Through his words and his grants, Steve Kirsch challenges fellow high-tech millionaires to step up their philanthropy
San Jose, Calif.
Like many high-technology entrepreneurs here, Steve Kirsch, 44, has seen his fortune dwindle in the past year. He estimates his net worth to be $70-million, down from $200-million last summer.
The downturn has also hurt the value of the charitable foundation that he and his wife, Michele, set up with $50-million of the $200-million they received when Mr. Kirsch sold Infoseek, an Internet search company, to the Disney Corporation in 1999. Although the fund was worth $80-million last summer, swelled largely by its investment in technology stocks, its value has sunk to $42-million.
Even with the bad financial news, Mr. Kirsch says he has no intention of slowing grant making -- his fund will continue its practice of giving away 10 percent of its assets a year, and he hopes to add to the endowment in the years to come. He has also pledged to donate 1 percent of the initial equity of his new company, Propel Software, to charity when it goes public.
‘Will You Reach Into Your Pocket?’
Perhaps just as important, he says, he has no plans to relinquish his role as the region’s most outspoken advocate for philanthropy -- or his criticism of wealthy entrepreneurs who do not give more.
“Yes, things are tough,” he says. “We’ve lost half of our endowment, and that’s forced us to be more selective, and to focus more.” But he adds: “Things are also tough on nonprofits. So if the charities in your local community are being adversely affected, the question is, will you reach into your pocket and do something about it?”
Mr. Kirsch asked the same question in 1999 when he led an effort to bail out the local United Way from an $11-million deficit by pledging $1-million and sending out dozens of e-mail messages to his high-technology peers suggesting they make a similar gesture.
“Steve is very passionate about his different causes, and about philanthropy in the Valley,” says his friend Jeff Skoll, co-founder of eBay, the popular online auction and trading company. He says Mr. Kirsch helped him decide to give $39-million to set up an endowed fund at Community Foundation Silicon Valley, and has led others to consider sizable philanthropy gifts. “I get at least an e-mail a week from him on the subject.”
Role Models
Peter Hero, president of the community foundation, says Mr. Kirsch’s boosterism of philanthropy has had substantial influence. “Ten years ago we had Bill Hewlett and Dave Packard as these almost Olympian icons, and while everyone loved and respected both men, most people did not identify with them because the scale of their wealth and the enormity of their generosity was beyond most people’s capacity.”
He adds: “But now we have people like Steve, who are younger, who are vocal about their giving, and I think that’s very important.”
Mr. Kirsch’s outspokenness has gotten him plenty of publicity well beyond Silicon Valley. He has been interviewed on national television news programs and is frequently quoted in national publications by reporters seeking an inside look at the new-economy philanthropists. He and his wife were featured on the cover of Worth magazine’s December issue next to a cover line that declared, “Young, rich, and changing the world: Why charity has become the ultimate status symbol.” Not everyone is impressed with how voluble Mr. Kirsch has been with reporters. He acknowledges that he received an e-mail criticizing him for being “showy” with his philanthropy.
Mr. Kirsch dismisses such criticism. “I don’t see how hiding the fact that you support a certain nonprofit can help that nonprofit,” he says. Talking about his giving, he says, is “high leverage” for the causes he cares about.
“For a lot of charities, you look at where their funds come from and in many cases you’ll find that a huge portion comes from a very small number of people,” he says. “And you look at the distribution of wealth in America and you find that the top 1 percent of Americans control more money than the other 99 percent combined.”
He adds: “So it makes sense, if you’re trying to impact charitable giving, to target your message to the top 1 percent. And so encouraging other people to become philanthropists is a relatively high-leverage activity.”
Making Everything Public
Mr. Kirsch tries to add to his leverage by making his views about philanthropy and many other things available on the foundation’s Web site, http://www.kirschfoundation.org. In 16 essays that he calls “reflections,” he asks whether wealthy people should give all their money away (the answer is No), explains how he would spend $1-billion over five years to achieve the maximum good, suggests how companies should give their money away, and wanders off into non-philanthropic topics such as the importance of getting at least eight hours of sleep a night.
The Web site also includes detailed information on every group and program the foundation supports, how much each grantee has received in grant dollars, and explanations of why the foundation supports each grantee, plus links to the charities’ own Web sites.
“We’re transparent because Steve came out of the Internet world, where everything is democratic,” says Kathleen Gwynn, the foundation’s president. “Practically everything we’ve ever done, and everything we have planned, is on the Web site.”
