When I worked in the New York bureau of U.S. News & World Report, the fax machine was constantly spewing out self-congratulatory pabulum from high-tech firms. When deadlines didn’t loom, I’d occasionally entertain myself by sifting through these laughably overwrought paeans to bland “breakthroughs”–“Revenio Announces Revolutionary Dialog Marketing Software Solution!” or “Users Applaud NetLedger’s Customer Service!”
As dot-com hysteria peaked, however, I noticed an increasing number of communiqu*s devoted to less Mammon-centric feats. Mixed in with the notes hailing venture-capital deals were salutes to geek munificence, bearing toot-our-own-horn headlines like “Sun Supports eBay’s Efforts to Bridge the Digital Divide for Seniors,” “Granitar Turns Red Sox Win Over Yankees Into a Hit for the Jimmy Fund,” or my personal favorite, “New Economy SWAT Team Formed to Save One of Nation’s Largest Dance Centers”.
At least according to these self-generated press clippings, the Robber Barons 2.0 are fast earning points for entry into Paradise. Rich beyond all reason despite NASDAQ’s wanton fluctuations (most either still have billions of dollars in stock or were able to cash out before the recent drop) top dot-com tycoons are funneling millions into a panoply of unobjectionable causes: education, homeless shelters, and measles vaccines for Third World infants, for example. Taking heed of Andrew Carnegie’s legendary credo, “He who dies rich dies disgraced,” the Baby Billionaires who’ve solidified their paper wealth are vowing to give it all away. “If we have a dollar or a penny when we die, we’ll feel like we miscalculated,” says Netscape co-founder James Barksdale, one of Silicon Valley’s budding Rockefellers who has a couple of billion to his name. So, to paraphrase the first line of Christopher Hitchens’ anti-Mother Theresa polemic, The Missionary Position, who would be so base as to pick on these computer geeks, who have promised their wealth to the needy and destitute?
Despite its clever co-optation of rhetoric befitting a Sally Struthers infomercial, the dot-com set’s spotty philanthropic track record makes them an easy mark. The flurry of press releases trumpeting “e-philanthropy” and a Golden Age of giving belies a disturbing stinginess among the New Economy’s young aristocracy. Their forays into charity are frequently marred by hubris or navet*, laying bare the techno-elite’s substantial disconnect from the world beyond IPOs and Pentium chips. The flowering of social responsibility among dot-commers may have all-important buzz, but for now it seems more of a public-relations confection than an honest-to-goodness trend.
A slew of figures attest to the geeks’ relative close-fistedness. Dot-com flacks gleefully point out that charitable giving leapt by over $15.9 billion between 1998 and 1999. But that simple stat obscures a Scroogishness among the very wealthiest Americans.
Despite the past decade’s gangbusters economy and the attendant widening of the wealth gap, charitable donations remain stuck at around two percent of the U.S. gross domestic product. Among Silicon Valley households, which have prospered far more than most, the ratio of giving to income is just 2.1 percent, scarcely distinguishable from the national average and well below the figures for such down-at-the-heels states as Alabama (2.5 percent) and Idaho (2.4 percent). Of those Silicon Valley households with a net worth in excess of $1 million, a whopping 45 percent give less than $2,000 per year, a number that takes into account non-cash gifts like stock options.
Nationwide, Americans earning over $100,000 per year give an average of 2.2 percent of their incomes to charity, a drop from the 3-percent rate of six years ago. Apparently ignorant of the age-old slogan “Give until it hurts,” upper-class donors rarely flirt with even a moment’s discomfort when it comes to philanthropy. Claude Rosenberg, author of Wealthy and Wise: How You and America Can Get the Most Out of Your Giving, estimates that Americans with annual incomes above the $100,000 mark could increase their giving sixfold without hampering their ability to cruise about in leather-interiored SUVs and eat mail-order steaks, for those raking in more than $1 million, giving could be upped 10 times.
Corporate America has been equally reluctant to share its unprecedented wealth. Companies currently donate around one percent of pre-tax profits to charity, a substantial decrease from the 1.5 percent average of the recession-plagued early 1990s. Those that deign to dole out assets often do so by offering pre-IPO stock in lieu of cash. An almost no-lose situation for startups, stock donations are dubious propositions for recipient nonprofits as the dot-com shakeout kicks into high gear. One New Economy laggard, the youth Web-site operator Snowball.com, celebrated its NASDAQ debut by giving the Community Foundation Silicon Valley 100,000 shares. From a high of $20, however, the share price has tumbled to under $1. Per federal law, of course, Snowball.com’s tax write-off is based on the stock’s artificially bloated inaugural price, rewarding the company for giving when the going was good.
