The Charity That Big Tech Built

Silicon Valley technology has been unkind to traditional
middlemen. Streaming music punished
the record industry. Netflix killed video stores.
Life has become harder for intermediaries such
as travel agents and stockbrokers.

So it is perplexing that when it comes to philanthropy,
Silicon Valley has given birth to an intermediary that
has rapidly grown into one of the world’s biggest foundations. The
Silicon Valley Community Foundation (SVCF), which was formed
10 years ago by the merger of two smaller community foundations,
connects the region’s wealthy donors to nonprofit organizations
that they want to support, around the corner and around the world.

With assets under management of more than $8.2 billion, the
Silicon Valley Community Foundation last year made more than
108,000 grants
valued at $1.3 billion, pushing more money out the
door than the Ford, Rockefeller, Hewlett, or Packard foundations—more, indeed, than any foundation in the United States, except for
the Bill & Melinda Gates Foundation.

Community foundations are nothing new. Cleveland’s came first,
in 1914, when Frederick H. Goff, a banker and lawyer, had the idea
of pooling the resources of the city’s philanthropists into a single
endowment to benefit Cleveland in perpetuity. Today, every big
city has one, as do such places as Holdrege, Neb., and Orcas Island,
Wash. The United States has nearly 800 community foundations,
according to the Foundation Center.

The Silicon Valley Community Foundation towers over them
all and has thus attracted national attention. But as the SVCF has
enabled its donors to give to whatever charities they want—more
than half of its grants
leave the San Francisco Bay Area, and many
that remain go to global institutions such as Stanford University—local community-based organizations and advocates for the poor
feel neglected. Some social critics argue that the influx of wealth to
Silicon Valley has made life harder for working-class and middle-class people, and that the rich are thereby obligated to mitigate some of
the damage they have caused.

That is debatable. But there is no doubt that the region’s wealth
disparities are stark. You will not find Silicon Valley on a map—it
is more of an idea than a place—but let us define it for our purposes
as two counties, San Mateo and Santa Clara, that are south
of San Francisco and home to technology giants Apple, Google, and
Facebook. About 2.7 million people live in the two counties; they
include 76,000 millionaires, and about 12,600 households have
investable assets of at least $5 million, according to Joint Venture
Silicon Valley
, a research group. More than 1,100 private foundations,
with combined assets of $31.6 billion, operate in the two

Yet about 800,000 people in Santa Mateo and Santa Clara counties,
or nearly one-third of those who live there, need public or private
assistance to make ends meet. More than 30 percent of public
school students access free or reduced-price lunches. Housing is
wildly expensive; the median home price in Santa Clara County is
$1.2 million, twice what it was just five years ago. Poor people crowd
into tiny apartments or endure long commutes.

“Silicon Valley is ground zero of income inequality,” says Jen
Ratay, executive director of the Silicon Valley Social Venture Fund,
a donor group. “Local community organizations are struggling.”

These issues and statistics were spotlighted last year by “The
Giving Code
,” a much-discussed report about Silicon Valley philanthropy
commissioned by the David and Lucile Packard Foundation
and published last year by philanthropy consultants Alexa Cortés
Culwell and Heather McLeod Grant. They wrote, “Many of these
community-based organizations face considerable challenges that
threaten their ability to achieve impact and scale—including, in
some cases, a failure to attract local philanthropy and the mindshare
of local entrepreneurs that could help them gain traction.”
Silicon Valley donors and local nonprofits, the authors argue, are
so disconnected that they even seem to speak different languages;
it is a caricature, but a useful one, to say that young, tech-savvy donors want disruption, innovation, metrics, and impact, while the
nonprofits are simply desperate for them to care.

How, then, is the Silicon Valley Community Foundation trying
to bridge this divide? As the Bay Area’s biggest grantmaker, what
obligation, if any, does it have to alleviate the suffering of its neighbors?
And if the foundation cannot, by itself, solve the region’s biggest
problems, what should its role be?

