The New Tech-Based Philanthropy

By Anne Nelson

Not so long ago, most major U.S. foundations fit the image of the giant East Coast foundation, rooted in fortunes made by titans of the manufacturing and extractive industries. For decades, the Ford, Carnegie and Rockefeller foundations carried out sweeping programs on a scale that rivaled those of governments. Many public reforms and institutions were buoyed by their efforts, including public broadcasting, public libraries and the Green Revolution.

But in recent years that primacy has been challenged by a host of new foundations, rooted in the digital communications and technology sector, which are rewriting the rules of American philanthropy. They don’t always march in lockstep or speak with one voice, but they are generating a new philanthropic culture nonetheless.

Here are eight ways in which the new tech philanthropies are making their mark:

1. Tech-based donors represent the fastest-growing sector in U.S. philanthropy today.

This claim could be based on the Bill & Melinda Gates Foundation alone. Founded in 1994 with an endowment of $94 million in Microsoft stock, it immediately experienced dramatic growth. This was further galvanized by Warren Buffett’s 2006 contribution of the equivalent to $30 billion, which was to be paid out over a number of years.

The Foundation Center’s list of last available audited statements (as of July 2011) places the Gates Foundation’s assets at nearly $34 billion at the end of 2009 (see chart below). This is more than the assets of the three next largest U.S. foundations listed (Ford, J. Paul Getty and Robert Wood Johnson) – combined.

Tech-based philanthropy displays a strong affinity forscience and technology.

In recent years Gates has been joined by a number of other donors from the tech community, among them eBay’s Pierre and Pam Omidyar, founders of the Omidyar Network; eBay’s Jeffrey Skoll, founder of the Skoll Foundation, and the Google philanthropic arm known as google.org. Not only are these organizations built on vast new fortunes, their assets are also often neutral or even counter-cyclical compared to traditional foundations’ portfolios.

2. They are generating new organizational cultures.

Institutions tend to mirror the dominant administrative cultures of their origins, and foundations are no different. The new tech-based philanthropies, rooted in start-up culture, tend to be distrustful of big bureaucracy and admiring of innovation.

The Gates Foundation began in Seattle with a bare-bones staff that had to be doubled in 2006 when the Warren Buffett contribution arrived. The Omidyar Network dispensed with traditional titles to indicate its idiosyncratic approach to the funding process. (This decision included the word “foundation.” One of the network’s alternate labels is “philanthropic investment firm.”) Omidyar programs are shaped by individuals whose titles include “principal” and “managing partner.” The network collaborates with “partners” rather than funding grantees. The Omidyar Network is also pioneering the use of social investment, by investing in for-profit companies for the sake of social impact, at times acquiring equity in the process.

Foundation Rank Assets As of fiscal year end date
1. Bill & Melinda Gates Foundation (WA) $33,912,320,600 12/31/2009
2. Ford Foundation (NY) $10,881,598,073 9/30/2010
3. J. Paul Getty Trust (CA) $9,584,879,219 6/30/2010
4. The Robert Wood Johnson Foundation (NJ) $8,490,415,783 12/31/2009

Source: Foundation Center

3. They promote a global perspective.

The Ford Foundation and the Rockefeller Foundation were deeply involved with the architecture of the Marshall Plan that rescued Europe from the ashes of World War II. Now the Gates Foundation and its counterparts are taking a close look at the developing world, and at Africa and India in particular.

The Gates Foundation’s three program areas are global health, global development (with a special focus on Africa and India) and U.S. programs (with a primary focus on education). The Omidyar Network’s portfolio includes many projects in India and Africa. Google’s philanthropy has experimented with a number of different approaches, among them pro bono tech projects and public health initiatives in Africa. Some of these global initiatives include surprising new approaches, such as Jeff Skoll’s Participant Media, which finances films to advance public education on critical global issues. Participant’s most recent project is Contagion, a feature film that portrays the world in the grip of a rapid-fire pandemic.

The project features a public education website, and its advisors included public health expert Dr. Larry Brilliant, formerly the head of Google’s philanthropy and currently president of the Skoll Global Threats Fund.

4. They’re still in motion.

There are older technology-based foundations, such as the David and Lucile Packard Foundation (founded in 1964) and the William and Flora Hewlett Foundation (founded in 1967). These foundations have been around long enough to define their portfolios and their institutional approaches and bear a stronger resemblance to traditional East Coast foundations. But their younger cousins are far from set in their ways. The Case Foundation was founded in 1997 by the former CEO of AOL, Steve Case, and his wife Jean. Google was launched as a project in 1996, and its philanthropic arm google.org debuted in 2004.

Many new foundations favor a “venture capital” approach in which new projects are seeded with the expectation that some will fail, and successful models will proceed to the next level of support.

5. They believe in “social entrepreneurship.”

Digital media celebrates a culture of grassroots participation, so it’s no surprise that many of their foundation portfolios feature projects in micro-finance, anti-censorship and public participation in good governance. The Case Foundation has experimented with the “Make It Your Own Awards,” in which individuals are invited to suggest “citizen-centered” solutions to their community problems and compete for $25,000 grants to implement them – chosen by a public online voting process.

The John S. and James L. Knight Foundation is based in Miami with origins in the newspaper industry, but it has moved decisively into the spheres of digital media and tech-based philanthropy. Knight has not only pioneered online public competitions for digital media grants, it has also forged new approaches to collaboration among philanthropies with shared goals.

6. Their funding interests often reflect their core businesses.

It’s only natural that foundations that arose from the digital revolution would take a strong interest in innovators in the field. The Omidyar Network and Google have recently made major grants to the Wikimedia Foundation, the nonprofit organization that supports Wikipedia, as well as to Global Voices, an international blogging community, and its academic birthplace, the Berkman Center at Harvard. Tech-based philanthropy also displays a strong affinity for other areas of science and technology, especially medical science and public health. The Gates Foundation has undertaken massive public health campaigns involving vaccinations, malaria eradication and nutrition in the developing world; the Omidyar Network and google.org have also made important contributions to global public health campaigns.

7. Individual and institutional philanthropy are both significant.

Sometimes they are carried out simultaneously. Pierre Omidyar’s wife Pam was a co-founder of the Omidyar Network and also founded two other philanthropic enterprises, Humanity United and HopeLabs. A new generation of individual philanthropists is emerging from the tech sector, and they are not all American. New Indian philanthropists include Dr. Abraham George, a technology entrepreneur who created the George Foundation to promote projects in health, education and poverty alleviation.

8. They’re West Coast-oriented.

This point is less obvious than it may seem. For decades, much U.S. foundation activity was concentrated in the Northeast Corridor, running from Washington through New York to Boston. This route involved heavy traffic with the federal government, New York media and cultural institutions and northeastern universities. The new corridor involves Los Angeles, San Francisco and Seattle. (It is noteworthy that while the Case Foundation is based in Washington, D.C. and the Gates Foundation has an office there, none of the new tech-based foundations mentioned in this article maintains an office in New York.)

Foundations that arose from the digital revolution take a strong interest in innovators in the field.

The relative influence of the West Coast donor community may be growing, but there have also been signs of increased consultation and collaboration among the various donors. Ideally, the surge of the tech-based donor activity can usher in a new age of American philanthropy, combining the energy of the new institutions with the experience of traditional foundations, to offer the world a much-needed array of innovative solutions.

Anne Nelson is a Senior Consultant of AKA | Strategy.

This is an expanded version of an article on PBS MediaShift.. The author posts on Twitter as anelsona on media, education and development.

STRATEGY MATTERS © No 6
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