Jim Fruchterman, who leads Benetech, a nonprofit in the heart of Silicon Valley that uses technology for social good, knows how to get tech donors to give.
They love it when he talks about a Benetech program called Bookshare and how he explains that it provides digital audio books to people with vision problems and other disabilities at a fraction of the cost of its competitors, while memberships generate revenue that helps pay for the program.
It’s not always the cause that stirs their passions, he says: “People will actually invest in that even if they don’t care about blind people, because they care about the model.”
The contrast is obvious, though, when he tries to sell them on another Benetech program — providing secure technology that human-rights groups use to collect and store sensitive information about abuses. Their eyes glaze over. Mr. Fruchterman thinks it’s because human-rights work is at odds with many tech donors’ approach to giving: It’s slow going, hard to measure results, and generates little or no income. So Benetech relies heavily on traditional foundations, not Silicon Valley’s rising philanthropists, to support that program.
Mr. Fruchterman says he’s talked to potential donors who think social enterprise is also the answer for human-rights work.
“We just have to agree to disagree,” he says, “because I don’t think you’re going to be able to do a lot if you think that business is going to be the main engine for improving human rights.”
For years, the charity world has been in thrall to donors who made their wealth in technology, marveling (or clucking) over the hundreds of millions of dollars they bestow on universities and research labs or tuck away in donor-advised funds. Nonprofit leaders are torn. They’re bullish about the new donors’ long-term potential. With their early start in philanthropy, the tech zillionaires could make a big difference in the causes they care about over decades, possibly helping nonprofits build a culture of experimentation and spreading the gospel of measurement.
But that’s all in the future. Right now, charities are just trying to figure out what makes the new donors tick.
The money that tech entrepreneurs have set aside for philanthropy tantalizes nonprofits.
Organizations pepper their materials with Silicon Valley buzzwords like “pivot” and “iterate” and scramble to incorporate technology into their programs, all in the hopes of winning a share of the dollars for their missions.
But winning support from Silicon Valley is proving a challenge for charities — and sometimes a mixed blessing once it’s secured.
“A lot of not-for-profits think that the streets are paved with gold out there and if they use certain language or create an app that some kid in a hoodie who had made a billion dollars is going to write them a check,” says Nancy Lublin, chief executive of DoSomething.org, which uses technology to encourage young people to volunteer.
Sometimes, she says, in the effort to become attractive to tech donors, organizations make smart changes that strengthen their programs. But other times, it can be painful to watch as charities contort themselves into something they’re not.
Says Ms. Lublin, “I don’t think every food pantry needs an app.”
Peer Pressure
And yet, the promise of limitless tech wealth ready to aid stretched charities remains so ... promising.
Donors like Microsoft’s Bill Gates and Facebook’s Mark Zuckerberg have set an expectation: Tech gives back.
“I’ve actually been in meetings where I’ve had someone say, ‘I want to be like Mark,’” says Michael Wagschal, senior vice president for philanthropic solutions at U.S. Trust, a private bank that serves very wealthy individuals. “I’ve been in other meetings where people say, ‘I want to be like Bill.’”
The peer pressure is working. Three of the five most generous donors in America last year came from the tech world, giving more than $1.6 billion among them.
And the wave of giving keeps growing. More tech entrepreneurs are incorporating philanthropy into their companies. Workday and Yelp have created corporate foundations. Box, Salesforce, and Wealthfront offer free or discounted products to nonprofits.
More than 250 companies have signed on to Pledge 1%, a commitment to devote 1 percent of the company’s equity, employee time, or products to charity. The effort is spearheaded by the Atlassian and Salesforce foundations and Rally Software Development.
Suzanne DiBianca, president of the Salesforce Foundation, the charitable arm of the cloud-software company, envisions a time when templates that start-ups use to write their founding documents all include a pledge to set aside stock for a corporate foundation.
And she thinks it will happen within the next 10 years: “Our dream is to build a movement.”
Heading West
Susan Davis, chief executive of BRAC USA, which supports the Bangladeshi international-development group of the same name, remembers the first time she realized the scope of Silicon Valley’s riches — and its potential to be a driving force in philanthropy.
It was 2004, and John Doerr, the venture capitalist, had invited a group of tech entrepreneurs to his home to learn about microfinance with Muhammad Yunus, founder of the Grameen Bank and a future Nobel Peace Prize winner. Guests for the weekend retreat included Pierre Omidyar, who started eBay, and Larry Page and Sergey Brin, the founders of Google. Ms. Davis took part as then board president of the Grameen Foundation.
The participants debated and scribbled on flip charts and whiteboards as they tried to figure out the answer to a very big question: How much would it cost to end extreme poverty worldwide?
In time, the brainstorming settled on an estimate. “We came up with a number, maybe $60 billion,” she recalls, her voice still a little incredulous more than a decade later. “And it didn’t phase these guys.”
Participants at the gathering committed more than $30-million to a guarantee fund for Grameen, and Mr. Omidyar went on to donate more than $100 million to advance microfinance.