Pauline Borsook, author of Cyberselfish: A Critical Romp Through the Terribly Libertarian Culture of High Tech, has damned miserly dot-commers as stunningly hard-hearted, even by the Gordon Gekko standards of Reagan-era Wall Street. “Unlike those who make their money from speculation, technologists feel they’ve created something concrete,” she writes in Cyberselfish, “so that no atonement (if that’s what philanthropy is) need be made, no guilt money paid … Their view is, ‘I’ve got mine, so why can’t you get yours.’”
Borsook’s targets typically counter that as “out-of-the-box thinkers,” they are awaiting philanthropic opportunities that will maximize the efficacy of their contributions. The vogue among the New Rich is to dismiss the nonprofit sector as bloated and arcane, a black hole where contributions are frittered away on inefficient administration and expensive frills. The solution, the theory goes, is an innovative brand of giving termed “venture philanthropy.” Nonprofits, the dot-commers surmise, can be run more effectively if their growth strategies are patterned after those of, say, online vendors of dog-grooming products. “When you create wealth in a short time, you think about philanthropy as you think about business,” eBay founder Pierre Omidyar told Forbes last May. “You don’t move from saying, ‘How can we rationalize an industry?’ to ‘Where do I sign the check?”
The concept of venture philanthropy was popularized in a 1997 Harvard Business Review article entitled “Virtuous Capital: What Foundations Can Learn From Venture Capital.” Authors Christine Letts, William Dyer, and Allen Grossman urged potential donors to model their charitable involvement on the business dealings of venture capitalists–philanthropists, for example, were instructed to stipulate specific performance goals and to monitor their “investments” as carefully as stock portfolios.
The quest for accountability may sound reasonable enough to the uninitiated, but nonprofit veterans question the concept’s usefulness. Unfamiliar with the challenges of assisting the underprivileged, techno-elitists are prone to meddling in the affairs of even well-run charitable groups. Many earmark their donations for specific programs without taking into account the day-to-day expenses that enable charities to function in the first place. In the Bay Area, for example, 71 percent of donors stipulate that their money pay for specific projects of their choosing. Hamstrung by those restrictions, many of the recipient charities are scrambling to meet such non-sexy costs as office rent and staff salaries.
Dot-commers err in assuming that instant NASDAQ success qualifies them as nonprofit geniuses. Though certainly justified in being picky about how their money is spent–no one wants to fund a crooked nonprofit tsar’s Jaguar repairs and Maui trysts–the New Rich interfere far too much. “Part of the model as it’s presented is that the venture philanthropists do get very involved with the organization so they can bring in their expertise, which is great,” says Bruce Sievers, executive director of the Walter and Elise Haas Fund in San Francisco. “But with that expertise comes an amount of control … To have a funder come in and reshape that organization, potentially in their image, simply because they are supplying the funds, is very problematic.”
As a result, instead of focusing on their street-level missions, recipients of dot-com largesse must concern themselves with proving they have a viable “business plan,” or that donors can expect a healthy “ROI”(Return on Investment). “‘Our portfolio of grantees,’ I hear [that] phrase all the time,” says Claire Peeps, executive director of the Durfee Foundation. “There is a real show-me-the-goods mentality that I think is coming from the younger members in the boardroom. The nonprofits’ concerns are that there’s too much program support, not enough infrastructure support, and that the increased evaluations are killing them.”
“The dot-com-millionaires-turned-venture philanthropists underestimate the difficulty of philanthropy,” agrees Lisa Sullivan, founder and president of Listen, Inc., which trains urban youth for leadership. “I think they’re going to find out that giving away money is hard, that social change doesn’t happen at Internet speed.”
The new philanthropists occasionally extend the charity-as-business model to farcical extremes. Database vendor Informix donated an entire software suite to OMB Watch, for which the public-spending guardian was deeply grateful. A year later, however, Informix demanded that OMB Watch pay a $250,000 licensing fee to continue using the programs–or else. “We became totally dependent on this piece of software, and now they are threatening to cut us off or force us to pay for their software,” grumbles Gary Bass, OMB Watch’s executive director. “I was already nervous about any dot-com philanthropy, and here they [gave] a gift in such a way as to ultimately become a controlling interest and help their own business. I think it’s a bastardization of philanthropy.” Informix, however, has been nice enough to offer OMB Watch a special reduced rate–a mere $233,000, roughly a 7-percent discount.