Other People’s Money

“I have been driven all of my life,” Emmett Carson tells me, “to
want to make a difference in people’s lives.”

As the founding chief executive of the SVCF, Carson has led the
foundation through a decade of phenomenal growth—17 percent
compounded annually, during a period when community foundations
grew by an average of 5 percent a year. A veteran of the foundation
world with a PhD in international affairs from Princeton University,
Carson is a charismatic albeit controversial figure. He has a raft of
fans and a surprising number of detractors, although few of the
critics are willing to be quoted by name.

A hard-charging fundraiser, Carson has tapped into the enormous
wealth created in Silicon Valley. “The fact that they’ve raised
over $7 billion in donor-advised funds is really great,” says Carol
Larson, president of the Packard Foundation. Rick Williams, the
chief executive of the Sobrato Family Foundation, which is also based
in Silicon Valley, says of Carson, “He’s passionate, committed, and
bright.” Nationally, the Silicon Valley Community Foundation is
“driving the conversation” about the changing role of community
foundations, in part by expanding the definition of “community” to
include any place to which its donors feel an attachment, says Brad
Smith, president of the Foundation Center.

Emmett Carson, CEO and president of the Silicon Valley Community Foundation, addresses his organization’s 2014 regional meeting. (Photograph courtesy of Silicon Valley Community Foundation) 

Carson greets me with a big smile and firm handshake when we
meet at the foundation’s headquarters, which occupy two floors
of a modern seven-story office building on a commercial strip in
Mountain View. A 57-year-old African-American man with a commanding
presence, Carson grew up in Chicago, where his father
was a city inspector and his mother was head cook in the public
schools. He earned degrees in economics and international affairs,
and found his way to the Ford Foundation, where he led a program
on rights and social justice.

Carson then led the Minneapolis Foundation, a community
foundation whose assets tripled under his watch, before heading
for the Bay Area, where he oversaw the merger of the Community
Foundation of Silicon Valley, which was based in Santa Clara County,
with the Peninsula Community Foundation, based in San Mateo
County, that created the SVCF.

By Carson’s account, that was a Herculean task.
Nonprofit mergers are never easy. “The smart
money said we couldn’t do it. The smart money
said it would fail. The New York Times ran an article
that said my days were numbered,” Carson recalls.
Then came the Great Recession. Since then, he said,
“we have exceeded everyone’s expectations on every
metric you can have, having started with the
worst possible scenarios of the economy, of teams
that were not just disparate, they saw themselves
as competitors.”

The foundation’s board of directors, which includes
executives from Facebook, Microsoft, and
eBay, tracks Carson’s performance against a list of
metrics that include fundraising, grantmaking, operational
improvements, and surveys of individual
donor and corporate satisfaction. (The foundation
has a growing business advising companies on their
philanthropy and social responsibility.) His compensation
was $900,000 in 2015, the most recent year
for which data is available; that is double his initial
base salary, reflecting the board’s satisfaction with
his performance.

Tracking Carson’s impact on the community—however defined—is more difficult, largely because
of the foundation’s peculiar role. Of that $1.3 billion
that flowed out the door last year, all but a
sliver—$19.2 million, or less than 2 percent—came
from funds that are held by the SVCF but controlled
by others. (The $19.2 million came from SVCF’s
own community endowment.) Some are corporate-advised
funds, which are administered for companies
like eBay and Cisco, who retain control over
their giving. Others come from so-called supporting
, which are similar to private
foundations but operate with fewer restrictions. But by far the majority
of the assets held by the SVCF are donor-advised funds, or DAFs.

DAFs function as rest stops for charity dollars. The fastest-growing
segment of philanthropy, DAF assets have increased from
$33.6 billion in 2010 to $78.6 billion in 2015, according to the National
Philanthropic Trust
. They can be parked at community foundations,
religious charities, universities, banks, or the charitable arms of for-profit
asset managers such as Fidelity, Schwab, and Vanguard. For
tax reasons, DAFs have special appeal to donors who (like many
in Silicon Valley) generate substantial capital gains from a public
stock offering or the sale of a company and want to give to charity
but have not decided how or when.