Enjoying Giving
Mr. Kirsch says he had not thought seriously about giving until he had begun to achieve success in the world of high technology. The founder of three startup companies, Mr. Kirsch is credited, among other things, with inventing the optical mouse, which uses an optical sensor rather than a mechanical ball to manipulate the cursor on a computer screen.
When a philanthropist remarked to him about a decade ago that some people actually enjoy parting with their money, he says, “I thought about it and decided I wanted to be a person who wants to give money away.”
He started with a $100,000 donor-advised fund at the Community Foundation Silicon Valley, which allowed him and his wife to recommend what causes their money would support. Mr. Kirsch says he chose the community foundation because it would have been impractical to start a private foundation with such a modest sum. He continued to add to the fund as his wealth accumulated.
After the sale of Infoseek to Disney, Mr. Kirsch and his wife decided to turn the donor-advised fund into a supporting organization of the community foundation. The move allowed them to maintain a connection with the community fund, Mr. Kirsch says, while gaining a measure of autonomy.
The Kirsch Foundation, which operates out of the community foundation offices, has its own three-member board of directors, though two members are appointed by the community foundation. The third is Mr. Kirsch.
Mr. Kirsch, who is chairman, says he is satisfied with the arrangement, which allows him more say over the fund’s giving plan and its investment portfolio than if it had remained a donor-advised fund. The Kirsch Foundation, for example, invests more heavily in technology stocks than the community foundation does, and will continue to do so, says Ms. Gwynn. “We’re committed for the long haul to an investment strategy in technology,” she says. “Our board is convinced that tech stocks will outperform other stocks in the long run.”
Influencing Policy
While the Kirsch Foundation continues to support local causes, in keeping with the community foundation’s mission to improve living conditions in the region, it also has a handful of broader, more blatantly ambitious goals: curing cancer, attaining global nuclear disarmament, returning the earth to a “pristine” environmental state, and protecting the earth from the threat of destruction by asteroid impact.
Equally important, says Mr. Kirsch, is the fund’s duty, within legal limits, to affect public policy. He himself has become increasingly vocal on politically charged issues such as nuclear-arms control, campaign finance, clean air, and most recently, voting rights and California’s energy crisis.
“You only make a difference by getting legislators to pass laws to fix the system,” he says.
In California, the foundation has financially supported and worked closely with groups that were successful in getting legislators to pass measures that give tax incentives and carpool privileges to drivers of electric vehicles. Both Mr. Kirsch and his wife drive electric cars.
In December, the foundation awarded $300,000 to the American Civil Liberties Union Foundation of Florida for a project to change the state’s voting system to reduce racial and other disparities that were highlighted during the 2000 presidential election.
Although a registered Republican, Mr. Kirsch was an active supporter of Al Gore, and contributed $500,000 of his own money to the vice president’s recount effort in Florida. He also helped to finance lawsuits in two Florida counties challenging the vote count. “That’s why I haven’t put all my money in the charitable foundation,” Mr. Kirsch says. “Because I have more flexibility with the money that’s not in the foundation than with the money that is.”
Mr. Kirsch is the first to admit that his philanthropy is not rooted in altruism. “I look at giving as a very practical use of capital that can do things that are important to myself or people close to me.”
Consider the foundation’s $100,000 grant to a geneticist who is working to reverse baldness. If the scientist succeeds, Mr. Kirsch, who clearly suffers from the condition, may get his hair back. But, he points out, so might millions of other balding men.
The foundation’s continuing support of asteroid research -- $100,000 a year to the University of Arizona’s Spacewatch Project to identify asteroids and other near-earth objects -- has been described as offbeat, but to the Kirsch Foundation it makes as much sense as supporting efforts to rid the world of nuclear weapons.
“There are only two things that have the ability to destroy the world as we know it,” says Ms. Gwynn. “One is nuclear weapons. The second is large, near-earth objects, otherwise known as asteroids.”
Astronomers estimate that 90 percent of asteroids have yet to be identified and located, Mr. Kirsch says.
“The sad fact is that there are fewer people scanning the skies for asteroids than there are working at an average McDonald’s restaurant,” he says.
‘National Embarassment’
His interest in nuclear disarmament, meanwhile, was sparked after the U.S. Senate failed to ratify the Comprehensive Test Ban Treaty in 1999, a voting outcome that Mr. Kirsch criticized as political and called a “national embarrassment” in one of his reflections posted on the foundation’s Web site.
