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Silicon Valley’s Business of Giving

A new generation of philanthropists are “disrupting” charity, but how accountable are they?

Thomas McMullan
Sep 11, 2018 · 9 min read
Credit: tangi bertin via flickr/CC BY 2.0

When a young soccer team was trapped in a cave in Thailand, Silicon Valley wasn’t the most obvious source of help. But Tesla CEO Elon Musk directed a team of engineers to solve the problem and eventually sent a miniature submarine to Thailand. Some modest praise and a significant amount of mockery followed, and the sub wasn’t used. Yet Musk was one of many trying to do something to help, so why was there so much backlash?

Writing in the New York Times, sociologist Zeynep Tufekci contrasted what she called the Silicon Valley model of “can-do optimism” and “a preference for rapid, flashy, high-profile action” with the “slower, more methodical, more narrowly specialized approach to problems” that underpinned the successful rescue mission. There had been a clash of sensibilities: between the tech industry’s tendency toward engineering-led intervention and the established practices of the divers, between disruption and continuance.

As easy as it may have been to delight in the schadenfreude of Musk’s ego being pricked—here was a man, after all, who had recently shot one of his own cars into orbit—the entrepreneur’s approach says more about the shifting relationship between technology, money, and social good than it does about one man’s hubris. Musk’s submarine may not have been used, but it spoke to powerful forces rippling beneath modern philanthropy, steadily transforming how the nonprofit sector works.

The past decade has seen a new generation of elite philanthropists emerge from the U.S. west coast, typified in many ways by the Chan Zuckerberg Initiative (CZI). Owned by Facebook founder Mark Zuckerberg and his wife, Priscilla Chan, the three-year-old company says it brings “world-class, cutting-edge engineering to social change,” with projects in education, housing, and health. Pairing engineering with social progress, it arguably pulls on the wider rhetoric and business mentality of Silicon Valley. This is to be expected, says Benjamin Soskis, a research associate in the Center on Nonprofits and Philanthropy at the Urban Institute.

“Historically, people have given away their money in ways that reflect the ways the money was made,” Soskis tells me. “It was true when industrial robber barons made corporate philanthropies that resembled their business corporations, and it’s true now.”

Sean Parker. Credit: JD Lasica via Wikimedia Commons/CC BY 2.0

This connection is important. In a 2015 piece for the Wall Street Journal, ex-Facebook president Sean Parker describes what he terms “hacker philanthropy,” something brought about by a “monumental shift in the distribution of wealth on the planet” and centered around an elite group with a background in telecommunications and internet services. The mindset of these wealthy individuals, according to Parker, is bound to an anti-establishment outlook, a belief in data-oriented problem-solving, and a desire to “hack” complex issues using technological solutions. Engineering-based interventions, from education apps to miniature submarines, speak to this mindset.

A wealthy person drawing on the business strategy that made them rich is by no means new, but the interest in technological solutions reflects a deeper change in the nature of philanthropy. In recent years, the lines between profit and charity have become increasingly blurred. In 2008, the economic writers Matthew Bishop and Michael Green coined the term “philanthrocapitalism,” encompassing an approach that encourages active investment in social programs that yield a return. The Clinton Foundation has been an advocate of this approach, as has the Bill and Melinda Gates Foundation. In her book, No Such Thing as a Free Gift, Linsey McGoey goes so far as to write that “Gates is hailed as the ‘Macdaddy’ of the new philanthropy,” epitomizing a new breed of donor who leverages market forces for social good.

The younger generation is, if anything, going further in this direction. Two of the most prominent organizations in the sector—the CZI and the Emerson Collective run by Laurene Powell Jobs—are both limited liability companies (LLCs) instead of foundations. Crucially, this means they are able to invest in private companies and political advocacy as well as nonprofits. “It reflects the mentality in which philanthropy is basically integrated into a whole set of strategies,” says Soskis. “In a sense, it’s a derivative of the philanthrocapitalist mindset, in which the lines between market activities and philanthropic activities are blurred almost to the point of nonexistence.”

The LLC model offers maximum flexibility for a donor to dip between for-profit and nonprofit as they see fit, but the structure is much less transparent than a foundation. The CZI and the Emerson Collective don’t need to report their assets and spending, which has given rise to criticism about how accountable to the public these organizations are, particularly if they’re investing huge amounts in bringing about systemic social change. These people haven’t been elected, after all.

For a young and wealthy “disruptor” in their twenties or thirties, philanthropy is becoming part of a wider career strategy that crosses freely between profit and nonprofit—a hop, skip, and jump compounded by a business rhetoric that frames products as objects for social good in their own right.

“Andrew Carnegie would never have said: ‘My steel mills are making these people’s lives better,’” historian Maribel Morey tells me. “He would turn around and say my libraries and the church organs I love giving communities will improve these people’s lives, but I think he would have been pretty honest that he was trying to maximize profit in his business. That was the goal he had in the private sector.”

Morey characterizes the bleeding between public and private as a long-running tension in the history of wealth, something that can be traced back as far as Adam Smith. What has changed with recent generations, however, is the bleed between the languages of profit and “social good.” Whereas Carnegie gave money in part to solve the problems he knew were created by the capitalist society he profited from, modern philanthropists are buoyed by a belief in the private sector to be a force for good in its own right.