Donors can deposit their gains into a DAF, claim an immediate
tax benefit, and “advise” the umbrella organization holding the
DAF until they decide where the money will be donated. (Ninety percent of donors surveyed by Fidelity named the tax benefit as the
main reason for starting a DAF.) DAFs are also not subject to payout
requirements, and donors who choose to can remain anonymous.

As most acknowledge, DAFs depend on a legal fiction that is
widely ignored. While the law requires that DAFs be controlled by
the parent charities like the SVCF, it is the donors, in practice, who
decide how the funds will be spent. When I ask Carson about how
much influence he has over donor-advised funds, he replies with a
question of his own: “Do you have kids? When they can’t talk, you
have a lot of control. When they can, you have less and less.” Suffice
it to say, his donors can talk. “They are some of the smartest
people in the world,” he says.

Carson and his development team of about a dozen people operate
in a crowded market, competing with low-cost, large-scale providers
of DAFs such as Fidelity and Schwab at one end, high-priced
bespoke philanthropy advisors at the other, as well as staffed family
offices, faith-based federations, politically liberal and conservative
DAFs, and giving circles. It is no wonder that Carson does not
lobby donors too vigorously. Indeed, he explains, SVCF staff members
see themselves not as advocates or even as counselors but as
facilitators or partners.

“The traditional community foundation model,” says Carson, “is
one in which we set up as the guide. I’m going to guide you through
this world of philanthropy. I’m going to take you on the trails that
I know. We’re going to avoid the difficult places. Come with me.”

That is not his approach. “Our model is, it’s a jungle out there.
We’re going to learn together. We’re going to discover this is a dead
end. We’re going to share the frustrations. We’re going to share the
joy of success. That’s the partnership,” says Carson.

“We start out by saying, where are you trying to get to? What
gives you satisfaction? What do you care about out
there?” Carson says. Success, he says, is a satisfied
donor or, in the argot of business, a repeat customer.
“Did this grant fulfill your goals as a donor? Did it
do good in the community? Does it make you want
to do more in the community? That’s what I am trying
to facilitate and grow—not did I get you to do
the things I wanted to do.”

To Carson, it is not merely counterproductive but
wrong to push donors too hard. He rejects the claim
that some causes matter more than others. “Philanthropy
is intensely personal,” he says. “The fact
that I think housing and transportation are critically
important, does that mean hospitals aren’t important?
Does that mean the arts aren’t important?”

Some say that is a cop-out. Other community
foundations advocate for local nonprofits, saying
their role is to spotlight local needs and coordinate
collective action. (See “The Promise of Local
Impact” below.) The two community foundations
that merged to form the Silicon Valley Community
Foundation were locally focused by design,
according to Sterling Speirn, who was president of
the Peninsula Community Foundation from 1990 to
2005. “What about the poor kids in East San Jose?”
Speirn asks. “Wouldn’t you like to think that their
lives are markedly different because they live in the
same place as the Silicon Valley titans?”

The perception that the SVCF is insufficiently
committed to local needs has been reinforced by
several recent moves. The foundation opened a San
Francisco office, ruffling feathers because community
foundations generally avoid soliciting donors
outside of their own locality. (San Francisco has
its own community foundation, The San Francisco Foundation.) It relocated an executive to New York City, although
she is there largely to service East Coast corporate accounts, including
PepsiCo and Glamour magazine. (The SVCF worked with
Glamour on The Girl Project, a program to help poor girls in the
United States and abroad to stay in school.) The foundation also
made it easier for donors to give overseas. It produced a report on
philanthropy in India, supported a donor circle for Africa, and created
a global charity database of 1,100 NGOs; it now processes global
donations in multiple currencies.

