Surf's Up: Why Southern California Philanthropy is Taking Off

More wealthy people live in California than any other state, by far, and many of them live in Southern California. LA has been called "the ATM of the DNC," but while this region has long been a magnet for political fundraisers and candidates, the philanthropy scene has historically been pretty sleepy. A handful of medium-sized foundations did much of the grantmaking and little money tended to come out of Hollywood.

Lately, things have perked up. Big money is coming off the sidelines as billionaires like Eli Broad, Patrick Soon-Shiong, David Geffen, John Tu, Haim Saban and Jerry Perenchio step up their giving. Money is starting to flow out of the entertainment sector in a bigger way, with hints of more to come. Also, a larger, more cohesive community of foundations has emerged to collaborate on tough problems.  

To get a bird's eye view of the blossoming SoCal giving scene, I recently sat down with Christine Essel, the CEO of Southern California Grantmakers (SCG), and Wendy Garen, the group's board chair and president of the Ralph M. Parsons Foundation. 

Essel arrived at SCG after a stint heading up the Community Redevelopment Agency of the City of Los Angeles (CRA/LA), where she'd commanded a large staff and budget working to improve the city. Before that, she'd spent three decades at Paramount Pictures, building and running the studio's Government and Community Affairs wing. Essel has also served on various boards and commissions over the years. She is, in short, a woman who knows her way around the power centers of Los Angeles. 

And what struck Essel, arriving at SCG in early 2013, was that LA's philanthropic sector was not nearly the power player that it could be. Funders weren't collaborating enough with each other or with the sectors that had the most muscle to drive changegovernment and business. Instead of being more than the sum of their parts, LA funders were less. Wendy Garen, a longtime veteran of this world, had been frustrated by this problem for years: "philanthropy had never come together as a force," she says. 

There were various reasons for the lack of cohesion. One was the sprawling geography of the Los Angeles area. In places like New York and Chicago, funders can walk or catch a cab to meetings and networking events. The distances of Southern California, along with murderous traffic, make that kind of thing far harder. Just driving from Santa Monica to downtown LA for an after-work reception can turn into a ninety minute ordeal. 

But another reason for LA's fragmented funding scene was that SCG itself wasn't realizing its potential. "Primarily, it did not see itself as a leadership hub," Essel says. That view was shared by many funders, Garen among them, who thought SCG "could actually do more." Bringing in a dynamic outsider like Essel was a "big step in that direction." 

At their best, regional associations of grantmakers pull together funders and other players to make big things happen. But some of these outfits stick to a more modest agenda of servicing members and operating in the background. Essel, who had pushed Paramount to engage in more strategic philanthropy, aimed to get SCG out front by shifting its mission to focus more externally and connect up with other sectors. 

One early step was to open the association to government grantmakers. In Essel's previous job, at CRA/LA, she'd overseen one of the largest grantmaking operations in the region. The money was public, but it went to some of the same nonprofits that foundations funded. To Essel, it seemed obvious that everyone giving money in LA needed to be talking with each other, and working with each other. 

Another step was to allow philanthropic consultants to become members of SCG. Why? Because these folks guide the giving of wealthy donors who don't yet have foundations. If they weren't part of the conversation, SCG was missing a super-important piece of SoCal's philanthropy scene. 

Essel found plenty of excitement about her ideas. A lot of funders, it turned out, were hungry for more collaboration and bigger joint projects. "There was a deep willingness to engage with each other." SCG's membership started rising, and so did the energy level. 

Lately, funders have come together in a new and bigger way on the issue of foster care. The long-festering problems of LA's foster care system became front page news in 2013 after the brutal murder of an eight-year-old boy. Both public and private funders underwrite this sytem, and people were keen to collaborate to make it work better.  

SCG put together a Foster Care Funders Collaborative that quickly became an important nexus of conversation in the city about how to ensure the best outcomes for foster kids. That collaborative brought together public and private funders who wrote checks to the same nonprofits but, in many cases, had never sat down to compare notes or plot strategy. 

Helping veterans is another cause for which SCG has catalyzed new dialogue and collaboration. LA has more veterans than any place in the country, and they face the kinds of problems that can't be solved by any one funder or sector—like unemployment, homelessness, mental illness, and substance abuse. SCG pulled together a Veterans Funders Group in mid-2014. Like the foster care collaborative, this group has become the nexus for conversations across sectors and organizations that weren't happening before. 

SCG is bringing funders together on other issues, too, like education. Along the way, though, SCG hasn't lost sight of the bread-and-butter concerns that associations of grantmakers need to address well to fully engage their members. SCG's signature program, Fundamentals of Effective Grantmaking, is going strong and its main annual conference drew more people than ever last year. Another yearly conference on public policy, which happened on April 13, was sold out in advance. 

The Southern California philanthropy scene is still unformed and diffuse compared to many other places, but it's worth remembering that this remains a newer part of the United States. Few old-money foundations exist because, well, there isn't a lot of old money. And it can be decades between the creation of a large fortune and the formation of a professional foundation. 

With so much big money in the Los Angeles area, it's only a matter of time before philanthropy catches up, and there have been plenty of signs of this happening. For example, the Eisner Foundation, run by former Disney CEO Michael Eisner and his family, has become a more mature grantmaking operation in recent years, now giving out around $7 million annually. Billionaire Jerry Perenchio, who made his fortune from Univision, has been doing more giving through the Chartwell Charitable Foundation he runs with his wife. The tech entrepreneur John Tu, who lives in Palos Verdes and is worth $6 billion, has increased his LA giving. Another tech winner, David Bohnett, has upped his game, too, with a recent $20 million gift to the LA Philharmonic. David Geffen's LA giving is also on an upward trajectory lately, and a vast fortune waits in the wings there. Patrick Soon-Shiong, the richest man in LA, has engaged in a lot of big giving in recent years, mainly focused on healthcare. The Marisla Foundation, based in Orange County and funded by a Getty oil heiress, is engaged in robust local grantmaking with a focus on women. (All links above are to IP articles on these funders and their LA giving.) 

The list could on, and looking at the people who are giving underscores that the Southern California economy is far more diversified than most outsiders realize. Today's entertainment fortunes are larger than ever, thanks to globalization, but big money has also been made in real estate, health care, tech, finance, and energy. More of that money is now going to philanthropy, with a lot of it staying local. Both the University of Southern California and UCLA, for example, have been showered with huge gifts in recent years. 

The golden age of SoCal philanthropy is not yet here, but all signs suggest one is coming.  

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