How Does an Emerging “Army” of Tech Donors Think? Ask This Guy
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Quick, name 10 philanthropists from Silicon Valley.
Many people may run out of names after flagging the obvious biggies, like Mark Zuckerberg, Pierre Omidyar, Jeff Skoll and Gordon Moore. Those paying more attention will have a longer list that might include Dustin Moskovitz, Sean Parker, Marc Benioff, Eric Schmidt and the Google co-founders.
But in fact, there is now a vast array of active donors emerging in Silicon Valley amid an unprecedented era of wealth creation. At Inside Philanthropy, we’ve profiled over 100 philanthropists from the tech industry, but even that long list—which is mainly composed of billionaires—barely scratches the surface of the new tech philanthropy.
Giving among techies is “evolving at a rapid pace,” says Nick Tedesco. “A few names have dominated the headlines, but there is a whole army of philanthropists behind them.”
Tedesco is the West Coast lead of J.P. Morgan Private Bank’s Philanthropy Centre, where he helps clients shape their giving strategies. In this role, based in San Francisco, Tedesco is working at one of the busier entry points for philanthrosphere newcomers during a period of explosive growth in giving. While the Silicon Valley Community Foundation is the best-known intake center for new tech donors, the big financial services firms are very much in this game, too—capitalizing on their existing relationships with industry winners. For its part, J.P. Morgan Private Bank’s Philanthropy Centre can help a wealthy client with nearly every aspect of becoming a major donor—including choosing a philanthropic vehicle, identifying giving priorities, and administering grantmaking.
JP Morgan’s operation is yet another example of the expanding outsourcing options in philanthropy—options that also include larger financial players in this space like Fidelity and Schwab, community foundations, consulting firms like Arabella, intermediaries like Tides and NEO Philanthropy, and other outfits, like Foundation Source. Never before has it been so easy to get help in giving away money. (And never before have so many people made a good living by providing such help.)
By talking to new tech donors about their philanthropy—both the mechanics of giving and the goals—Tedesco identifies strong patterns emerging, ones that we’ve also noticed at Inside Philanthropy and written about often.
I’ll get to those patterns in a moment, but first let me say that Nick Tedesco has a real knack for being in the right place at the right time. In early 2010, he took a position at the Gates Foundation, where he helped develop the Giving Pledge campaign, an effort to get the super-rich to commit at least half of their wealth to philanthropy. Once the campaign was underway—emerging as an even greater success than its organizers, Bill and Melinda Gates and Warren Buffett, had imagined—Tedesco’s job was to manage relationships with current and prospective members of the pledge, as well as their staffs and advisors. There are now well over 100 people who’ve signed the pledge from around the world. Tedesco was in an extraordinary position to observe closely how many of these mega-donors operate.
Tedesco stresses that a key goal of the Giving Pledge was to “catalyze giving at all levels,” not just among billionaires. And now, in his current position, he’s struck by just how much excitement there is about philanthropy among more ordinary wealthy folks in the Bay Area. “It feels like an absolute moment of revolution,” Tedesco says.
And what, exactly, are the patterns that is he seeing in this revolution? Here are a few.
Starting Earlier and Aiming to Spend Down
Mark Zuckerberg is not the only tech entrepreneur who is turning to philanthropy while still active in business. Tedesco sees this a lot. More wealthy techies are “thinking about philanthropy as a complement to their existing careers,” as opposed to a retirement project, after they’ve made their bundle. And they’re being egged on by other techies to give early. “There’s no better time to start than the present,” wrote Sean Parker in an essay on “philanthropy for hackers” in the Wall Street Journal, around the time he put $600 million into his foundation. Says Tedesco: “These tech entrepreneurs are challenging each other to engage in philanthropy."
The shift toward early giving is a big deal, because it means that more capital will flow to philanthropy sooner than would be the case if the norms of an earlier era applied. For example, such early tech titans as Bill Hewlett and Gordon Moore waited until late in their careers to ramp up their giving. What’s more, many of the new tech donors aspire to give away most of their money while they are still living. Tedesco says they’re not interested in creating foundations that exist in perpetuity, but want to do their “giving while living so they can control it and ensure success.” I’d add that some of these donors, like Facebook co-founder Dustin Moskovitz, have emphasized the value of deploying resources early to solve problems that will otherwise grow and become harder to solve later.
Staying Lean
Tedesco spends a lot of time talking to the bank’s clients about philanthropic structures, and he’s found that most new donors are not interested in creating traditional foundations of the kind created by earlier generations of donors. “We’re seeing more people taking an outsource approach. A lot of people have a lean staff, and are looking to lean on others for grantmaking advice and execution.”
