they work.

“It can seem to someone who doesn’t understand the laws and regulations that something is wrong here: If you have such a large endowment why isn’t more going to local?” says Ms. Taylor, chief executive of Thrive Foundation for Youth, in Menlo Park. “But you’re bound to follow donor intent.”

Mr. Somerville says the community foundation should push harder to get its donors to give more to the endowment. “There’s nothing to keep them from calling things to their donors’ attention,” he says.

Donor Matching

Mr. Carson says that’s exactly what the foundation does every day. “We have an active effort of matching up donors to nonprofits.”

It supports donor circles for the arts and the environment, and has been working for months to prepare its first online effort, in May—called Silicon Valley Gives—to attract money to a range of causes.

The foundation, which is promoting the giving day to its corporate and individual donors, has staged training sessions for hundreds of small nonprofits to help them craft web pages and pitches that will appeal to people who haven’t previously given.

Rob Tufel, executive director of Cancer CarePoint, a San Jose nonprofit, says Silicon Valley Gives is a great opportunity for his organization—with a budget under $1-million and only five staff people—to find new supporters.

“This gives us the bandwidth that we wouldn’t have normally,” Mr. Tufel said.

Mr. Carson says the foundation also serves local needs by deploying its public-policy specialists to identify critical issues and solutions and then gather donors, board members, nonprofits, and others to lobby lawmakers.

The foundation says it put its advocacy behind new state and local laws eliminating fingerprint requirements for food-stamp recipients and capping interest rates on payday lenders, as well as a regional plan to better coordinate housing and transportation planning in the region.

Such policy advocacy is desperately needed, according to Marie Bernard, executive director of Sunnyvale Community Services in Santa Clara County.

Her nonprofit receives grants both directly from the foundation and from its donors’ advised funds to help alleviate local hunger and homelessness.

Her group was a beneficiary of the foundation’s stepped-up efforts, started in 2009, to help safety-net groups. Last year the community fund provided $1.5-million for social-service aid; in 2014 it will channel $2-million to efforts to improve education and help immigrants.

Porcia Chen Silverberg, executive director of Thrive-the Alliance of Nonprofits for San Mateo County, says the loss of the safety-net money worries many nonprofits.

Yet another nonprofit official says the foundation has always been open about its shift in strategy, and it is hard to argue with giving money to education and immigration.

“I’m sure they’re doing their best to drive donors to the social-justice agenda that Emmett has set,” says Connie Martinez, chief executive of Silicon Valley Creates, formerly the Arts Council Silicon Valley. “People have accepted that.”