A Three-Year Initiative Sought to Increase Local Giving in Silicon Valley. Here's What It Learned
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Campers and RVs line a street in Mountain View, California, a common indicator of the region’s housing crisis. Sundry Photography/shutterstock
Silicon Valley is a place of contradictions. On the one hand, it’s home to spectacular wealth and some of the most powerful companies in the world—titans of tech like Google, Facebook and Apple. On the other hand, it’s a place where hardship is prevalent, many struggle to make ends meet, and the ultra-wealthy live alongside thousands without homes.
While the same can be said of many other major metropolitan areas, the wealth disparity in Silicon Valley is among the highest in the nation, and fortunes continue to accumulate at the top—the region is home to more than 147,000 millionaires and billionaires.
In 2016, a report by Open Impact titled “The Giving Code: Silicon Valley Nonprofits and Philanthropy,” found that almost 30% of local residents rely on some form of public or private assistance due to the skyrocketing cost of living, and nonprofits play an important role in addressing these stark local inequities. “In one Silicon Valley neighborhood, luxury vehicles in every driveway; in another, families living out of cars,” the report stated.
The Giving Code also found that, although philanthropy was expanding in Silicon Valley, only about 10% of it went to community-serving organizations in the area, and most of that went to private schools, universities and hospitals instead of community nonprofits. The report provided a wake-up call to the community and raised several important questions. Chief among them: Why, exactly, aren’t more Silicon Valley philanthropists giving to local organizations and issues? And what would get them to give more?
Answering these questions and more was the mission of Magnify Community. Rather than relying on a Dickensian model of simply shining a light on the suffering in the area, the nonprofit launched in 2018 as a more concrete effort to increase giving to community-serving organizations through a donor pledge and a series of pilot projects. Designed as a three-year program, Magnify sunset on September 30, and is now unpacking what it learned, including what worked, what didn’t work, and how this effort can continue.
“There’s a tremendous amount of wealth here, a growing amount of wealth, quite a bit of philanthropy, but at the same time, there are incredible local needs,” said Catherine Crystal Foster, Magnify’s co-founder, president and CEO. “There’s vast wealth inequality and the majority of the philanthropy here does not go to community service nonprofits that serve the people who live and work here in Silicon Valley.”
Magnify was funded by six family foundations: the Grove Foundation, the David and Lucile Packard Foundation, the Sand Hill Foundation, the Sobrato Family Foundation, the Heising-Simons Foundation and Sunlight Giving. The project started out with three key goals: to change the norms around local giving in Silicon Valley; to make local giving easier, more rewarding, and more high-impact; and to catalyze an additional $100 million in philanthropic giving to local community-serving nonprofits.
“The idea would be that it was time-limited,” said Foster. “So acting with a tremendous amount of urgency, we set out to develop and test a number of pilots to see what we could do in order to address this problem.”
Did local giving increase?
As Magnify Community was winding down, the team laid out what it learned through a variety of means, including a series of blog posts, exchanges over Zoom with other philanthropic organizations and advisors, and in meetings and internal memos. And one big question was, of course, whether more money made it to community groups. Results were mixed.
In terms of financial impact, Magnify points to the activity of 40 high-capacity individuals and family foundations who signed onto its Magnify Community Pledge. Developed in 2019, the pledge called on Silicon Valley’s high-capacity donors to make a three-year commitment to support the nonprofits that serve the people who live or work in Silicon Valley. Pledgers had the choice either to measurably increase their local giving or to sustain their current local giving at a significant dollar or percentage amount.
Part of pledge’s goal is to catalyze an additional $100 million in local giving over a three-year period, by fall 2023. Magnify has published data for 2020, the first year of the pledge (although some pledgers signed on as late as 2021). In total, participants have pledged to increase their local giving by $47 million through 2023, so well short of the $100 million goal. However, in 2020 alone, pledgers did report that they increased local giving by $35 million. In total, pledgers donated $118 million to local causes that year, although this doesn’t represent additional funding generated.
While the numbers might sound somewhat underwhelming, considering the tremendous need the pandemic sparked and the enormous wealth in play, an important thing to remember is that Magnify’s numbers undercount its results, as not all pledgers reported their local giving numbers. Since Magnify did not distribute the funds itself, and acted as more of a resource for donors, it’s impossible to know just how much money it catalyzed. But Magnify cites millions of dollars in new local donations, including $200,000 gifts to COVID-related cash relief funds, six-figure gifts for specific initiatives, and general support for community nonprofits, according to one of its blog posts.
According to Foster, it’s also important to understand that, beyond the $100 million goal, Magnify was about setting a new norm, shifting narratives and creating tools in a limited amount of time. “The $100 million is not the point,” she said. “The point is that local donors have a new recognition of the needs in their own backyard, the outstanding nonprofits making this a better place for all, and their role as donors and leaders in this community.”
Giving Code co-author Alexa Cortés Culwell was enthusiastic about Magnify, telling me that its results show that there’s a need for more initiatives like it. Open Impact, the group that published the report, was not formally part of Magnify, but it did help create an implementation plan based on its findings. Once Magnify launched, the group stepped aside, said Culwell.
“It’s a really unique initiative that took a lot of the insights in the Giving Code and a lot of the recommendations and framed it into this very tangible kind of initiative that actually accomplished a lot in terms of really figuring out and experimenting with how to best connect ultra-high-net-worth donors to community-based organizations,” she said.
What worked and what didn’t (spoiler: data isn’t enough)
What actually motivated donors to give locally varied, often included a mix of factors, and did not always match up with what they said they needed in order to cut the checks.
