Silicon Valley nonprofits are struggling to get money from wealthy tech donors, so they're acting more like startups

  • Less than 5% of donations from wealthy people in Silicon Valley reach local nonprofits.
  • Silicon Valley nonprofits are trying to rely more on data analysis to show wealthy donors how their money could make an impact.
  • Some nonprofits have hired marketing consultants to help out.

Silicon Valley is home to many prominent philanthropists – Larry Page, Elon Musk, Pierre Omidyar, to name a few – but these billionaires often donate to causes outside the Bay Area.

Meanwhile, nonprofits in Silicon Valley are struggling to raise enough money as demand for their services grows, according to The Atlantic.

As a result, local organisations are being forced to act more like startups than traditional nonprofits to echo the mentality of Silicon Valley donors, who tend to measure effectiveness through data rather than altruism.

Mark Zuckerberg and Priscilla Chan, his wife, have committed $US120 million to improving education in underserved schools across the Bay Area, but gifts like theirs are not all that common among Silicon Valley billionaires.

Roughly 90% of donations from Silicon Valley go to national and international causes, according to The Giving Code, a 2016report about philanthropy in Silicon Valley. Of the remaining 10%, a significant chunk benefits hospitals and large universities, while less than 5% reaches local groups.

The rising cost of living is producing a greater need for community-based services in Silicon Valley, where nearly one-third of residents require public or private assistance.

In Santa Clara and San Mateo counties – home to Silicon Valley cities like Cupertino and Menlo Park – about 80% of the local nonprofits surveyed in the report saw an increase in demand over a five-year period. But more than half of them are struggling to meet demand for their services, and many are gradually adopting the language of startups to market their work to donors, The Atlantic reported.

“In talking about the world and about their work, most nonprofit leaders speak a moral language that emphasises social responsibility, social justice, equity, and the common good,” Alexa Cortés Culwell and Heather McLeod Grant, authors of The Giving Code, wrote in their report. “The new philanthropists are far more transactional when describing their work and their strategies. Theirs is a language of finance, of metrics, of power, of capitalism, of winners and losers.”

The Bay Area is home to some of the wealthiest people in the world, with 74 billionaires reported to be living in San Francisco last year, according to financial research company Wealth-X.

These individuals are striving to be “bigger, better, and faster” in their donations than past philanthropists, according to The Giving Code.

Billionaires’ donations, however, frequently go toward issues they have personal connections to, such as diseases that have affected their loved ones. Bill Gates, for example, donated $US50 million to Alzheimer’s research last year, saying the decision was personal because men in his family have been diagnosed with the disease. Gates teamed up with other philanthropists this year to put another $US30 million into this research.

McLeod Grant told The Atlantic that tech donors also like to focus on large, systemic issues like healthcare and education.

Some nonprofits have already taken steps to focus more on data. The Silicon Valley Children’s Fund, for example, hired a marketing firm to “speak in the language of business and metrics” and help the nonprofit raise money for foster youth, according to The Atlantic.

Many local organisations, however, are not able to contract specialists with their current budgets. Close to one-third of Silicon Valley nonprofits have large deficits, and nearly half only have enough cash on hand to keep running for three months.

To help nonprofits attract more donors, two local foundations recently awarded 20 grants to community-based organisations. The grants are worth more than $US800,000 in total and are meant to bridge gaps in social networks and mindsets between local nonprofits and Silicon Valley philanthropists.

One of these groups, Sacred Heart Community Service, will use its grant to hire a consultant who can help the nonprofit come up with metrics to describe its work and terminology to articulate how it is helping low-income people in Santa Clara County.

Some nonprofit leaders say local organisations with similar objectives could begin collaborating to raise more money, according to the San Francisco Chronicle. Galas, for example, are popular among wealthy people in the Bay Area, and can generate between $US300,000 and $US1 million in donations. But for some local nonprofits, the cost of hosting an annual gala is just too much.

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