Silicon Valley Philanthropists Need to Give More Locally, Report Finds

Even as the wealth of — and giving by — Silicon Valley philanthropists has soared, local nonprofit organizations have struggled to meet the needs of the poor, a report from Open Impact finds.

Funded by the David and Lucile Packard Foundation, the report, The Giving Code: Silicon Valley Nonprofits and Philanthropy (82 pages, PDF), found that between 2008 and 2013, total giving by individuals in San Mateo and Santa Clara counties grew 150 percent, from $1.9 billion to $4.8 billion. Over the same period, however, 29.5 percent of local residents relied on some form of public or private assistance. Based on a survey of a hundred and thirty Silicon Valley nonprofits, the report found that 80 percent of those nonprofits had seen an increase in demand over the past five years, and that 51 percent won't be able to meet that demand in 2016. The report also found that 52.6 percent of the nonprofits who responded to the survey had run a deficit in at least one of the past five years; that 74 percent said they did not have access to networks of high-net-worth-donors; that 63 percent have difficulty finding donors who are willing to cover the full costs of program implementation; and that 95.6 percent have at least one donor who requires impact data reporting, even though only 26.7 percent of those organizations say the data is useful to their own organization.

The report also found that while giving by private foundations in Silicon Valley increased 40 percent between 2006 and 2013, the share of giving to local community-based organizations shrank from 5 percent to 3 percent. And while giving by donor-advised funds at community foundations and corporate foundations in the region jumped by 7.5 times and 4.3 times over that period, their share of giving to community-based organizations fell from 27 percent to 14 percent and from 8 percent to 6 percent, respectively.

According to the report, that may be due in part to a sort of "giving code" among Silicon Valley philanthropists that pressures them to be "bigger, better, faster," and more strategic in their giving. At the same time, many donors are disconnected from the nonprofits they support by cultural and language differences, while there are too few intermediaries in the region working to bring donors and nonprofits together.

To encourage philanthropists in the region to think locally, the report proposes a new giving code that emphasizes the building of local networks and relationships. Suggestions to that end include investing in the development of effective leaders, organizations, and networks with unrestricted and/or multiyear funding; engaging with nonprofits to better understand their clients and challenges; providing the full cost not only of programs but of impact measurement initiatives; and supporting collaborations.

"If philanthropy's true role is to serve as society's 'risk capital' for social change," the report concludes, "then the moment has never been riper to consider how the formidable philanthropic and intellectual assets accumulating in Silicon Valley could revolutionize how we address the most challenging issues of our time, starting right now, right here in our own backyard."