He took his concerns to Naila Bolus, executive director of the Ploughshares Fund, a San Francisco organization that provides seed grants to groups working to eliminate nuclear arms and other weapons of war.
“The idea that we were sacrificing national security for politics was appalling to him,” says Ms. Bolus, whose group has received $200,000 from the Kirsch Foundation for its work toward nuclear disarmament.
The Kirsch Foundation’s medical goals are just as ambitious, and politically charged, as its global ones. It gave $30,000 to the American Society for Cell Biology, a group that supports collaboration among scientists. It is using the grant to pay for a lobbyist to advocate continued federal support for the use of human embryos in medical and scientific studies. The Bush Administration is considering a ban on federally financed research using embryos.
Investing in Businesses
In their quest to cure cancer, the Kirsches have taken a completely different tack. Rather than making a grant to a nonprofit group through the foundation, they made a personal $2-million investment in a for-profit biopharmaceutical company that is developing new ways to diagnose and treat various forms of cancer. Although the investment is commercial, the Kirsches say they consider the investment part of their philanthropy because it was made with “a charitable intent.” The primary reason for the investment is to help the company in its medical mission rather than to get a return on their investment.
Supporting Alma Maters
Recently, in the same spirit, the Kirsch Foundation’s board decided to make a similar type of investment. At Mr. Kirsch’s request, it agreed to invest $250,000 in LearnNow, a for-profit school management company that is licensed to use elementary and secondary school curriculums developed by the National Center on Education and the Economy, a nonprofit organization based in Washington that advocates, among other things, smaller class sizes and teachers who follow their students from grade to grade.
“We think of it as the foundation trying to leverage assets even further than simply financially,” says Harry J. Saal, a Kirsch Foundation board member who, like Mr. Kirsch, has made a fortune in high technology.
Despite such unconventional approaches, the Kirsches continue to do their share of traditional philanthropy.
Both have given million-dollar gifts to their alma maters for bricks-and-mortar projects and scholarships -- Mr. Kirsch graduated from the Massachusetts Institute of Technology and Mrs. Kirsch is a graduate of Mills College. They have given nearly $1-million to the Tech Museum of Innovation, in San Jose, where Mr. Kirsch sits on the board.
And Mr. Kirsch is still probably best known in the world of philanthropy for taking the lead in a rescue effort for one of the most traditional charitable organizations, the local United Way -- though the money he helped to raise went directly to charities affected by the shortfall.
He still gets outraged when he recalls that his e-mail appeal to 65 wealthy people prompted just two -- Bill Gates and Gordon Moore -- to give $1-million or more. Fifteen others donated in the range of $1,000. Most of the rest of the money was raised from corporate donations.
“There are 65,000 millionaires in the Santa Clara County and only 18 families donated $1,000 or more?” he says, still incredulous.
Peter Giles, president of the Tech Museum, says it is likely that some people were put off by Mr. Kirsch’s brazen appeal.
“It just was so unorthodox that with some people it just didn’t quite compute,” he says. “Fund raising can be very personal, especially at those levels, and people generally appreciate a more quiet approach.”
But, Mr. Giles adds: “Steve has a lot of things he asks people about and asks them to support because that’s the way his mind works. He is a remarkable leader, and the community needs that.”
Says Ms. Bolus of the Ploughshares Fund: “His philanthropy is incredibly courageous.”
She adds: “We’re seeing a real cautiousness with donors because of the economy in Silicon Valley. But Steve is reminding them that this is not the time to cut back.”
STEVEN AND MICHELE KIRSCH FOUNDATION
History: Established in 1998 as a supporting foundation of the Community Foundation Silicon Valley with $50-million from Steven Kirsch, chief executive of Propel and founder of Infoseek, and his wife, Michele.
Areas of support: Environment; medical and scientific research, including grants to individual researchers; campaign finance and electoral issues; global issues, such as nuclear disarmament; charities that serve Silicon Valley.
Finances: The foundation awarded 117 grants totaling $8.6-million in 2000 and expects to give away $5.6-million this year.
Assets: $42-million.
Key officials: Steven T. Kirsch, chairman; Harry J. Saal, vice chairman; Perry Olsen, director.
Application procedures: The foundation accepts inquiries and proposals only via e-mail, with the exception of the Kirsch Investigator Awards, which go to individual medical researchers. Detailed application instructions are on the foundation’s Web site.
Address: 60 South Market Street, Suite 1000, San Jose, Calif. 95113-2336; (408) 278-2278.
Web site: http://www.kirschfoundation.org