No wonder national charities are eager to open offices in the land of milk and honey.
“I had an executive tell me, ‘Well, we’re going to expand into Silicon Valley, because if we can’t make it there, then we probably can’t make it anywhere,’ " says Alexa Cortes Culwell, managing director of Philanthropy Futures, a consulting company in Burlingame, Calif. “And I was like, ‘Well, wait a minute. Silicon Valley is actually a very hard market.’”
The region grew up as a tech center, and the development of the civic infrastructure — things like parks, museums, and other amenities — lagged behind, says Ms. Cortes Culwell. That’s a big reason so many tech workers live in San Francisco and commute to the Valley in their Wi-Fi buses.
The combination of weak public institutions and difficulty gaining access to tech donors makes it much harder to set up a Silicon Valley chapter than national nonprofit CEOs expect, she says.
“The donors,” she notes wryly, “don’t just show up all of a sudden to pay for it.”
Inaccessible Donors
In fact, it’s often hard for charities to find many of the tech industry’s philanthropists at all.
With many eschewing traditional foundations, there are no giving guidelines to consult, and the young entrepreneurs aren’t necessarily gala or direct-mail people.
In many cases, even their companies’ philanthropy operations remain mysterious, compared with those of more traditional businesses. (A Google search for “Ford Motor Company corporate social responsibility” brings up Ford’s latest annual sustainability report as a first listing. A search for “Facebook corporate social responsibility” first serves up a page asking, “Is there a CSR program at Facebook?”)
When tech entrepreneurs do make themselves accessible to charities, they often bring the Silicon Valley mind-set with them.
Reid Hoffman, the co-founder of LinkedIn and a high-power tech investor, offered to join the board of DoSomething.org in 2011. But he had one condition: The charity would have to shrink its 23-member board down to nine people.
In Mr. Hoffman’s industry, companies are usually steered by small boards that make big decisions after discussing them in-depth. It took several months, but the nonprofit pared its board, and Mr. Hoffman took his place as promised.
Ms. Lublin is thrilled by the result: Her charity snagged a savvy trustee with great connections and strengthened its governance.
“Our board functions so much better now,” she says. “They’re all really involved.”
Viewed one way, DoSomething’s experience is a textbook example of a hands-on donor sharing his business expertise in a way that benefits the nonprofit.
But another observer might come to a very different conclusion, seeing instead a powerful donor who assumes that what works in Silicon Valley can translate to the nonprofit world — and who, frankly, is used to getting his own way.
Culture Clash
The road from corporate superstar to world-class philanthropist can be a bumpy one. Figuring out how to turn big ambitions and good intentions into reality is never as easy as donors expect.
Mark Zuckerberg’s $100-million gift to improve schools in Newark, N.J., made in 2010, has been widely panned as ill-conceived and ineffective.
But the Facebook chief executive isn’t the only luminary to stumble out of the gates. A decade earlier Mr. Omidyar and his wife, Pam, got off to a shaky start with a family foundation that changed direction frequently and was viewed by many as arrogant and difficult to work with.
While Silicon Valley donors have shown a willingness to place big and risky bets (see Newark public schools), some observers question if their culture and temperament are up to the challenge of tackling tough problems.
The tech industry has been successful by figuring out ways to make things faster, easier, and cheaper, says Michael Edwards, a former official at the Ford Foundation and editor of the online journal Transformation. By contrast, he says, lasting social change is “messy, unpredictable, highly politicized, conflicted, and struggle-based,” as people hash out opposing views.
“If you’re from Silicon Valley, that’s a nightmare because you want smoothness,” says Mr. Edwards. “You want maximum cost efficiency. You want everything to go as quickly as possible. And what you don’t want is roadblocks along the way.”
Mario Morino’s been there. After leaving the successful software company he co-founded, he turned his attention to philanthropy full-time at the age of 49.
Now, more than 20 years later, he’s blunt about his own rookie mistakes.
“I came in a little too brash, a little too arrogant, a little too sure of myself, not realizing that this really was a different world,” says Mr. Morino, founding chairman of Venture Philanthropy Partners. “It took a long time for that to sink in.”
In a hurry to make a difference, Mr. Morino says he tried to do too much on his own — a trap today’s new donors are repeating. While he thinks the newcomers will learn and adapt in their giving, he says the impulse to go it alone is a direct result of how they built their own businesses.
“Great entrepreneurs drive like hell,” he says. “They’re not great collaborators.”
Ironically, given the new donors’ background, a lack of information might be part of the problem. Kathleen Enright, who leads Grantmakers for Effective Organizations, says the infrastructure designed to support smart giving hasn’t accommodated the explosion of wealthy donors. “People are getting advice from all kinds of sources, some of them good, some of them not so good,” she says.
She says it’s up to the nonprofit world to come together to create an “on ramp” to help new folks get their footing in philanthropy faster and “move from enthusiastic newbies to highly sophisticated, high-impact donors.”
