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Inter@ctive Week News

Some Cyber-Rich Remember To Give Back

By Alex Miller , Inter@ctive Week
Special To Inter@ctive Week
May 22, 2000 2:11 PM ET

Is it true that no one gives back in Silicon Valley? That the cyber-rich - among them the new generation of young dot com millionaires known for their expensive cars and for sending prices soaring into the multimillion-dollar range for modest ranch-style homes - are greedy and self-serving with no interest in helping the less fortunate?

Peter Hero doesn't think so. The president of the Community Foundation Silicon Valley is elated by how much money people are giving away these days.

"Philanthropy," he said, "is a lot higher on the radar screen."

In the last six months of 1999, the CFSV received a record $75 million in cash and stock gifts, a number that Hero called conservative. According to Hero, "The scale of the gifts [is] going up because people have more money to give away."

Founded in 1954 with a gift of $50,000, the foundation had only $8 million in the bank when Hero arrived in 1988. "We were giving away about $400,000 a year, and we had a staff of two and a half people in an old building in another part of town."

Fast forward to 12 years later, and things are very different. The foundation now employs a staff of 40 people at its new offices in the heart of San Jose. More important, the CFSV's coffers have ballooned. The amount of funds under management there have increased tenfold in the past five years, from about $50 million in 1995 to nearly $500 million today.

With the increase in the size of the CFSV's bank account has come an increase in its philanthropic activities. It awarded more than $35 million in grants in the period from July 1998 to June 1999.

Though the foundation manages funds for other corporations and individuals, it is also involved in a wide variety of its own philanthropic activities. Last year, the CFSV gave money to causes as diverse as the arts, education, health and human services, and the environment. It even awarded grants to help local nonprofits with year-2000 preparation.

Its flagship program, The Mayfair Neighborhood Improvement Initiative, is helping members of the impoverished east San Jose neighborhood to transform the area in which they live by giving them the funds and expertise to organize community revitalization projects. It also operates a youth in philanthropy program in which at-risk youth serve on a board that allocates funds to worthy youth causes. Hero calls the program, "a very interesting learning experience."

But who's giving all this money away? Reading through the list of corporate donors in the back of CFSV's 1999 annual report is like scanning a who's who of Silicon Valley's top companies: 3Com, Adobe Systems, Advnced Micro Devices, Cisco Systems, E-Loan and Hewlett-Packard all gave money to the CFSV last year - and that's only companies found in the first half of the alphabet.

The foundation said it has gained the attention of so many major companies and individuals by playing a unique role in facilitating philanthropy in the Internet heartland. "The Community Foundation is like a gearbox," Hero said. "We can bring government, business and nonprofits together around the table. A lot of those never intersect, never talk to each other except around our table."

Jeff Skoll, eBay's first employee and now a philanthropist, agreed. "They do the stuff nobody wants to do," he said.

In 1998, eBay established its own foundation with the CSFV by donating 324,000 shares of stock. Today, the eBay foundation is worth $40 million. According to Skoll, the CFSV takes care of all the legal, accounting and government issues associated with running a philanthropic organization.

And that leaves eBay "to do the fun part, which is to figure out the best grants to be made, and to make sure those grants happen," Skoll said.

According to Hero, that's the way it should be. "To introduce some sort of strategy and structure to [their giving], donors come work with us so we can help them define their charitable goals," he said. Those goals vary greatly from donor to donor. As Hero said, "Every donor is as different as a fingerprint."

Last year, Skoll gave $7.5 million to his alma mater, the University of Toronto, to add more entrepreneurship to the undergraduate engineering program there. He's also funded a school of e-commerce at Stanford University.

On the other side of the Valley, Steve Kirsch, founder of Infoseek and Propel Software, is lobbying for cleaner air in California and funding the search for asteroids headed for the Earth. "I try to make a difference," Kirsch said. "There's usually a story to tell for anything that I give to."

Last year, Kirsch's lobbying efforts got legislation passed to allow zero emission vehicles in the carpool lane in California. Kirsch drives an EV1.

Kirsch said he has also given $150,000 to fund the search for near-Earth objects, which he said has been disturbingly neglected by the National Aeronautics and Space Administration and others. "There are fewer people searching the sky for asteroids than there are working in the average McDonalds," he said.

Kirsch can't even remember when he began giving back. "I got started who knows when," he said. He set up a donor-advised fund at the CFSV in 1990, which he has grown into a foundation for himself and his wife with assets of about $80 million. "It's sort of like a savings account," he said.

Though he works to do his part, Kirsch feels that not enough people give back appropriately. "[The giving] is not commensurate with the amount of wealth that's been generated," he said. To change this common failing among the high-tech elite, Kirsch works to serve as a role model for the younger tech-wealthy, like Skoll.

At 35, Skoll finds it odd to be giving money to his college already. "The whole wealth thing feels kind of weird. Period," he said, because philanthropy is "what your grandfather does."

Skoll feels Silicon Valley needs more people like Hero and Kirsch to set an example in giving back. To that end, he's trying to set an example through his own activities. According to Skoll, giving back is "a kick."

As for the perception that the tech elite doesn't give enough to charity, Skoll believes things are changing. "Just during the last year, I've noticed a big psychological change amongst a lot of the tech-wealthy," he said. People are beginning to think about giving back as he and others have done, he said. He also feels Internet money is too new for many of the suddenly wealthy who are not yet thinking about giving money away.

But, he added, "Given enough time, you'll see a lot of the tech-wealthy giving back as well."

Skoll, who puts in 80 hours per week at eBay, also feels that many of the tech-wealthy don't have enough time to think about philanthropy. Kirsch isn't as forgiving. "You're seeing a lot of people suddenly come into a lot of wealth who are not taking advantage of the opportunity, and in some cases really blowing it," Kirsch said.

To facilitate charitable giving among the busy new money of Silicon Valley, the CFSV created the Silicon Valley Social Venture Fund in June 1999. The fund is made up of young professionals who contribute $2,500 to $25,000 each year. Hero said it has created, "a peer-based learning process for donors to get as involved as time permits."

According to Hero, the shift in patterns of giving may be evolutionary, "It could be that the Valley will evolve and that the next generation will demonstrate sort of more traditional giving behaviors, whatever that is," he said.

At the same time, Hero doesn't expect to see donors take a more relaxed attitude toward giving anytime soon. "If you're not personally passionate about [giving], if you're not personally involved, then it's not meaningful," he said.

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