Of course, a guy working at a philanthropic outsourcing shop would say that the old-style foundation, filled with permanent program officers, is becoming a relic of the past. But the point Tedesco makes certainly lines up with what we’ve been seeing among new donors—not to mention data showing a big expansion in donor-advised funds and, more anecdotally, lots of evidence that these are boom times for consulting firms and intermediaries.
Tedesco says that the focus on giving while living is one motive for staying lean. If that’s the goal of your philanthropy, “you don’t necessarily want to build a robust infrastructure around it.” Meanwhile, many donors who give at a more modest level don’t want to deal with the administrative headaches of a private foundation. “We’re seeing a big decline in the creation of private foundations at the under-$10-million level.” Tedesco has even seen cases in which donors are actually shuttering their family foundations and putting their money into donor-advised funds instead.
Looking for the Big Play
Many of the emerging philanthropists Tedesco advises are keen on making a decisive difference with their giving. “I talk to a lot of clients about identifying the gaps.” Donors are less interested in fortifying existing institutions and causes, and more intent on “putting their philanthropic capital into underfunded areas.” They ask: “Where is there a lack of funding, and where can my funding have an impact?”
Even more notably, Tedesco says, we’re “seeing a large resurgence in catalytic philanthropy. People are looking to back systemic efforts that attack problems at their root causes and not just treat the symptoms.”
It’s no accident that Tedesco uses the word “resurgence” to describe this focus on underwriting a quest for big, game-changing breakthroughs. He knows enough about the long history of philanthropy to reject the notion that Silicon Valley philanthropists are really doing anything new with their giving, even as they talk endlessly about disruption. As I’ve written elsewhere, these donors are, indeed, departing from past patterns with their focus on starting early, spending down, and staying lean; otherwise, many aren’t that much different from John D. Rockefeller, who was also fixated on leveraging his money to effect systemic change.
That said, the focus on identifying gaps and achieving disruptive change by tech donors very much reflects where they come from. As Tedesco notes, you get rich in Silicon Valley by thinking up a product or service that changes how things are done in some industry or corner of society. These entrepreneurs, armed with their winnings, now want to do the same thing with social challenges related to education, health, and poverty.
Collaboration and Risk Taking
The new tech donors are bringing two other hallmarks of Silicon Valley culture to their philanthropy—a focus on learning from others and an appetite for risk.
As competitive as the tech world is, it’s also a hugely collaborative industry, where information flows widely and people build on each other’s ideas. “Tech entrepreneurs understand the many is better than the one,” Tedesco says. And as these people embrace philanthropy in a big way, they are looking to their peers for guidance and are engaged in lots of talking and comparing of notes. The Open Philanthropy Project that Dustin Moskovitz’s foundation is spearheading is a great example of that.
Collaboration is hardly unique to tech philanthropy—just look at all the funder affinity groups within the established foundation world—but it’s still worth spotlighting here to better understand how this community is evolving with its giving. It’s not just that many more dollars are flowing out of Silicon Valley aimed at changing the world; it’s that many more conversations are happening within it about how best to do that.
Likewise, while mainstream philanthropy is hardly allergic to risk, and gets a bad rap for being invariably cautious, it’s hard to think of any sector where risk and failure is more embraced than in the tech world. There’s even a conference, FailCon, dedicated to efforts that flopped, and just about every winner in the Valley has also been a loser at some point, with one failed project or another. Tedesco sees that mindset among his clients. “There’s an appetite for risk,” he says, and one that goes hand in hand with the quest to fill gaps and engage in systemic giving. People are also open to “longer-term investments,” says Tedesco, where the immediate payoff is not so clear. They not only see “philanthropy as society’s risk capital,” but believe that it should be patient capital, too. Mark Zuckerberg made this exact point in his recent philanthropic announcement.
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So will the mindset that techies bring to philanthropy actually result in greater impact than that achieved by other kinds of funders? Tedesco and I didn’t get into that question, and it’s surely too early to say, in any case. But figuring out how to measure such success is very much on the minds of new donors, he says. “There is a really strong focus on measurement and evaluation. Our clients really want to understand their return on investment.”
Again, that impulse is hardly unique to tech philanthropy—some legacy foundations have been obsessing on this for decades—but it will be interesting to see what Silicon Valley brings to the devilishly tricky challenge of gauging impact. Given their success in solving so many other difficult problems, this could be among the issues where tech donors make their most distinctive mark.
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