Tech titans donate $50M+ in stock to one nonprofit. Here’s what I think it means for the rest of us.
A recent headline in the New York Times asks a provocative question: “A Charity Accepts Uber Stock as Donations. Then Uses it to Pay Staff Bonuses. Is that O.K.?”
Elite entrepreneurs — largely from the “unicorn” companies valued at $1B or more — have pledged at least 1% of their equity to charity: water, a nonprofit bringing clean and safe drinking water people in low-income countries. These donated shares have an unusual restriction: When these companies are sold or go public with an IPO, the entrepreneurs will pay out a portion of their stock to charity: water, 80% of which will fund salaries and office rent, and 20% will pay bonuses to charity: water staff.
One of the founding members called it “an exploration into the future of philanthropy.” Others see it as a controversy over whether the employees of a nonprofit should benefit. Darren Walker, the president of the Ford Foundation, says “It’s very strategic to structure gifts this way, but the issue of enriching employees of the charity is potentially problematic.” He would be familiar with the critics, as a foundation leader who earns more than a million dollars annually.
I agree with Mr. Walker: There are a few good reasons why this giving plan is strategic. And before I dive into where I see the problematic issues, I want to clarify that enriching employees, based on their performance results, is not one of them.
The strategy is smart because nonprofit employees deserve to be paid well. Our society is uncomfortable paying nonprofit staff, but we don’t blink an eye when professionals in the for-profit sector take home a pretty good paycheck. Brigette Bugay nailed this point in her Medium response to the Times article. Why shouldn’t high-performing nonprofit employees have good salaries, quality health insurance, paid parental leave, short and long-term disability coverage, a 401k match, and access to professional development? Everyone should — including those who work for a better world. And yet, so often funders say, “We don’t fund overhead.”
So there are three areas I’d like to see discussed further, by not only the nonprofit and funders piloting this model, but by all of us who want to be effective philanthropists, at any level.
First, I question the recruitment message behind this strategy. In the Times article, charity: water’s CEO talks about his effort to recruit people who would otherwise take jobs at Facebook, Google, and Amazon. “How do we compete with massages and Michelin stars,” he asks, alluding to the insane perks that these companies offer, including free food every day. These perks are enviable on a surface level, but my answer is: nonprofits compete by having a strong mission, flexible work culture, and fair compensation.
It’s time we stop seeing for-profit talent as the ultimate coup. There is brilliant and underestimated talent in the nonprofit industry, where we have learned how to turn measly resources into formidable change. In the new book Giving Done Right, Phil Buchanan, CEO of the Center for Effective Philanthropy, argues that nonprofit leaders are often unsung heroes, “balancing a range of responsibilities that can make a corporate CEO’s job feel like a walk in the park.” We need to focus on cultivating and retaining this type of talent, not attracting tech employees.
The tech industry is also overwhelmingly white and male, especially at management and leadership levels. If that’s the talent we’re poaching, we’ve still got an issue. If I were advising these tech titans, I’d ask them whether they are incentivizing candidates who already have distinct advantages. I’d encourage funders to consider how they can help nonprofits raise their base salaries. That would make a nonprofit career path feasible for more people. Are hard-to-predict bonuses going to do it?
Privilege — inherent advantages possessed by a person on the basis of their race and/or gender in a society characterized by racial inequality and injustice — is one reason why leadership in the nonprofit sector is more than 80% white and largely male (despite the majority of the nonprofit workforce being female). In an increasingly diverse world, homogeneity is not how we’re going to solve problems. I’m white, and I know that privilege allowed me to make moves that many others cannot afford. In 2012, when I quit my corporate job to go work full-time for She’s the First, the nonprofit I co-founded, I could miss a paycheck for a few months, take a lower salary, and still be fine. Though I’m first in my working-class family to graduate from college, I didn’t have debt, thanks to saving where I could, scholarships, and financial support from my parents.
Second, this initiative makes a valid statement that business leaders have a responsibility to share their financial upswing with others. But at the same time, it’s a prime example of “the old Boys’ Club” that still rules the philanthropy sector. This giving strategy, worth more than $50M so far, started over a lunch that charity: water’s CEO had with the co-founder of a unicorn company. Last year, another white male nonprofit CEO received a historic gift of $29M from a Silicon Valley entrepreneur. I admire both of these men and have for more than a decade. They are absolutely brilliant at their jobs, inspiring radical generosity among the world’s richest people. But they have access to a club that most of my fellow female CEOs do not, and that’s because of how wealth trickles down.
Only 2% of VC funding goes to women, even less to women of color and underrepresented groups. When so few women have the chance to scale their businesses, they don’t reap the immense profits that the men who get funding do. That naturally limits their philanthropic capacity. It’s no surprise then that the trickle-down of wealth largely benefits male-led nonprofits.
The nonprofit industry is run by women — 73% of the workforce is female — but far from led by us; only 21% of the largest nonprofits have female CEOs, even fewer women of color. Despite proof of concept, we don’t have access to the same resources to scale.
That’s why it’s critical that future gifts of this size are very intentionally invested in women-led nonprofits.
This year, I want to see 10 women-led nonprofits with proven track records receive their first million-dollar gift.
Depending on who you’re sitting across the table from at lunch, that either sounds like an audacious challenge or a wish that could be granted in an instant.
Third and finally, this pilot was intended to create a sustainable structure for one nonprofit that has a “100% pledge,” meaning they put 100% of the public’s donations into the programs. This gets tricky in the nonprofit sector. I’ve learned when we separate personnel costs from program costs, we are doing a disservice to the realities of running a nonprofit.
I once tried to mimic this 100% marketing lingo, before I conceded that it reinforces a troubling myth: that the public’s donations shouldn’t support operations. This paradigm devalues the skill and effort of the professionals who make it possible to achieve the results donors want to see. It’s not sustainable. I suggest these high-profile funders use their platforms more widely to advocate that donors, at any level, support operational costs.
My bottom line is that when business leaders attempt to innovate within the philanthropy sector, they may inadvertently complicate efforts for gender equity, diversity, inclusion, and sustainability. So I invite them into a conversation with more of us. That goes further than a critique because ultimately, we’re all learning. The future of philanthropy is ours to explore together, alongside the communities we serve.
If you read this far and don’t know me, allow me to introduce myself. I’m Tammy Tibbetts, CEO and Co-Founder of She’s the First, a nonprofit fighting gender inequality through education. We want all girls to access the rights they deserve, especially their right to an education. We’re best known for reaching 7,200 girls in 11 countries who will be the first in their families to graduate high school. By strengthening local organizations with funding, training, and capacity-building, we improve their life outcomes. Michelle Obama teams up with us. Our 2019 annual budget is $1.7M. October 24th is our 10th-anniversary gala, and it is my goal to secure our first multi-million-dollar investment by that date.