Carson has no patience for those who question the global grantmaking.
He notes that the plan for the SVCF, which predated his
arrival, says the foundation will “meet donor partners where they
are and support their personal definitions of building community—locally, nationally, and around the globe.” This expansive view reflects
Silicon Valley’s demographics as a magnet for talented people
from around the world, who retain emotional ties to the places
where they grew up. “We had a lot of donors who did work around
the Ebola crisis,” he says. “Do you think we should wait to do something
about Ebola until it’s in San Mateo or Santa Clara county?”
For all the attention paid to the SVCF’s global grantmaking, donations
to nonprofits outside of the United States amounted to just
$10.5 million last year.

The Promise of Local Impact

It has never been easier to open a donor-advised fund. With $5,000, an Internet connection,
and a Social Security number, you can start a fund at Fidelity Charitable or
Schwab Charitable in about five minutes and pay as little as $100 in annual fees.

This poses a problem for community foundations, which offer similar accounts
but charge higher fees. They need to stand out from the crowd of competitors
who want to manage the money of wealthy donors.

Most do so by focusing locally, according to Deborah Ellwood, president and
CEO of CFLeads, a nonprofit that seeks to improve the effectiveness of community
foundations. “At their best, community foundations are local organizations
that are using a whole toolbox to strengthen their communities,” Ellwood says.
“They have local knowledge. They create and disseminate local information. They
can also, of course, engage residents, and not just residents with titles after their
names. They’re also working across sectors. They can fund advocacy, and they
can lobby. They are trusted, so they can be even-handed conveners.”

Here are snapshots of three community foundations that aim to strengthen
their hometowns:

The Boston Foundation

When this community foundation dug
into its history as part of its centennial
celebration in 2015, executives were surprised
to find that it had provided seed
money to about 100 nonprofit startups,
including Brigham & Women’s Hospital
and public broadcaster WGBH-TV. More
recently, it helped to launch such notable
nonprofits as BELL (Building Educated
Leaders for Life), City Year, and Citizen
. “Receptivity to new ideas, for
whatever reason, got into the DNA of
the foundation from the beginning,” says
Paul Grogan, who has led the foundation
since 2001. “Smart people could go
up to the open window and get backing.”
While birthing some organizations,
the foundation helps others to transition
through its Center for Nonprofit
Effectiveness, which looks for ways to
encourage nonprofits with overlapping
missions to join forces. The foundation
has been involved in “a number of significant
mergers but not as many as we
would like there to be,” Grogan says.

Community Foundation for Greater Buffalo

In 2011, this 98-year-old foundation
identified public schools that “were
not delivering the workforce the community
needs” as one of the region’s
biggest problems, says Clotilde Perez-
Bode Dedecker, its president and CEO.
The community foundation brought
governments, companies, and donors
together; formed a partnership with
a national nonprofit called Say Yes to
; and developed a comprehensive
program to “radically improve
the life course of an entire generation of
public school students” in Buffalo with
a mix of college scholarships, academic
help, and counseling. The resulting Say
Yes Buffalo
program built a management
system, which it says is the first
of its kind in a public-school district in
the nation, to track academic, attendance,
behavioral, and health indicators
for each student based on input from
schools, students, and parents; those
students who veer off track get help.
High school graduation rates are up by
15 percent, and enrollment in college
and post-secondary trade schools is up
by 10 percent. “We are seeing all the
macro trends going in the right direction,”
Perez-Bode Dedecker says.

The San Francisco Foundation

Last year, this foundation set a clear
and ambitious agenda to “disrupt the
trajectory of inequality” in the San
Francisco Bay Area. “Race and economic
inclusion are the North Star for
us,” says Fred Blackwell, the foundation’s
chief executive. “The work that
we are embarking on, and the level of
ambition that we have, requires us to
go far beyond our role as a grantmaker
and a service provider to donors.” Its
efforts have intensified since the election
of President Donald Trump. “We
had a lot of donors who were asking
us how they could respond,” Blackwell
says. The foundation made a $3.5 million
grant to defend people against
deportation, which was matched with
$1 million from the city of Oakland.
The foundation also created a Rapid
Response Fund for Movement Building

that is making onetime grants of
$3,000 to $15,000 to grassroots advocacy
groups working to advance racial
and economic equity. Blackwell is
fortunate that the foundation’s own
endowment holds about $800 million
of its $1.3 billion of assets. “It gives us a
good amount of flexibility to drive discretionary
grantmaking,” he says.

