Glasspockets Find – Can the Silicon Valley Giving Code Be Cracked?
December 21, 2016
The fast and furious pace of Silicon Valley’s tech innovation culture has also given rise to burgeoning new wealth, and yes, new philanthropy. From 2008 to 2013, total Silicon Valley-based individual giving increased 150%, from $1.9 billion to $4.8 billion, according to a new report. But how do established nonprofit groups make contact with the new philanthropic powerhouses in the neighborhood?
“Just blocks away from the region’s booming tech companies but (local nonprofits) aren’t sure how to attract Silicon Valley’s philanthropy to their causes.”
This question is at the heart of the new report, “The Giving Code: Silicon Valley Nonprofits and Philanthropy,” documenting the rising challenge local Silicon Valley nonprofits face in attracting funding from some of the world’s most generous funders – right in their own backyard. Despite this wealth of local resources, about 30% of the community-based organizations focused on providing local safety net support – such as homelessness, poverty, troubled public schools – reported higher deficits than the national average.
The authors noted the region is developing an “emerging giving code – an implicit set of strategies and approaches shared by Silicon Valley’s individual, corporate, and institutional philanthropists alike.” This approach to giving is “widely shared among the region’s new philanthropists” and heavily influenced by technology and business.
With support from The David and Lucile Packard Foundation, Open Impact gathered data from more than 300 Silicon Valley stakeholders, such as wealthy residents and their advisors, nonprofit executives, corporate and private foundation giving officers, and thought partners across all sectors.
A key issue raised in the report: Although Silicon Valley philanthropists give funds to local issues and causes, most but most are earmarked for private schools, universities and hospitals rather than for community-based organizations.
The report stated, “These nonprofits are struggling to keep pace with exponential increases in demand for their services, lack the capacity and the funding to gain real traction, or are themselves in financial distress. Some have offices just blocks away from the region’s booming tech companies—but they aren’t sure how to attract Silicon Valley’s philanthropy to their causes. The support they need to have more systemic impact is often right next door, but it is not a door they know how to open.”
Silicon Valley Demographics
Although the Silicon Valley boasts a growing number of millionaires and billionaires, many of its 2.6 million residents are facing financial distress due to the high cost of living. About 29.5% or 800,000 people rely on public or private assistance. The median sale price of a home in 2015 was $830,361, and in some neighborhoods, homes are two or three times that price. Since 2011, rents have increased 27%, which is 227% higher than the national average.
Many of Silicon Valley’s community-based organizations operate on a small scale and are doing their best to meet the needs of a growing displaced and vulnerable population. These organizations have little time, capacity or resources to advocate for systemic change – which appeals to many philanthropists seeking strategic impact.
Barriers to Local Giving
The report identified barriers to local giving:
- The small size of community-based nonprofits, which have minimal capacity to partner with foundations, corporations and individual donors in the ways philanthropists expect or meet requirements that come with large grants.
- The cultural divide between the new Silicon Valley donor and traditional nonprofits. Many Silicon Valley donors have business backgrounds and prefer a “return on investment”; they believe they will have more impact in a developing country, where costs and barriers are often low.
- Knowledge and information gaps – local nonprofits do not know how to make contact with the new donors on the philanthropic scene; and new philanthropists lack awareness of local nonprofits and local needs.
- Social network and experience gap – community-based nonprofit leaders and new philanthropists “don’t move in the same social circles.”
- Mindsets and language gap – nonprofit leaders speak a kind of “moral language that emphasizes social responsibility, social justice, equity and the common good” and they use jargon like “empower,” “transformation,” and “theory of change.” Meanwhile, new philanthropists and donors speak in the language of “business, efficiency, and bottom-line profits… they talk about the ‘biggest bang for the buck’ not just in business but in their philanthropy.”
The authors noted that the combination of these gaps – knowledge and information gap, social network and experience – contribute to and reinforce an empathy gap that is felt by both sides. Therefore, wealthy tech entrepreneurs don’t understand nonprofit leaders, and vice versa, which may lead to judgment and ultimately make it more difficult to “recognize how their work, their passions, their skills, and insights might align for the betterment of their shared local community.”
This report also captures hope amidst struggle. This hope may be best manifested by the funder of the report, the David and Lucile Packard Foundation, which was one of the very first Silicon Valley philanthropies to emerge in the region. The foundation was established in 1964 following the birth of the Hewlett-Packard Company, which was ahead of the curve, i.e. the now familiar trajectory of moving from garage shop tinkering to tech powerhouse. Today, despite being a large, global foundation, the Packard Foundation maintains an active grantmaking program that supports local communities.
The report concluded that potential opportunities to develop a more effective and collaborative Giving Code will “spark the creation of an even more powerful Silicon Valley giving code: one that works on behalf of all the region’s residents.”