By regarding philanthropy as akin to venture capitalism, in which a foolish choice can lead to relative penury, dot-commers are bound to favor safe bets over potential boat-rockers. Cutting-edge charities had hoped that youthful gadzillionaires would be jazzed to take bold risks, tackling issues deemed risqu* in the hallways of old-school foundations. “But a lot of New Economy wealth is going to pretty traditional causes and pretty traditional groups,” says Neil Carlson, a researcher at the National Committee for Responsive Philanthropy. “New Economy philanthropists have yet to figure out a way of investing in areas and issues that really get to what I see as some of the most glaring problems in our country today–the wealth gap, the sort of growing divide between inner city communities and suburban communities, the lack of access to affordable health care–the sort of meat-and-potatoes issues that have to do with social and economic justice.”
Indeed, the purportedly forward-thinking techno-elite seem to prefer the favorite charitable outlets of generations past–museums, Ivy League schools, ballet troupes, and causes that Boston anti-gang activist Rev. Eugene F. Rivers III has famously lampooned as “saving whales with one fin.” Of last year’s eight biggest charitable contributions, for example, six went to large, wealthy universities such as Stanford and Cornell. Cisco Systems co-founder Sandy Lerner has focused on pets-for-prisoners programs and restoring Jane Austen’s English vicarage (where she hopes aspiring writers can someday spend inspiringly retro nights, sleeping beneath antique quilts and peeing in chamber pots). Infoseek founder Steve Kirsch, one of Silicon Valley’s most loquacious philanthropists, has funded such idiosyncratic causes as NASA’s search for Earth-destroying asteroids and a California law that permits zero-emission vehicles to drive in carpool lanes (Kirsch, naturally, drives an electric car).
Donors also tend to contribute locally–fabulous news for churches in already well-off Sunnyvale, but hardly an efficient way for dot-com dollars to tackle social problems in the vast regions yet to reap rewards from the advent of one-click shopping. “The New Economy left a whole bunch of people behind,” says Sullivan, who has found traditional foundations like Rockefeller, Ford, and Kellogg more eager than dot-commers to fund her trail-blazing work in Washington, D.C.’s blighted neighborhoods. “I’d really like to see the folks who benefited from this growth inequity turn some of their attention to addressing the folks who were left behind. That would be, in my book, disproportionately people of color.”
One gap the techies have aggressively addressed is the much heralded “digital divide.” A large number of dot-commers have concentrated on furnishing inner cities and rural communities with PCs and modems. Chief among these crusaders has been John Gage of Sun Microsystems, who founded an initiative called Netday that aims to bring the Internet to classrooms in underprivileged areas. “In the beginning days, what the schools needed was the hands-on volunteers to actually get the wires through the walls,” says Julie Evans, Netday’s current CEO. “What they really need now is knowledge, to sift through all the information that’s in the world today. It provides a schema to help those decision makers, the school-side administrators, really learn how to use the best resources on the Web.”
But critics charge that technological bridges over the digital divide are doomed to be little more than decorations. Evans dreamily boasts that the Web has enabled grade-schoolers in Rosedale, Mississippi to take virtual field trips, to understand that “there aren’t cotton fields in New York City.” But how does that understanding contribute to an eight-year-old’s ability to escape the cycle of poverty? “The digital divide doesn’t exist in a vacuum,” says Carlson. “It exists as the result of years of social and economic discrimination. It exists as a result of what I see as an abandonment of a poor underclass. So to sort of expect that you need to throw technology at a problem without addressing these other issues as well is fairly nave.”
The computers-in-classrooms solution is particularly out of touch when it comes to the Third World, a fact recently acknowledged by none other than Bill Gates. Though he admits to once believing that information technology was an elixir for the destitute, Gates now terms that outlook “nave–very nave.” The $21 billion Bill and Melinda Gates Foundation may be roundly criticized for its Byzantine bureaucracy, but at least its namesake recognizes the tunnel vision of his sheltered peers. At a November conference in Seattle designed “to bring the benefits of connectivity and participation in the e-economy to all of the world’s six billion people,” Gates stunned the crowd by questioning the life-altering power of computers. Speaking of a hypothetical village in sub-Saharan Africa, he lampooned his peers’ focus on PCs as panacea: “Mothers are going to walk right up to that computer and say, ‘My children are dying, what can you do?’ They’re not going to sit there and, like, browse eBay or something. What they want is for their children to live. They don’t want their children’s growth to be stunted. Do you really have to put in computers to figure that out?” Netday founder Gage brusquely dismissed Gates’ skepticism. “After listening to three days of serious analysis and work, and then to have Gates rather flippantly say, ‘You’ve got to have clean water and food… That wasn’t exactly furthering the point of the entire meeting,” Gage said.