Problems in the Valley

While Emmett Carson and his colleagues will not tell philanthropists
with donor-advised funds where to give, they do control the
foundation’s endowment, along with whatever funds they can raise
year to year. Unfortunately, of the $8.2 billion in assets held by the
SVCF, only $216 million, or less than 3 percent, sits in the endowment.
Other community foundations, by contrast, have bigger piggy
banks of their own. The San Francisco Foundation holds $1.3 billion
in assets, of which $800 million sits in an endowment, available for
discretionary grantmaking. Of the $1 billion held by the Boston
, about $300 million is an endowment. To the degree that
money confers power, the presidents of those community foundations
have more than Carson.

Last year, the endowment, coupled with other fundraising, enabled
the SVCF to make $19.2 million in discretionary grants, all
locally focused, in four areas: education, the education of immigrants,
regional planning, and economic security, which focuses
on “financial education as well as opportunities to save, invest, and
protect family wealth.”

These categories exclude many nonprofits, including those focused
on the arts, the environment, and, notably, social service
programs such as food banks and homeless shelters. “We want to
be going after the root causes,” says Erica Wood, the foundation’s
chief community officer, who oversees discretionary grantmaking
and public policy. “If we want to be about impact, we have to be focused.”
Of course, some would counter that providing meals to the
hungry or temporary shelter to families has impact.

The strategic focus is, in any event, a departure. “The predecessor
foundations spread money around in ways that were not impactful,”
Carson says. Wood, who worked at the Peninsula Community
Foundation, agrees: “We are a far more courageous organization
today than we were back then.” Grantmaking at the SVCF is now
aligned with research, advocacy, and policy work.

One example: In 2009, after the Great Recession, the foundation
commissioned a report designed to raise awareness of the negative
effects of payday lending. The SVCF then gave about $3.4 million
in grants to organizations that oppose payday lending and urged
local governments to protect low- and moderate-income families
from unscrupulous lenders. Since then, 14 Silicon Valley jurisdictions,
including San Mateo and Santa Clara counties, have enacted
to restrict payday lending. “SVCF’s funding not only
stimulated formal and informal coalitions; it deepened the capacity
of the participating organizations,” says a 2017 report commissioned
by the foundation. (Under IRS rules, community foundations have
the freedom to fund advocacy and lobbying, and to engage in lobbying
themselves.) SVCF grantees have taken the campaign against
payday lending to other California cities and the State Legislature.
The foundation counts these as significant victories.

Carson is also proud of the SVCF’s multipronged efforts to
end so-called math misplacement, a euphemism for discrimination
against minority and low-income students who are forced to
repeat algebra classes despite passing grades and test scores. The
problem was brought to light in 2010 by research commissioned by
the Noyce Foundation and further documented in a report called
“Held Back,” funded by the SVCF and produced by the Lawyers’
Committee for Civil Rights
. The SVCF hired a law firm to file Freedom
of Information Act requests with 54 school districts, which revealed
that the problem was widespread. Carson was outraged. “You’re
demoralizing a kid who actually won the race. It was doing irreparable
harm to these kids,” he says. The SVCF advised school districts
on how to overcome the bias and, working with legislators, sponsored
a bill to curb the practice that was signed into law in 2015 by
California Gov. Jerry Brown.

These efforts are not trivial, but they are not terribly ambitious,
either. Critics say that the SVCF should be bolder. John Maltbie, the
veteran San Mateo County manager, wishes the community foundation
would tackle poverty alleviation and affordable housing. “If
you ask the average person who lives in Silicon Valley, ‘What makes
your life more difficult?’ they would talk about transportation and
they would talk about housing. Those aren’t issues that the Silicon
Valley Community Foundation has been very involved in,” Maltbie
says. “I would question their commitment to community if those
issues don’t rise up on their agenda. My sense is that more and more
they are donor directed.”

