More Than a Building: What a Tech Firm's Campus Gift Says About the Economy

Seattle's tech scene would be booming even faster with more skilled workers

On the surface, Zillow's recent $5 million gift to fund the construction of a computer science building at the University of Washington (UW) looks rather mundane. It's a run-of-the-mill corporate gift to the top school in its home city that is earmarked for a capital expense.

Yet a closer read underscores the growing role of corporate philanthropy in developing human capital—and growing the economy.

Let's first start with the details. The Zillow Group became the latest Seattle tech company to contribute to the construction of the new building. Other big contributors include Microsoft, which kicked off the drive with a $10 million donation in June 2015, and Amazon, which pledged another $10 million in October of last year.

In all, $55.7 million has been pledged for the building, and the UW has a goal of raising $70 million privately. About $32 million in state funds is also funding construction.

We covered Amazon's $10 million gift, and at the time, I framed it as another example of the online retailer's accelerated giving over the past few years. Indeed, the building has a way of rousing tech companies off the philanthropic sidelines: Zillow's gift represents the first time the company has made a major corporate donation.

Again, it's just a building. What's the attraction? The fact that it's based in Seattle, home to so many rich tech companies, certainly helps. But as with many corporate gifts, the bottom line is also in play.

As we've recently discussed, corporate giving is becoming more sophisticated. More corporate funders are thinking about how they can use their competitive advantage to advance their causes, and many are also aligning their philanthropy with their long-term corporate interests.

For tech companies, but also manufacturing and energy firms, one goal that's critical to the bottom line is ensuring a steady stream of new skilled workers. Universities have a key role to play, here, and UW is a case in point. There's an insatiable demand inundating UW's computer science program—and also a strong demand for the grads of this program among local employers in Seattle's booming tech scene. Unfortunately, though, there just isn't enough room to accommodate interested students.

"The enrollment demand is tremendous, the employment demand is tremendous," said UW computer science professor and fundraiser Ed Lazowska. "We're trying to double our enrollment and we have no place to put the students and faculty." As for the Zillow gift, Lazowska called it "really remarkable for a company this young to step up like this."

Which brings me to the larger macroeconomics at play, here. President Trump now sits in the Oval Office and jobs look to be his administration's top priority. Will good manufacturing jobs return to the Rust Belt? Perhaps. Regardless of the outcome, however, the process of bringing those jobs back—think renegotiating trade agreements, tariffs, etc.—will be a contentious and lengthy one.

Meanwhile, creating jobs in the tech sector represents low-hanging fruit. During this tech boom, as in previous ones, companies can't find enough qualified candidates—not to mention places for them to live. As Annie Lowrey recently pointed out in an Atlantic article, "Wages are so high in San Jose, San Francisco, and New York that some economists think building more housing to let more people move there would boost national economic output by an astounding 10 percent.)"

The growth of Washington State's tech sector is also being stunted by workforce challenges. According to UW, employer demand is also unprecedented. "In our state," the school notes, "the workforce gap is vastly greater in computer science than in any other field. The bachelors-level workforce gap in computer science exceeds that of all other high-demand fields combined." The school is "by far the preferred provider of new talent to leading companies."

The giving in Seattle by tech companies to UW's computer science program is a microcosm of what's driving the broader boom in corporate giving for workforce development (and also why some funders, like Facebook, are giving for housing, too.) Universities play a lead role in developing human capital, and there's a real win-win in relationships between corporate foundations and campuses. Schools that understand just how much practical value their different programs can deliver to local employers or key sectors writ large will have the confidence to make major asks.

As for the bigger picture, it's hard to think of the tech industry—and its philanthropic arms—as natural allies of President Trump's economic agenda, given that automation and robotics have played a big role in killing off working class jobs. But the short-term situation is considerably rosier.

While recently attending the Davos conference, Cisco CEO John Chambers told the Wall Street Journal that he was bullish on the economic prospects of a Trump presidency. He also noted that U.S. wage growth in recent years can be fixed by "focusing on digital jobs."

Chambers' hypothesis will be of little comfort for unemployed Rust Belt factory workers. Computer science students in the Pacific Northwest, on the other hand, buoyed by friendly market dynamics and bottomless corporate tech coffers, have good reason to be optimistic.

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