Tech’s Inventive Elite Can Reinvent Philanthropy
When the Bill and Melinda Gates Foundation pledged $1 billion last month to send 20,000 minority scholars to college, Gates confounded many who view him in one dimension--as the Darth Vader behind software’s evil empire of ruthless mediocrity.
Whatever your opinion of Microsoft, it seems clear that Gates may make good on his assertions that ultimately he will give away most of his fortune. With more than $17 billion, his foundation is already the nation’s largest.
More important, the Gates Foundation shows nerve--in this case, directly aiding people who have been abandoned by government with the demise of affirmative action and dwindling scholarships and loans.
The gift raised the tantalizing prospect that today’s high-tech tycoons--determined to change everything--will approach philanthropy with genuine creativity.
That prospect is hardly academic. According to the latest Fortune magazine tally, representatives of high tech among the nation’s wealthiest 400 individuals account for well over $300 billion--comparable to the total assets of U.S. foundations combined.
However, notwithstanding the growing influence of Gates and the David and Lucile Packard Foundation (a growing force in environmental philanthropy), high tech is still a minor force in the world of giving, experts say.
Perhaps we should cut them some slack for a while. After all, the new economy is, well, new. And it’s a youth movement, while big-time philanthropy has historically been a form of moral indemnification for the dying rich.
Young moguls fear losing their fortunes if they divert attention to do-gooder activities when their businesses operate on Internet time. Then there’s the liquidity issue--most of their wealth is tied up in company stock.
But the biggest deterrent to giving is confusion. Even the most socially concerned among them face a daunting task: figuring out what to endow, given that many traditional charities tend to be bureaucratic and sometimes ineffectual.
These are not simple excuses for selfishness, though the selfish rich hide behind them.
In time, the largess of the new economy will filter down to benefit society as a whole if for no other reason than the imperative of inheritance taxes. But why should the high-tech industry wait to shake the conventions of giving just as it has shaken the world of business?
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Ford, Mellon, Carnegie and Rockefeller were more reviled in their time than Gates is today. Yet despite despotic, monopolistic and cruel business practices, their public images today are, on the whole, positive because they ultimately donated much of their fortunes to the public good, helping to establish universities, hospitals and palaces of high culture.
And while the robber barons’ motives were mixed, many of their gifts were creative and even radical for their times. For example, Carnegie built about 2,600 public libraries--with the condition that municipalities stock and maintain them, effectively forcing government to provide what we now view as an essential service.
But over the generations, the giant old-money foundations calcified, reinforcing the status quo instead of making risky gestures that challenge society to genuine greatness.
“They fell into a bureaucratic morass and inertia, where they spend $25,000 per grant application to give away $23,000,” said Mark Dowie, an investigative historian writing a book about American foundations.
Will today’s high-tech robber barons build a more innovative legacy?
Gates’ decision to become a major philanthropist while still in midlife and his provocative scholarship fund offer hope that they will. Maybe he did it for PR benefits, tax breaks or indirectly to push Windows on new customers. But give the devil his due.
Gates reached out to a disenfranchised group when he could have gotten nearly as much credit for something safe and bland, such as endowing a few hundred chairs in departments of computer science.
And in an environment rife with self-righteous hand-wringing, “the amazing speed of Gates’ decisions” stands out, said Peter Karoff, president of Philanthropic Initiative, a charity consultant in Boston. “He must be one hell of a decision maker, and the decisions have been good ones.”
Gates is part of an interesting trend, what might be the beginnings of a new philanthropy.
Social Venture Partners (https://www.svpseattle.org), based in Seattle, applies the activist elements of the venture capital model to charitable giving. Created by Paul Brainerd (considered the father of desktop publishing), the group pools donations from high-tech businesspeople who work in teams to award grants. The teams then provide time and expertise to the grantees, much like venture capitalists who nurture fledgling companies. SVP rewards innovation aimed at long-term “social profit.”
The group has so far provided only a handful of grants, primarily targeting education, but it has inspired similar efforts in Silicon Valley and elsewhere.
“Knowing something about business doesn’t necessarily mean you don’t need to learn something about giving,” said John Walters, president of the Philanthropy Roundtable. Such guidance from hardheaded entrepreneurs can be more important to success than money--a key reason for the high-tech wealthy to give early in their careers.
To get around the liquidity problem, a few new businesses and foundations are experimenting with giving away pre-initial public offering stock to charities. The Entrepreneurs Venture Fund in Research Triangle Park, N.C., in effect lends money to businesspeople who are stock-rich and want to jump into philanthropy before they have access to the cash.
Such efforts are in their infancy, but the rate of wealth creation in high tech is so rapid that the industry’s donations could soon be one of the most important sources of funding for the public good. The Gates Foundation alone is approaching the size at which it will have to give away nearly $1 billion every year merely to maintain its tax status. Last year, U.S. foundation giving totaled about $19 billion.
This is not to say that high tech will soon transform philanthropy. As Dowie points out, the baby boomers’ parents will pass on $10 trillion in the next two decades--the largest transfer of wealth in U.S. history. During that period, he predicts, foundation assets could rise to $2 trillion.
And of course, no amount of philanthropy can replace effective government services, sensible regional planning, fairness in labor relations and thoughtful laws to guard against discrimination and protect the environment.
But if high-tech businesspeople show the same willingness to embrace new ideas in giving money as they do in making money, intelligent generosity could define the soul of the new economy.
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Times staff writer Charles Piller can be reached at charles.piller@latimes.com.