Others contrast the SVCF with the much-smaller Sobrato
Family Foundation, which focuses on local grantmaking and disbursed
$16.2 million in the Valley in 2015, nearly as much as the SVCF. A hub of local philanthropy, Sobrato provides rent-free office
space to 71 nonprofits. The executive director of one of them, who
asked not to be named, says, “We love Sobrato. They fill a huge need.”

Joined by US Rep. Zoe Lofgren,
then-San Jose Councilman Ash Kalra, and others, Emmett Carson speaks about the dangers of payday lending at a December 2014 event. (Photograph courtesy of Silicon Valley Community Foundation) 

Carson says he constantly exposes donors to the problems of
the poor. Last spring, the SVCF hired an investigative reporter to
describe the struggles of several thousand low-income people living
on the southern Pacific coast of San Mateo County; it showcased her
findings in a blog post and podcast. “We are always talking to our
donors about opportunities,” Carson says. But he thinks that local
nonprofits need to make the case for themselves. “I have given up
on the idea that it is our job to make the case for the development
officers of every nonprofit,” he grumbles.

When Carson and the SVCF have tried to do more, the results
have been lackluster. In January, the SVCF created a fund called
Opportunity for All, saying that one of its top priorities was to help
the region’s immigrants. The SVCF set a modest goal of raising $1
million to support legal aid and provide information and other resources
to immigrants; it has raised only about $250,000. A month
later, after a flood forced the evacuation of 14,000 people from a San
Jose neighborhood, causing an estimated $73 million in damages,
the foundation and the city’s mayor set up a relief fund. A California
billionaire, Kieu Hoang, gave $5 million, but the fund brought in only
another $1.4 million, with very little coming from the tech industry.

Several factors explain the tepid responses to these campaigns,
as well as the frustrations of other local fundraisers who cannot tap
into Silicon Valley’s riches. In part, they reflect what “The Giving
Code” describes as “the barriers and tensions between local philanthropists
and local nonprofits and why they seem to keep missing
each other.”

Heather McLeod Grant, coauthor of the report, says the new
generation of young philanthropists who made their money in tech
have scant interest in business-as-usual nonprofits. They bring “an
innovative and disruptive approach to their philanthropy,” she says.
“They approach giving as investing, not charity. They’re very interested
in disrupting the status quo.”

But how do you disrupt a soup kitchen? “It is hard to disrupt
soup,” laughs Cat Cvengros, vice president of Second Harvest Food
Bank of Santa Clara and San Mateo counties
. The food bank today
serves more people—largely poor and working-class families being
squeezed by higher rents—than it did during the Great Recession. To meet the growing demand—and to appeal to tech-savvy donors—
the food bank is researching ways to improve, perhaps by building
an app. “We want to launch an innovative effort to reimagine food
banking,” says Cvengros, adopting the lingo of the Valley.

The Sobrato Foundation’s Rick Williams ascribes the disconnect
between wealthy donors and local nonprofits not to a lack of empathy
but to a “lack of rootedness in the community.” Most people in
Silicon Valley come from somewhere else, and many are intensely
focused on their work. “It is very hard to get the new wealth to understand
the nonprofit community,” Williams says. Carson “may
be trying,” Williams acknowledges, “but it’s just not working.” If
current trends continue, he worries, Silicon Valley will be increasingly
unlivable for all but the well-to-do.

