THE NEW PHILANTHROPY
SILICON VALLEY’S TECH TITANS BELIEVE THEIR CHARITABLE GIVING IS BOLDER, BIGGER AND MORE DATA-DRIVEN, BUT IT IS NOT WITHOUT CONTROVERSY
THE ENTREPRENEUR/PHILANTHROPISTS OF THE SAN FRANCISCO-AREA TECH INDUSTRY ARE AS CONSERVATIVE AS BENEFACTORS OF THE PAST
The enduring credo of Silicon Valley is that innovation, not money, is its guiding purpose and that world-changing technology is its true measure of worth.
Wealth is treated as a pleasant byproduct, a bit like weight loss after rugged adventure travel.
The tech world is home to some of the planet’s wealthiest entrepreneurs and most dynamic philanthropists, 21st-century heirs to Carnegie and Rockefeller who say they can apply the same ingenuity and zeal that made them rich to making the rest of the world less poor. San Francisco also has one of the highest levels of income inequality in the U.S., with the wealth distortion most concentrated among the very people who are driving the economy as a whole.
A similar paradox seeps into philanthropy. Tech entrepreneurs believe their charitable giving is bolder, bigger and more data-driven than anywhere else — and in many ways it is. But despite their flair for disruption, these philanthropists are no more interested in radical change than their more conservative predecessors. They don’t lobby for the redistribution of wealth; instead, they see poverty and inequality as an engineering problem and the solution is their own brain power, not a tithe.
As Marc Andreessen, the venture capitalist and philanthropist who invested in, among other things, Twitter and Airbnb, put it in a Twitter post: “Thanks to Airbnb, now anyone with a house or apartment can offer a room for rent. Hence, income inequality reduced.”
Increasingly, though, idealistic tech leaders find themselves giving back to a world that complains that they took too much in the first place. The skepticism is all the more wounding because some tech luminar- ies ardently believe their businesses can solve social ills.
Laura Arrillaga-Andreessen, a real estate heiress and the wife of Marc Andreessen, teaches a course on philanthropy at Stanford University and is the muse of Silicon Valley munificence.
In the most recent issue of T: The New York Times Style Magazine, Arrillaga-Andreessen extolled Elizabeth Holmes, the founder of the blood-testing company Theranos, which claims that it can screen for a wide range of conditions with a single finger prick. Arrillaga-Andreessen cited her as a shining example of how altruistic entrepreneurs are blurring the lines between profit and non-profit with products that promote a worthy mission.
The timing, however, was unfortunate. The essay came out on the heels of a frontpage article in the Wall Street Journal that questioned the company’s claims and methodology, and just before the Food and Drug Administration released two reports raising other concerns.
But second-guessing in Silicon Valley is a pesky inevitability. As Mark Zuckerberg, the chief executive of Facebook, put it at a Vanity Fair tech conference in San Francisco in October: “Basically, everything impactful you want to do has some controversy.”
In Silicon Valley, there is pious disdain for Wall Street’s showy, status-seeking ways of giving.
“The primary reason my wife and I give to charity is to accomplish some change in the world,” said Elie Hassenfeld, who quit his job at a hedge fund to help create GiveWell, a San Francisco-based charity-evaluating service that guides the philanthropical choices of, among others, Dustin Moskowitz, one of the founders of Facebook. “We don’t attend galas or give to my alma mater.”
Those may not be such big distinctions. “There is a bit of delusion in Silicon Valley that they are not like the other rich because their technology is ‘making the world a better place,’ ” said Steve Hilton, a former aide to Prime Minister David Cameron of Britain and a co-founder of Crowdpac.com, a political startup.
“But McDonald’s and Walmart also think that their businesses help society. Walmart says it lowers the cost of living for poor families. All corporations think they are having a positive impact.”
Zuckerberg donates to causes such as the Newark school project and other experiments in education reform through the Silicon Valley Community Foundation, one of the wealthiest foundations in the nation; much of the money it manages is given by tech entrepreneurs who save on taxes by making large donations on the eve of selling their companies or going public.
“West Coast philanthropy is marked by innovation, it’s about disruption, it’s about change,” said Emmett D. Carson, the foundation’s chief executive. These donors “bring this ‘go big or go home’ willingness to fail and see failure as a good outcome if you learned something.”
Michael Birch, a tech entrepreneur and philanthropist who owns a chic private club, the Battery, added a giving circle this year for members who want to research causes before making donations.
“It’s the Silicon Valley way to question the way things are done and see if they can be done differently,” he said.
Bill Gates set the tone in 2000. His foundation now has a $41.3-billion (U.S.) endowment — far more than the Rockefeller, Carnegie and Ford foundations combined.
But Gates is old money, by tech standards. Sean Parker, whose billions stem from Napster and Facebook, is newer money. In a manifesto in the Wall Street Journal in June, he dismissed traditional philanthropy as “a strange and alien world made up of largely antiquated institutions.” He unveiled his own $600-million foundation to spur more daring research into, among other things, cancer, malaria and allergies.
“The techno-utopianism of hackers has already transformed our lives,” Parker wrote. “But the greatest contribution that hackers make to society may be yet to come — if we are willing to retain the intellectual and creative spirit that got us this far.”