Myopia may be the key factor in the dot-commers’ overweening faith in technological solutions, but the role of old-fashioned self-interest can’t be underestimated either. Computer-savvy children are tomorrow’s eBay bidders and Lotus Notes users, after all, and a cynic could easily regard digital-divide initiatives as thinly veiled attempts to enlarge the pool of potential e-commerce customers or low-level tech drones. Thus in New York’s Silicon Alley, mere miles from slums galore, the biggest recipients of the industry’s generosity have been MOUSE and HEAVEN, organizations dedicated to helping youngsters develop technical acumen. And flush with cash from his days launching software maker Red Hat, Marc Ewing has plunged into philanthropy by founding something called the Red Hat Center for Open Source, dedicated to using the open-source development model “for the greater good of the general public”–as if a geek-chic programming philosophy holds the key to undoing human woe. So far, the Center’s only accomplishment of note has been to partially fund ibiblio.org, a yet-to-be-launched online library.
A particularly egregious example of self-serving philanthropy occurred last February when 3Com, Lucent, and Cisco joined together to pledge $100 million worth of products and services to government agencies and schools. In addition to currying favor with legislators, the tech troika will be introducing millions of impressionable youngsters to their trusty brand names, an advertising coup that has soft drink companies and fast-food chains green with envy. “Being a good corporate citizen pays great dividends,” said Cisco’s director of global government alliances in announcing the pact.
The Cyberselfish mentality is also apparent in other philanthropic avenues. As masters of spin, high-tech firms recognize the public-relations value of good works–or, more importantly, the appearance of good works. It is no coincidence that Gates’ fantastic donations to Third World vaccination programs began making page A1 during the height of Microsoft’s antitrust tussle. Sharka Stuyt, a veteran marketing director for Canadian firms Pivotal Corp. and ATI Technologies, believes that companies must use philanthropy to accrue “reputational capital.” “A socially active company is perceived to be more trustworthy than one that is not,” says Stuyt, who is organizing a nonprofit called Friends of Technology Group, aimed at fostering high-tech philanthropy. “The courts would likely have been more understanding, responsive, and accommodating” to Microsoft, she notes, had Gates taken the time in the mid-’90s to pose for a few more photo-ops with leukemia patients.
The inability of dot-commers to separate their philanthropy from their work-day duties is so endemic that every saintly act seems to have an ulterior motive related to market share and product branding. New Economy gurus have a nifty buzz phrase for the phenomenon of using philanthropy to lure customers–“cause marketing.” Workplace charity drives are “corporate-giving solutions,” and volunteer programs are designed to “maintain competitive advantage and loyalty.” Online retailer eToys does not support Rosie’s Readers for the sake of improving literacy, but rather, according to a marketing report from Boston-based consultancy Cone Inc., “because the Internet company is leveraging its resources to develop a comprehensive cause program to significantly impact their brand while making a difference within the community.”
The desire to create synergy between philanthropy and the bottom line is indicative of the softness of the dot-com set’s commitment to charity. Their philanthropic cluelessness is evinced by the apparatus that has arisen to manage their donations. There are philanthropic consultants, who are retained to cajole their guilt-ridden wealthy clients into writing checks. There are philanthropic mutual funds, like Schwab’s Fund for Charitable Giving, that are designed to make charity as palatable as playing the market. And there are social organizations that lure the New Rich into philanthropy with the sirens’ call of free booze. “We have parties that are cocktails, hors d’oeuvres,” says Abigail Ochs, founder of one such group called InvolveX. “There will be four different nonprofits in the room, and [guests] will go around and see which nonprofit interests them.” One suspects her brilliant party guests wouldn’t spend five minutes seeking out the needy sans apple martinis and seared foie gras.
The prodding is necessary because the dot-com set has no grand designs on a selfless second act. Cloistered from the non-networked world, their energy channeled into 100-hour-a-week quests for instant wealth, they have little natural impetus to tackle the planet’s myriad social ills. The current vogue for giving, spurred by a mix of shame and competitive desire, seems like a fad. “Generosity is becoming quasi-fashionable in Silicon Valley, like monster houses and BMW Z3s,” an article in Upside Today announced last April. Though the reporter’s intention was to hail the onset of dot-com philanthropy, the glib phrasing elegantly captures the industry’s detached view of giving back.
Giving is viewed not as a moral imperative, but as a spiritual side dish–a feel-good activity on par with mid-day facials or popping Paxil. Lecturer Tom Mahon, for example, has made charitable contributions a pillar of his “Reconnecting” program, a self-improvement regimen aimed at increasing mental well-being among dot-commers. Helping the poor souls unblessed with Java-coding skills is the cherry atop the sundae that is the techno-elite lifestyle. Philanthropy cheerleader Steve Kirsch neatly, albeit unintentionally, summarizes the mindset: “Once you’ve got the house, the car, maybe the private jet, what else are you going to do?”