Foundations in the region need to collaborate more, all agree. “I
don’t understand why this place can’t be a laboratory,” says Daniel
Harris, the San Jose program director at the John S. and James L.
Knight Foundation
. “We have broken school districts, we have a big
issue of inequity, we have people who are homeless, we have people who are stuck in endless traffic on the 101—depending on what your
issue is, there’s an opportunity here to think big.” Another Silicon
Valley grantmaker, who asked not to be identified, says that unlike
the best community foundations, the SVCF has failed to establish
itself as a trusted hub, a place where foundations, governments,
nonprofits, and businesses can come together to tackle the most
important local problems. The Opportunity for All immigration
fund, for example, fell short of expectations because the “ask” was
too small and the SVCF chose to go it alone, this grantmaker suggested:
“They don’t have a lot of influence because they don’t have
a lot of credibility.”

“The Giving Code” says, pointedly, that Silicon Valley “needs a
central, credible place to go for good and reliable information on local
nonprofits.” Tech donors in particular say they care about maximizing
the impact of their charitable donations, by supporting the best
nonprofits. Packard’s Larson says, “There’s a good percentage of
donors who would be interested in more information and guidance.

The SVCF could fill this gap, but its evaluations of local nonprofits
lack the rigor that other intermediaries, such as GiveWell
or The Center for High Impact Philanthropy at the University of
, bring to that task. Those organizations carefully study
nonprofits and look for third-party evidence of effectiveness; by
doing so, GiveWell has attracted tech money, notably from Dustin
Moskovitz, a cofounder of Facebook. While the SVCF touts its own
accomplishments in “impact reports” and elsewhere—it commissioned
not one but two reports marking its 10-year anniversary and
sponsored a series of promotional blog posts in the San Francisco
—it provides limited guidance to donors looking for effective

A Numbers Game

The Silicon Valley Community Foundation takes pride in the $1.3
billion of total grantmaking that it achieved in 2016. But there is less
to that figure than meets the eye. Most of the $1.3 billion is pass-through
philanthropy from donor-advised funds and businesses. In
addition, about 42 percent of the total comes from a single donation
of $550 million, from Facebook founder Mark Zuckerberg’s donor-advised
fund to the Chan Zuckerberg Biohub, a San Francisco-based
research institution that is just getting off the ground. If nothing
else, this transaction illustrates the outsized impact that a few major
donors can have on the numbers cited by the SVCF.

Facebook’s Mark Zuckerberg has donated almost $1 billion in shares to the Silicon Valley Community Foundation. (Photograph by Wenn Ltd./Alamy) 

In 2013, for example, Zuckerberg donated 18 million shares of
Facebook stock worth almost $1 billion to the SVCF, accounting
for 70 percent of the money raised that year by the foundation.
In 2014, 73 percent of the donations to the SVCF came from four
donors, including Nicholas and Jill Woodman, founders of the
GoPro camera company, who gave $500 million; and Jan Koum, the
founder of WhatsApp, who gave $556 million. In 2015, 70 percent of
the SVCF’s contributions came from 12 donors.

WhatsApp’s Jan Koum is also a big-time donor. (Photograph by DPA Picture Alliance/Alamy) 

Why do these mega-donors choose to park their money at the
SVCF? They are not saying, and neither is the foundation. “My
charm,” Carson replies, laughing, when I ask him. He goes on to say that the foundation prides itself on its customer service and offers a
“one-step, turnkey solution, and you can expect a level of expertise
and excellence.” Donors give to the SVCF in a variety of ways, including
hard-to-value shares in private companies. Carson says, “We’ve
taken Bitcoin. We’ve taken Ripple. We take buildings. We get art.”

GoPro’s Nicholas Woodman has also donated hundreds of millions of dollars to the foundation. (Photograph by Reuters/Mike Segar) 

The timing of these large gifts indicates that they are driven
by the desire to offset capital gains generated by so-called liquidity
events. GoPro’s Nicholas and Jill Woodman, for example, made
their $500 million donation to the SVCF in 2014, shortly after GoPro
sold shares to the public and just before Woodman cashed in nearly
$300 million of stock. The donation to the SVCF likely offset tax liabilities
from that sale. It is not known whether Woodman has made
any charitable gifts out of his donor-advised account, and GoPro did
not respond to requests for comment. For its part, the SVCF has no
financial incentive to push its donors to give away their money; to
the contrary, it supports its operations from the fees it generates
from donor-advised accounts, so more money parked there means
more revenues for the SVCF.

