Our $1M donation to the United Way of Santa Clara County

In May 1999, Silicon Valley faced the biggest charitable crisis in the over 20 years that I've lived here: an $11M shortfall at the United Way of Santa Clara County. This financial crisis jeopardized the funding of over 100 local social service agencies.

We've never really given much to United Way because our philosophy is to give to causes such as education that can help prevent these problems from happening in the first place. However, because this was by far the biggest crisis in our community in the past 20 years, we took the opportunity to make a $1M donation to help reduce the financial deficit and to set an example that we hoped other wealthy individuals in Silicon Valley would follow.

We did not make the donation immediately upon reading of the crisis on May 1 on the front page of the San Jose Mercury News. We didn't think our donation would be necessary. We thought people who already were United Way donors would respond to the crisis and quickly flood the United Way with donations and support. Surely with all the wealth in this valley, we thought the problem would quickly be solved and maybe even by a single donor. A few of people in this valley can write an $11M check and not even notice the money was missing. And a lot more can write a $1M check and not notice it.

After almost 2 weeks went by and nothing happened, we realized that if something was going to happen, it would have happened already. And it was clear that if the money were to be raised quickly it must be raised in large chunks. So on May 13, we announced our $1M donation hoping that others would follow our lead.

I sent e-mails urging over 65 of my wealthy colleagues in Silicon Valley to help out. Only TWO other individuals came through with gifts of $1M or more from either their personal foundations or from their own pocketbook: Gordon and Betty Moore at $1M (via a personal check), and Bill Gates at $5M (via the William and Melinda Gates Foundation). And Bill doesn't even live here! The remainder came from non personal sources (corporations and other foundations): eBay Foundation ($1M), Hewlett Packard Company Foundation ($1M), Packard Foundation ($2M), Intel Foundation ($1M), Peninsula Community Foundation ($1.2M), and the Health Trust Fund ($1M).

Bill Krause wrote:

Hi Steve. Thanks for thinking of us for this very worthwhile endeavor. Also congrats to you for leading it. Unfortunately we have to decline for two reasons: (1) our contributions are in the $50K-$100K range and (2) more importantly we are tightly focused on direct investments in Education due to Gay's background and our belief that education is one of the keys to success for the next generation. In any case, all the best and good luck with your generous gesture. \Bill.

That's a perfectly reasonable response. We had the same problems. United Way was not a focus area for us. And we have an annual budget and allocations so an unplanned donation dips into our cash reserve. This was not a problem in our case because our foundation's endowment is big enough to absorb such an unplanned gift. Many others are not as large.

So I had expected to have received responses like Bill's from other CEOs. Unfortunately, Bill and Ann Bowers were the only people to give a good reason for not participating (Ann's funds were already committed for the year).

I did receive responses (via their admins) from two valley billionaires that said "he asked me to pass along to you that he'll be unable to join in this donation with you at this time."

Another mega-millionaire CEO said, "Thanks for the note, but unfortunately I'm not "liquid" enough at this time to participate. With some luck, I will be within a year or so..." After I pointed out to him that he can make the donation at any time because stock donations are not subject to lockup, he wrote back:

Thanks for the note, but I'm really not ready to start making this sort of donation, though I do recognize an obligation to start this process at some point in the not to distant future. I did see more about what are are doing in the newspaper, and applaud your efforts.

One wealthy CEO said that his corporation had already made a large donation. One VC said he wasn't worth enough to join the $1M club yet. Another VC family, Pitch and Catherine Johnson, donated $100K. Many other smaller gifts came in as a result of the example set by the $1M donors.

The anemic response to the United Way crisis made it painfully obvious to us and to others in the valley that we have a major problem here that so many people with the means wouldn't help out their own community in a time of crisis. And it wasn't because of a lack of confidence in the United Way either; we donated to a special "Emergency Fund" that went directly to the affected charities, bypassing any controversy associated with the management of the United Way of Santa Clara.

So there was simply no convenient excuse for not making a donation to help out the community in a time of crisis. If anything, it underscored the results of a recent study on giving in Silicon Valley commissioned by the Community Foundation of Silicon Valley which found that:

While we have many generous donors, 45% of our wealthiest contributors give $2,000 or less annually to charity. Another 6% gave nothing to charity. At least four of ten respondents in the high-net worth survey have assets of more than $500,000, in addition to the value of the house where they reside in Silicon Valley. In addition, the survey of all households in Silicon Valley show that 43% of those with annual incomes of $100,000 or more gave $2,000 or less. Another 7% gave nothing to charity. Whether measured by net worth or annual income, about half of Silicon Valley's wealthiest households are low-givers. And, about one quarter of wealthy households are extremely low givers. These households make $100,000 or more and give $0-500 to charity annually.

The San Jose Mercury News wrote:

The first to pledge $1 million checks for the new emergency fund were Infoseek Chairman Steve Kirsch and eBay's corporate foundation.

Neither had been backers of the United Way. Neither company had run a United Way campaign. Kirsch, perhaps the most public of the valley's young philanthropists, says he had never been approached personally by the United Way to contribute or to allow the organization to solicit his workers.

Something is terribly wrong when a United Way nearly goes belly-up in a region that's staggering in wealth.

I sent Bill a note to thank him for his $5M donation to help our local United Way. Here is his response:

I was glad to help.

United Way is a very important institution that I really believe in. It needs to tap into a broad base of givers. It has to be credible and forward looking in order to achieve that.

Seattle has done a great job getting the people with "new wealth" to step up and get involved in giving. Not just United Way but a wide range of things.

It seems like the same thing needs to happen in Silicon Valley. More wealth has been created there in the last few years than at any place in any time ever.

[emphasis is mine, it was not in the original email]

He's absolutely right! There is a real shortage of philanthropists in Silicon Valley. So we’re helping to recruit more philanthropists into the fold through our work with SV2, press interviews, events at our home, and talks that we give.

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