Bay Area non-profits pride themselves on efficiency and “scalability,” applying sophisticated metrics to assess the success of social programs.
Give Directly, for example, is a charity that uses cellphones to give unconditional cash transfers to poor people in Africa without government bureaucracy, corruption or costly overhead. The program relied on a
2013 study in rural Kenya that used satellites to distinguish thatched roofs from tin ones because villagers with thatched roofs are poorer. It also monitored how the income was spent and even how it made recipients feel: The villagers’ saliva was collected to see if their cortisol levels decreased, a sign of reduced stress. The report concludes: “We document a 0.19SD increase in happiness.”
Back home, happiness is in the eye of the beholder.
“There’s a lot of giving and impact investment and caring, but those people are not looking to change the fundamental rules of how power operates,” said Michael Gast, a consultant for social justice non-profits in Oakland.
The disaffection isn’t merely manifested in a few protesters blocking Google shuttle buses or in Tesla-hating, or in labour unions fighting the “sharing economy.” Nor is it just the economists who complain that tech companies such as Google and Facebook are monopolies — the Standard Oils of the moment.
Academics and relief workers have been grumbling for a while about so-called philanthrocapitalists who try to micromanage their giving. The writer David Rieff questions the tech-centric approach to fighting global poverty of the Gates Foundation in a new book, The Reproach of Hunger. In The
Prize, the journalist Dale Russakoff looks at what went wrong with Zuckerberg’s $100million gift to Newark to resurrect its schools.
And the transformative power of Silicon Valley is slapped down by one of its own in Geek Heresy: Rescuing Social Change From
the Cult of Technology, written by a Microsoft apostate, Kentaro Toyama.
Rob Reich, a political science professor at Stanford who is also a co-director of the Stanford Center for Philanthropy and Civil Society, notes that the tax deduction that comes with a billionaire’s grant to charter schools is essentially money that won’t be spent on public schools, calling Silicon Valley largesse “an exercise of power that is unaccountable, non-transparent and taxsubsidized.”
While tech titans champion efforts to strengthen the social safety net for the most disadvantaged, many express less concern for the stagnating middle class. Alec Ross, who was an innovation adviser to Hillary Clinton when she was secretary of state and is the author of The Industries
of the Future, notes that entrepreneurs privately complain about workers, skilled and unskilled, who haven’t kept pace with the new tech-based economy.
“You hear derision for the working- and middle-class people who think that their education ends at the age of 22,” Ross said. “People who want their work to stay the same without doing anything to improve themselves.”
Nor is there much talk in these circles about taxing the rich to even the playing field. A few tech billionaires like Reed Hastings, a Netflix founder, have said they support raising taxes on the wealthy. There are many more who don’t publicly oppose a tax increase but feel they are paying plenty already. There is also a libertarian streak in parts of Silicon Valley that allows some to believe they can spend their tax dollars better than the government ever will.
There are, of course, some in Silicon Valley who blend tech savoir faire with oldschool, Carnegie-style philanthropy.
Marc Benioff (net worth: $4.1 billion), a native San Franciscan who founded Salesforce, has personally given $250 million to the San Francisco children’s hospital that bears his name. His company also lavishes grants, employee time and its cloud computing products on many non-profits, including San Francisco’s troubled public schools — and Benioff, unlike many reform-minded tech benefactors, lets the principals decide how to spend his money.
That’s a lesson that Zuckerberg learned as well. Last year, he and his wife, Priscilla Chin, quietly announced a $120-million do- nation to underserved public schools in the Bay Area. They haven’t given up on spreading their own vision for education, however. In October, they announced that next year they would open a free private school, The Primary School, for poor students in East Palo Alto, a struggling neighbourhood a few miles away from Facebook headquarters.
Carson of the Silicon Valley Community Foundation says his donors are not radically rethinking how to allocate their money.
“Poverty is still poverty, education is still education,” he said. Nor does he see the kind of shift in emphasis like the one that in June led the Ford Foundation to announce it was redirecting all its grants to address income inequality.
“West Coast philanthropy is not influenced by East Coast pronouncements,” Carson said dryly.
In many parts of the Bay Area, the deep philanthropic reach of entrepreneurs, corporations, foundations and impact investment firms feels like a billowy duvet of solidarity and support. In others, though, it’s more like a fitted queen sheet buckling at the corner of a king-size bed.
For every public school in the Oakland area that is lavished with iPads by Facebook and mentored by volunteers from Salesforce or Zynga, there is one that slips through the tech benevolence net.
There are no KidsCanCode banners in the halls of Garfield Elementary School in an ungentrified part of the city. Garfield parents are mostly poor immigrants working for minimum wage or less. Fewer than half have the Internet at home.
Garfield has laptops for students — 10 per class — bought with school funds and locked in blue metal boxes like plutonium; last year the school won a $60,000 grant from a local family foundation (ice cream, not tech) to help pay for IT support and teacher training.
In the hallways of Garfield, Silicon Valley seems as far away as Paris.
“We do kind of marvel that we are so close to Apple and we’re not in the pipeline even for used computers,” said Leslie McLean, a reading teacher.
On the other side of the Bay Bridge, power brokers still have faith that technology can spread the wealth and span social divides.
“We see the future today,” Carson said. “You all see the future tomorrow.”