The Raikes Foundation — started by Jeff Raikes, the former Microsoft executive who last year stepped down as head of the Bill & Melinda Gates Foundation — thinks wealthy donors need more guidance, too, and is considering a new effort to help them be more strategic in their giving.
Helping Charities Innovate
There’s a strange dichotomy in the way charity leaders think about the impact of Silicon Valley philanthropists. The source of their greatest anxiety — that the new donors are set on approaching giving the same way they approached their businesses — is also where observers see the greatest potential for tech donors to make their long-term mark on philanthropy.
Technology companies devote millions of dollars to research and development each year, the better to tinker, tweak, and stay relevant in a fast-changing environment. In the nonprofit world, money to test new ideas is an unheard-of luxury.
Tech entrepreneurs understand that experimentation spurs innovation, but philanthropy’s aversion to risk makes it almost impossible for nonprofits to test new ideas. Tipping Point Community, a charity that raises money for anti-poverty efforts in the Bay Area, is trying to change that, and technology companies are taking notice. T Lab, the group’s new fellowship program, invites teams of problem solvers to develop new ideas to tackle the dearth of child care and early education in low-income neighborhoods and services to help people leaving prison.
Tipping Point has also started to award research money to its grantees. Year Up Bay Area, a charity that helps low-income young adults gain work skills and entry-level professional jobs, won a grant to study how it could use technology to expand its program. Google.org put up $500,000 for the research, and Tipping Point kicked in another $250,000.
Silicon Valley donors could leave a powerful legacy by using their expertise and dollars to champion a culture of research and development in nonprofits, says Jay Banfield, executive director of Year Up Bay Area. “The problems that we’re trying to tackle as social entrepreneurs are no less complicated” than the ones tech companies face, he says.
At Benetech, Mr. Fruchterman has created ways for supporters from the tech industry to apply their skills for social good — and he hopes draw them closer to his nonprofit’s mission.
SocialCoding4Good puts rank-and-file technology employees to work on open-source software projects for Benetech and other nonprofits like Medic Mobile and Code for America.
To target potential supporters further up the ladder at tech companies, the organization created Benetech Labs Partners, a giving society whose members donate at least $10,000 a year and provide insight on new ideas the charity is testing. Since 2013, the program has raised $500,000 from 14 donors.
“What I really want these people getting involved in is our new ventures before we’ve really figured them out,” says Mr. Fruchterman. That involvement at the start-up stage is “where their advice is going to make a huge amount of difference.”
International Influence
Silicon Valley donors — and their equally math-obsessed cousins, the wizards of Wall Street — are notorious in the charity world for their love of data, demanding hard numbers that show the impact of their gifts: Did the rate of new HIV cases go down? By how much? How did the decrease affect the local economy?
Mr. Morino thinks that over time, tech donors will focus their giving on helping nonprofits be more effective and measure their performance — and he thinks they could spread the gospel of performance measurement internationally.
The Valley is one of the leading channels to doing business in the Pacific Rim, says Mr. Morino: “If you’re going to work in China or Japan, you better have an office in Palo Alto.”
By talking about the importance of measuring outcomes with their counterparts, they could help influence giving and charities across Asia, he says: “It would be huge because those are such emerging worlds of philanthropy in China and India.”
The next-generation approach to giving that Silicon Valley exemplifies is spreading not just in the United States but around the world, says Melissa Berman, chief executive of Rockefeller Philanthropy Advisors. She thinks tech donors in Silicon Valley and in Asia will learn from one another over time — and maybe even collaborate on projects.
Says Ms. Berman, “Just as we’re looking to see what people in Silicon Valley do, people in China are eager to see what Jack Ma” — who started Alibaba Group, the e-commerce giant — “and the founders of Baidu and the founders of Tencent are going to do in philanthropy and social investing.”
Donors for Life
What may end up being most revolutionary about the new wave of Silicon Valley donors is their early start.
By turning their attention to giving while they’re young, tech moguls have the potential to be philanthropists for 40 or even 50 years, says Emmett D. Carson, chief executive of the Silicon Valley Community Foundation. With that much time, he says, they’ll have the opportunity to learn and refine their giving.
“How much more sophisticated might Bill Gates be today if he started philanthropy in earnest 30 years earlier?” asks Mr. Carson.
The nonprofit world might already be seeing one byproduct of that precocious start: Donors are moving away from foundations designed to operate in perpetuity in favor of giving during their lifetimes.
The pull of perpetuity just isn’t as strong for people who are in their 30s and 40s, says Jeff Bradach, managing partner of the Bridgespan Group, a nonprofit that provides management consulting to other charities.
“If you start younger, you can envision actually seeing strategies and investments play out over your lifetime in a different way than if you’re starting at 70 or 80,” he says. “Your time frame is different.”
There may be challenges as the new donors find their footing in philanthropy, but for charities, the positives far outweigh the negatives, says Ms. Davis, of BRAC USA.
She says simply: “I want Mark Zuckerberg thinking about the problems I think about every day.”
