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January 1, 2001 |
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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 communiques 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 naivete, 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.

Venture Philanthropy

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.

Saving Whales With One Fin

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."

Virtual Charity

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 na

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