About those fees:
The SVCF is certainly
not the cheapest
place to maintain
a donor-advised fund.
It charges an annual
fee of 1 percent for accounts
up to $3 million,
less for larger
accounts. Fidelity,
Vanguard, and Schwab
charge administrative
fees of 0.6 percent annually,
less for larger
accounts. The differences
can add up; one donor told me that she moved her account
from the SVCF to Schwab so that she would have more money left
to give to charity.

What do donors get for those higher fees? Not enough, some gripe.
Three high-net-worth donors told me that they opened accounts at
the SVCF because they wanted to support the community but grew
disappointed with the quality of advice provided by the foundation,
even after staff were asked to identify local giving opportunities.

It is hard to know whether major donors like Zuckerberg seek or
receive guidance from the SVCF on their philanthropy. The SVCF
does not merit a mention in The Prize, a book by Dale Russakoff about
Zuckerberg’s $100 million donation to reform Newark, N.J.’s public
schools. The effort delivered mixed results, partly because of a failure
of the young philanthropist and his allies to consult with the community.
The SVCF declined comment, citing donor confidentiality.

There are other signs of donor dissatisfaction with the SVCF. One
of the largest grants reported by the SVCF in 2016 was a $25 million
“contribution” to a donor-advised fund at Goldman Sachs. In 2015 and
2016, another $21 million left the SVCF for donor-advised funds at
Fidelity, Schwab, Vanguard, Bank of America, and elsewhere. These
grants are transfers to financial institutions that do not do charities
any good, but they are logged as “grantmaking” by the SVCF.

All of this makes it difficult to definitively answer the questions
posed at the start of this story about the impact of the SVCF and
about its proper role. At the very least, the foundation has encouraged
the wealthy in Silicon Valley to become more generous, by
making it easy and advantageous, tax-wise, for them to set aside
assets and earn a financial return while they develop strategies for
charitable giving. It is, in this regard, much like the charitable arms
of Fidelity or Schwab, except that the fees that the SVCF earns support
its other work in Silicon Valley.

Carson’s willingness to let his donors define community in any
way they like also makes sense, despite the grumblings from local
nonprofits. Many if not most of those donors have roots outside of
Silicon Valley and do business internationally. Arguably, philanthropists
in Silicon Valley and elsewhere in the United States should do
more global giving, not less: The needs are greater in poor countries,
and donations go further there than they do close to home.

As for the foundation’s own initiatives, whether around payday
lending or math displacement, they are laudable, if not pathbreaking.
With his less than $20 million of the foundation’s own money,
Carson and his colleagues have no hope of tackling the region’s big
problems on their own. Like all but the very biggest foundations,
they are playing an incremental game.

And that, in the end, might be the most surprising thing about
the SVCF: how little this seemingly huge foundation reflects the ambition
and spirit of Silicon Valley. Except for his embrace of global
philanthropy, which is hardly radical, Carson has done nothing that
could be called bold or innovative. The SVCF has accumulated billions
of dollars of assets, to be sure, but you would expect that, given
the wealth of Silicon Valley.

You would also expect that Silicon Valley’s high rollers would
be more committed to improving the lives of their less fortunate
neighbors. But so far, this has not been the case, even as some people
have grown so angry about inequality that they throw rocks at
the Google bus
. Carson and his team at the SVCF have been slow
to collaborate with other foundations, and they have been unable or
uninterested in establishing the SVCF as the go-to place that brings
the movers and shakers of Silicon Valley together to drive exciting,
transformational change.

A region with so much money and even more brainpower, as well
as persistent and worrisome problems, has somehow produced a
community foundation that is, except for its size, unexceptional. For
all of Silicon Valley to thrive, the SVCF will have to become more
innovative, more collaborative, and more focused on the needs of
the poor. Most important, it needs to measure its success not by
assets under management but by lives changed.

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