“The lines between market activities and philanthropic activities are blurred almost to the point of non-existence.”

And not just the private sector, but technology in particular. “Steve Jobs literally made that argument,” notes Soskis. “The reason the fortune behind Emerson Collective is so big is because Jobs didn’t give a lot of money to philanthropy. He believed Apple was his philanthropy.”

This Silicon Valley rhetoric—evident in everything from Facebook’s mantra of “community” to Google’s former motto “Don’t be evil” to Tesla’s emphasis on sustainable energy—means that “social good,” or at least the phantom of it, is built into the DNA of these businesses. When it comes to actual philanthropy, therefore, the mindset is that good has already been done, for profit no less. What’s wrong with investing in businesses to maximize the good that can be further done? If I want to “disrupt” homelessness, why should I limit myself to grants for nonprofits?

Morey tells me this bleeding between profit and charity is coupled with a changing attitude toward the political sphere. “While it has been a constant that foundations have wanted to shape public life, the big difference is that nowadays they are ever-more nonchalant about exposing themselves directly in relationship to public policy makers.

“Early 20th century people in the foundation world would have intermediaries—academics or a social science council—between themselves and who was shaping public policy. They weren’t really interested in having photo ops with Lyndon B. Johnson or Franklin D. Roosevelt, whereas Bill Gates or Melinda Gates did have photos with Barack Obama. The visibility is distinct.”

Not all of the new generation of donors can be described in such terms—Laurene Powell Jobs is famously reluctant to be in the spotlight, for example—but taken in broad strokes, there’s a level of comfort with being visibly connected to public policy that previous wealthy individuals have shied from. It speaks to the culture of keynotes and TED Talks that has grown around companies in Silicon Valley, so much of which stems from the mythology of a founder’s entrepreneurial genius.

There is a thread to be followed here between this new generation of wealthy individuals, the charities that need their money, and the crises that those organizations work to resolve. As Alana Semuels wrote in The Atlantic, the changing of the guard around wealth has rippled down to nonprofits. Much of this stems from how charities are now expected to pitch themselves, to speak a new language of metrics, scale, and impact, “forcing nonprofits to become incubators and disruptors.”

In her book Policy Patrons, Megan E. Tompkins-Stange says the Gates Foundation tends “to frame problems in a ‘technical’ fashion, preferring to address social issues that have a clear solution and where a causal link exists between the problem and the results, consistent with the norms of engineering as a discipline.” The logic follows that philanthropists will draw on the culture of their business when they approach charity work, whether the target is education, health care, housing, or the refugee crisis. What this means for nonprofits in those areas, however, is that they have to learn to speak a new lingo.

If an organization can do this, they can unlock funding. For grassroots projects that aren’t as familiar with this new language, it can be a struggle. The Giving Code, a 2016 report on Silicon Valley philanthropy, found that only around 10% of philanthropic funding from the area goes to local causes, and the majority of that is to universities and hospitals. For a community-based organization that’s trying to address the area’s severe homelessness problem, for example, applying for this money can be made more challenging “by the fact that Silicon Valley’s new philanthropists don’t always behave the way traditional philanthropists do—and because most nonprofit leaders are not familiar with the emerging ‘giving code’ that drives their choices.”

It’s not only nonprofits in Silicon Valley that need to learn this new language. In the U.K., for example, organizations such as the Center for Acceleration of Social Technology (CAST) have emerged as an intermediary between funders and nonprofits, helping the latter make “innovative uses of technology to address social change” and understand how digital product development can help attract funding. On the other side of the money, CAST works with funders to help them best understand how technology needs to be guided by experts with years of experience in the areas being “disrupted.” It’s crucial, they argue, that the new language of charity doesn’t only go in one direction.

“Historically, people have given away their money in ways that reflect the ways the money was made.”

“There’s a lot of goodwill, of people doing things with the best intentions, but it needs better coordination,” co-founder and director Annika Small OBE tells me. “You have people who have a deep understanding of the complexities around a social issue, but they aren’t necessarily drawn in at the right time, when big tech is looking at how it might direct some of its resources to an issue. How do you create something that’s more cohesive?”

CAST wants to recognize that this new funding landscape is here to stay and to make sure that charities understand the new expectations of funders. At the same time, funders have to understand the value of working with organizations that have a deep knowledge of complex social issues—something complicated by a new generation of philanthropists blurring the lines between business and charity, and perhaps even seeing their own profit-driven business as a force for social good.

“How many really have a primary aim of social good?” Small says. “Mostly they are still there to make a profit. But where they are moving toward engaging those sorts of discussions, it is critical that the charity sector, and social enterprise more generally, have a voice and are connected to them. Otherwise there really is a danger.”

A danger of what? Of technology-driven interventions where grassroots social work is needed? Of private companies instead of governments bringing about systemic change? As Small notes, there is a seemingly genuine desire from the likes of Zuckerberg and Gates to do good in their philanthropy, just as Musk was ostensibly trying to help with his miniature submarine. But it is crucial that voices of experience are listened to and that there is accountability to the public.

In the case of the Thai cave rescue, Musk’s offer was turned away in favor of the specialized skills and methodical approach of divers. The irony could well be that, in the long term, nonprofits doing similar work in disaster areas will need to bend their thinking toward that of a tech titan.

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