Key trends in Silicon Valley philanthropy
CRITICAL GAPS BETWEEN SILICON VALLEY DONORS AND LOCAL NONPROFITS
“We know friends and neighbors who are benefitting from the tech boom, and we simultaneously advise local nonprofits serving those who are being left far behind. We have observed that the two groups often speak different languages and live in different worlds — with few bridges between them. And so we wanted to understand why: Why are local community-based organizations struggling to meet demand in one of the wealthiest and most sophisticated regions in the country? Why aren’t more Silicon Valley philanthropists directing their dollars toward local organizations and issues, and why hasn’t more entrepreneurial ingenuity trickled down to local nonprofits? What is the cause of these disconnects, and how might we help bring these two groups together in service of shared community?
New contours of giving — the emerging Silicon Valley “giving code.”
While Silicon Valley’s new philanthropists, including wealthy Millennials, are still in the early stages of their journeys, certain patterns to both the motives and the style of their giving are becoming evident. While this emerging “giving code” is not yet set in stone, two things are clear: these donors seek to be “bigger, better, and faster” in their giving than the philanthropists who came before — and they are inherently skeptical of nonprofits. We’re not the first to write about these patterns: with all the new wealth being generated in Silicon Valley, some journalists and a handful of sector thought-leaders have begun to document the philanthropy trends of this generation.”
Nonprofits Overview
Nonprofits are an important and often overlooked part of the state and local economy. California has 25,000 registered nonprofits operating with paid staff, and nonprofit revenues account for 15% of California’s gross state product.
With nearly 1 million employees, the sector is the 4th-largest industry in terms of employment, beating out both banking/finance and real estate.
Collectively, California nonprofits generate $208 billion in annual statewide revenue and hold $328 billion in assets, not including foundations — not bad for a sector that is often perceived as “invisible.”
Within Silicon Valley, there are a total of 3,145 nonprofits with revenue greater than $25,000, not including 1,146 foundations; the total number of nonprofits has grown by 28 percent in the last 10 years to 9,725 total. Of these, the vast majority (77 percent), report revenues under $1 million, comprising the bulk of the community-based organizations.
For nonprofits seeking to engage this new generation of donors, they would be well advised to find ways to measure and share results, to appeal to donors’ “heads” and not simply their “hearts.”
GIVING CODE:
- HIGH IMPACT
Like the previous wave of strategic philanthropists, this generation of donors is not interested in charity or Band-Aid solutions. While they can be persuaded that meeting immediate needs is important, they prefer leaving that to more traditional funders.
- INNOVATIVE
Many of these new donors made their fortunes as technology entrepreneurs, and they bring that same creative and restless energy to their philanthropy. Their emphasis on innovation and problem-solving goes hand-in-hand with the focus on impact, outlined above.
- CONNECTED
In our conversations with new donors, and in reading through recent writing on this topic, we were struck by how experiential their approach to philanthropy is, regardless of their age.
- DIVERSIFIED
Lastly, it’s worth noting that these donors approach giving from a pragmatic and multidisciplinary lens: this applies to the vehicles and kinds of capital through which they give, as well as the issues, places, and organizations to which they give.
CRITICAL GAPS BETWEEN SILICON VALLEY DONORS AND LOCAL NONPROFITS
Gap: KNOWLEDGE AND INFORMATION
Most local nonprofits don’t understand the new Silicon Valley “giving code” that is emerging, let alone how to influence it. They know that significant wealth is being created, and they see both its potential upsides and its downsides, including the displacement of their constituents and organizations. But they don’t know exactly how much money is out there, where it’s going, or how to access it. Likewise, most new philanthropists don’t have good information on local nonprofits and local needs: they don’t know who is working on what, which local issues are most important, or who is succeeding at solving local problems. These donors are often young and busy. Even though they live “locally,” their homes are typically located in affluent neighborhoods where the stark realities of economic distress aren’t visible. In not understanding how the other operates, both nonprofits and new philanthropists literally cannot see the potential synergies and points of connection that could bring them into partnership.
Gap: SOCIAL NETWORK AND EXPERIENCE
Also blocking the ability to connect their work is a social network and experience gap. Generally speaking, nonprofit leaders and new philanthropists don’t move in the same social circles. For the latter, community is increasingly defined not by physical place but by socioeconomic class: a particular psychographic and a set of shared experiences that only wealth can buy. Now more than ever, their social networks are defined by which elite neighborhood they live in, where they went to college, what company they work for (or founded), which private school their children attend, or where they own their second or third home. By contrast, nonprofit leaders, in part due to the highly local nature of their work, tend to define community by place, by culture, and by ethnicity. Very few Silicon Valley nonprofit leaders personally know the region’s technology leaders, and the two don’t often have reason to meet. They may live only a mile or two apart, but it might as well be 1,000 miles.
Gap: MINDSETS AND LANGUAGE
Another critical gap is one in mindsets and language. In talking about the world and about their work, most nonprofit leaders speak a kind of moral language that emphasizes social responsibility, social justice, equity, and the common good. Many have backgrounds in social work or other similar fields, and use shorthand jargon (words like “empower,” “transformation,” and “theory of change”). Needless to say, this stands in high contrast to the more utilitarian language of business, efficiency, and bottom-line profits spoken by donors. The new philanthropists are far more transactional when describing their work and their strategies. They talk about the “biggest bang for the buck” not just in their business but in their philanthropy as well. Theirs is a language of finance, of metrics, of power, of capitalism, of winners and losers — and it is starkly different from the more personal and emotional language that nonprofit leaders use to convey both the impact of their work and the vital human needs that drive it.
Gap: EMPATHY
Each of these gaps helps contribute to and reinforce a fundamental empathy gap that is both felt and fostered on both sides. Most wealthy tech entrepreneurs don’t understand nonprofits, and most nonprofit leaders don’t understand business people. This, in turn, can lead to judgment. The wealthy become “greedy” or “heartless,” while nonprofit leaders are characterized as “bleeding hearts” who don’t know how to think strategically or use business tools to quantify their impact. Without obvious common ground, it is easy for each group to reduce the other to a stereotype or distort them into a caricature. This gap might be the most unspoken as well as the most dangerous idea, making it extremely difficult for either group to recognize how their work, their passions, their skills, and their insights might align for the betterment of their shared local community.
In fact, this new generation of donors has the opportunity over the next few decades not only to shape how we think about philanthropy but to solve some of our most pressing problems as a society and the world, starting right here.
Authors: Alexa Cortés Culwell and Heather McLeod Grant
