As Inequality Rises In Silicon Valley, Can This Foundation Get Out of the Band-Aid Business?

Rising inequality is a national issue, but it's especially pronounced in new economy hotspots like Silicon Valley. Here, the middle class is being squeezed out while the working poor fight to survive.  

Sobrato Philanthropies funds mainly in Silicon Valley, so it knows all too well what's going on. In making a new $3.8 million round of grants, the foundation's CEO, Rick Williams had this to say:

Far too many people in our community see the wealth generated and the opportunities created in the valley as unattainable. That's why Sobrato Philanthropies supports strategies designed to create opportunities and help individuals grow the skills needed to take advantage of these opportunities when they're presented.

In fact, though, much of the new grant money will go to deal with the symptoms of inequality, even as foundation is trying to shift to get at the causes

Sobratro Philanthropies is the umbrella for all giving by the Sobrato family and the real estate firm it controls. The family's philanthropy has long been a total lifesaver for low-income people trying to keep their heads above water across the Bay Area. This isn't the kind of sexy grantmaking that draws attention, but it's hard to imagine how many communities would survive without funders like Sobrato Philanthropies.

Related: Sobrato Family Foundation: Bay Area Grants

As well, the Sobratos are a stellar example of a family with a multi-generation commitment to giving. John Sobrato made a fortune in Silicon Valley real estate and his family has been engaged in philanthropy for years, with over a quarter-billion in giving since 1996. His daughter Lisa Sobrato Sonsini has been a leader in building the family foundation in recent years. 

Related: Meet Lisa Sobrato Sonsini, a Driving Force Behind the Sobrato Family Foundation

While the family's giving has long focused on bolstering human services and providing free or subsidized office space to nonprofits, changes are afoot at Sobrato Philanthropies, which this year has been developing what it describes as "a Community Impact Platform" that aims to promote economic opportunity by ensuring access to high-quality education, jobs, and affordable housing, among other things.

The foundation sees these challenges as interrelated, and it aims to build up local nonprofits so they have the capacity to tackle them. "Our long term intention is to increase pathways out of poverty for the economically disenfranchised," the foundation says. 

Of course, that's easier said than done and it will be tricky for Sobrato to change course, and focus at a more systemic level.

The new grant funds mainly point to business as usual. The biggest chunk of the money, $1.75 million, will go to 11 emergency and food assistance providers in three counties. The next biggest chunk, $1.5 million, will go to fund the Sobrato Family Foundation's Healthy People & Places program and provide support to 13 nonprofits working on the front lines. A look at the groups that Sobrato has supported in recent years through this program shows that most are engaged in direct service. 

Anyone who's ever struggled to make ends meet can testify to the importance of direct support. Emergency help can allow people to get back on their feet during moments of crisis or transition. Meanwhile, investments in kids through education, counseling, mentoring, and more can enable them to thrive as adults. 

This is good stuff, but it's different than building an economy that actually works for everyone. Is Sobrato Philanthropies either able or willing to tackle that challenge? 

The biggest obstacle to self-sufficiency for poor Americans is that our economy doesn't generate enough decent paying jobs, especially for low-skilled workers. These people are struggling even in places where the cost of housing isn't sky high, and they're getting crushed in Silicon Valley. In 2010, one-third of Santa Clara County households earned less than the Self-Sufficiency Standard, which measures basic expenses for food, housing, transportation, child care and other necessities.

Better education is only part of the answer here, with research showing that the majority of jobs created in coming decades will not require a college diploma. In the last four years, most new jobs have been in lower-wage industries, paying under $13 an hour. A place like Silicon Valley, in particular, will always need legions of service workers to function, and unless those people can command higher wages, they'll keep showing up at food pantries. 

In the early postwar era, low-skilled workers were able to get a foothold into the middle class with a big helping hand from unions and a high minimum wage. Efforts are now underway, including in Silicon Valley, to unionize workers and enact living wage ordinances. Ron Unz, a businessman, is pushing a ballot initiative for this fall that would raise California's minimum wage to $10.10. 

Yet Sobrato Philanthropies appears to be typical of many local foundations that have zero appetite for supporting efforts to organize low-wage workers or promoting labor regulations that help this sector of the workforce. Many funders shy away from such work as "political." As well, Sobrato's local focus limits its ability to shape state-level policies that have a huge impact on the lives of low-income Americans when it comes not just to wages and tax credits, but healthcare, transportation, housing, affordable college, and much more. 

Sobrato Philanthropies is trying to think more structurally about opportunity. The question now is how far are they willing to go to help that third of Silicon Valley households who just aren't making enough money?