Silicon Valley philanthropists require

Alana Semuels, How Silicon Valley Has Disrupted Philanthropy, The Atlantic, 25 July 2018

Local nonprofits are having trouble attracting money from tech donors. The solution? Talk like a start-up.

Mega Pixel, Stas Malyarevsky, Shutterstock, Paul Spella, The Atlantic.

For more than a century, the Boys & Girls Club of America has had a pretty simple mission: providing somewhere for kids to go after school so they stay out of trouble. A 1982 PSA put it simply: “It’s a place to go besides the streets,” a man sings, as a video plays of (mostly black) boys running into a club.

But in 2018, that message isn’t enough to attract local money to the Boys & Girls Clubs of the Peninsula, which serves Silicon Valley, where the biggest donors tend to favor causes that use novel solutions to “disrupt” poverty, or that can employ data to show just how many problems their money solves. Many are fans of effective altruism, a philanthropy philosophy that espouses “evidence and careful analysis to find the very best causes to work on” rather than “just doing what feels right.”

So Peter Fortenbaugh, the executive director of the Boys & Girls Clubs of the Peninsula (BGCP), started thinking about what his organization could do to win local support. “Traditionally, we were a safe place to hang out, but in 2018, that’s just as important, but no longer sufficient,” he told me. He started adding on educational and vocational training programs to prepare kids to work in Silicon Valley. He launched a summer camp that emphasizes STEM learning and works with kids falling behind in reading. He started sending donors an annual “Report to Stakeholders” with detailed data about impact and how what the club does now compares to previous years.

And to really bring the money rolling in, he launched a “Shark Tank” event, in which “entrepreneurs”—employees and students—pitch wealthy Silicon Valley donors on certain programs, outlining just how much money they need and what “equity” the donors will receive on those programs. One presentation pitched the “sharks” a “unique and innovative cross-sector partnership”—a summer learning program—and talked about the program’s “marginal costs,” assuring potential donors that BGCP’s cost per student was lower than that of competing programs. The approach has been remarkably effective in bringing in money: Last year, the organization raised $2.7 million in 45 minutes from donors including George Roberts, the billionaire founder of investment firm Kohlberg Kravis Roberts & Co., who lives in nearby Atherton.

Fortenbaugh’s broader strategy has paid off as well. The Boys & Girls Club of the Peninsula has seen revenues double in the past four years, to $14 million. Revenues for the national Boys & Girls Club, by contrast, have steadily decreased in recent years, according to the group’s financial documents. Fortenbaugh attributes his success to the way he approaches donors. “We say, ‘We can maximize your return on investment,’” Fortenbaugh told me. “It’s not about looking for a handout, it’s about helping [donors] achieve their goals.” Recently, Golden State Warriors player Kevin Durant built a new basketball court in the BGCP Redwood City branch; Durant later said that he would pay for the first year of college for four BGCP students. Scott Forstall, an engineer who is known for leading the original development team for the iPhone and iPad, has said that he joined BGCP’s board after reading the Report to Stakeholders, sending 36 detailed questions to Fortenbaugh, and learning that, rather than just focusing on keeping kids busy after school, BGCP was “setting up kids for success in school and beyond.”

Silicon Valley companies transformed the way we shop, search for information, connect with friends, and consume entertainment. The people who made millions or billions from these companies are now changing yet another sector of the American economy: philanthropy. They’re forcing nonprofits to become incubators and disruptors, rather than just service providers, and to think about how they sell themselves, how they measure what they do, and what programs will attract money. For the organizations that know how to speak their language, it’s a tremendous opportunity.

Yet many local nonprofits have not figured out how to pitch themselves effectively to the millionaires in their backyards. About 90 percent of philanthropic dollars from Silicon Valley go to national and international causes, according to The Giving Code, a 2016 report about Silicon Valley philanthropy written by two women who run a consulting firm that works with nonprofits and donors. Of the 10 percent that stays local, much goes to large universities or hospitals, and less than 5 percent goes to local community-based organizations. Donors often give to causes they have a personal connection to—someone who has lost a parent to cancer may give to a nonprofit that tries to find a cure for cancer—or to groups that try to fix problems in the tech industry, like a lack of diversity in science and math programs. Many Silicon Valley founders are also from elsewhere, or have homes around the world, and don’t have the community ties business owners may have had in the past. “There’s a lot of philanthropic dollars coming out of Silicon Valley, but not a lot of them are staying here,” Cat Cvengros, the vice president of development and marketing at Second Harvest Food Bank of Santa Clara and San Mateo Counties, told me.