For example, through a series of conversations with donors and philanthropic organizations, Magnify found that donors sought “curated information from trusted sources” to inform their giving. As such, some of the pilots it tested included pre-vetted lists of local nonprofits; a portfolio of “bigger bet” opportunities that were provided to high-net-worth donors, wealth advisors and family offices; searchable databases of more than 300 local nonprofits; monthly live events with nonprofit leaders; timely recommendations on issues like racial justice, local wildfires, the digital divide and child care; and finally, bespoke recommendations.
But Magnify found that curation wasn’t enough to catalyze giving. Although many of the donors Magnify spoke with said that they wanted tools like lists and databases to make their giving easier, donors rarely relied on them entirely. “It’s a bit too facile to say that the people here are just all about the data,” said Foster. “They want the metrics and the data package… but I would not say that that is the overriding way in which people here give.”
In fact, what worked best was when these informational tools were coupled with a more personal touch, whether that was connecting with nonprofit leaders, hearing compelling stories, or when peers vouched for the nonprofits.
“Even when presented with pre-vetted, ambitious giving opportunities that can absorb large sums, most donors don’t jump to give to nonprofits or initiatives they don’t already know, or to unfamiliar issue areas. They still fear making a wrong move, or spending too much,” Magnify found.
For each pilot, Magnify used an evaluation methodology in order to gauge its effectiveness. According to Foster, the method that catalyzed the most dollars was an in-person (or virtual) ask by a peer about a specific, urgent issue backed by compelling leadership.
Of course, Magnify was not successful in all of its endeavors. One of the issues it faced was that although the “bigger bets” concept is appealing, a limited number of new donors was actually willing to take them. Additionally, Magnify found that the most successful approaches to motivate donors, such as a personal ask by a peer, cannot be easily scaled.
“Looking at the way people give here and the way they step up or don’t step up is much more nuanced than I think some people would have it,” Foster said.
Barriers to local giving
There are a number of possible reasons why, at least when the Giving Code was released, 90% of philanthropic dollars flew out of Silicon Valley. Some have claimed it’s the region’s affinity for effective altruism, which often directs philanthropy to poorer countries with the rationale that each dollar will go further. NCRP’s Ryan Schlegel countered that perhaps Silicon Valley is afraid to “look too closely at the economic carnage they’ve wrought.”
Participants in Magnify offered some of their own explanations. “Giving, first of all, is super-hard. No matter who you are, no matter what you do,” said Kathy Kwan, president of the Eustace-Kwan Family Foundation and Magnify Community pledger.
Although a large percentage of Kwan’s giving portfolio is centered on local giving, she says one of the most difficult things about funding is identifying grantees. “Finding effective organizations, finding good initiatives, good programs, is just really hard, especially if you’re just an individual funder like me.”
Kwan refers to what she calls the “first five” concept, meaning that someone’s first five giving opportunities will likely be their children’s local school, their alma mater, their church and two other nonprofits. This aligns with the Giving Code’s findings that most local funding goes to local schools and universities. Expanding beyond those first five is difficult. The person who gives the money is often the person who’s making the money, and that person might not have sufficient time or capacity to look beyond them, she said.
“Donors often don’t fully see the scale of problems in their communities and struggle to understand how nonprofits work, which makes them hesitate to give,” said Open Impact’s Culwell. “It is akin to needing an investment advisor to help with investing their assets; they need an intermediary to help them understand the challenges as well as the local nonprofit landscape and the funding needed.”
Another significant barrier is uncertainty regarding just how much their funds will help local groups and causes. Armando Castellano of the Castellano Family Foundation noted that one of the reasons money tends to flow out of Silicon Valley instead of being invested in local communities is that much of philanthropy is data-driven. Some funders will focus on how much bang for the buck they’re going to get and how much change they will be able to effect with their money.
“It may be more expensive to see that change here because of housing, because of food, because of the wealth-poverty disparity. The distance between the hyper-wealthy and the poor is really wide here,” said Castellano, a professional musician, foundation trustee, and active member of the Magnify Pledger community.
Additionally, Castellano pointed out that Silicon Valley is home to a lot of first-generation residents. “There’s people from all over the world that live here,” he said, “so when you’re first-generation, you want to bring resources back to where you came from. And if you’re not from here, then you’re going to bring it to wherever you’re from, as it should be.”
Another barrier is simply a lack of knowledge about the issues plaguing the region. “I think one of the things that Magnify showed us is that many donors simply weren’t aware of or engaged in the great needs right here in our neighborhoods,” said Lisa Sonsini Sobrato, board chair of the Sobrato Family Foundation, a prominent donor to local causes.
Open Impact’s Culwell shared a similar sentiment, stating that one of the key problems the report identified was that donors didn’t know how to connect with community-based organizations.
“They didn’t understand what was happening in the Valley,” she said. “They were often really disconnected from the reality of all the different changes that we were facing, didn’t have a sense of how severe they were in many cases, and certainly didn’t have a sense of how they actually, tangibly help.”
Magnify created an action plan for donors on housing and homelessness that offered information about the problem, identified effective levers for change and provided recommendations of some of the best organizations to support. One of the advantages of the brief is that it offered donors a number of entry points for what many considered an “extremely complex and intractable issue that felt like it was too big for them to get their arms around.”
According to Foster, the housing brief not only unlocked a lot of money, it also provided a means for donors to “see a clear path for them to make an impact,” while also giving nonprofit organizations a tool they could use to elevate the issue.
Changing norms
One of the challenges Magnify sought to address was the lack of a local giving norm in Silicon Valley. In other parts of the U.S., where much of the wealth is generational, philanthropists may be compelled to support the organizations their families supported. However, because so much of Silicon Valley’s wealth is new and generated by people who have immigrated to the area, there are no long-standing giving norms in the Valley.
Of course, norms don’t change overnight. But Magnify hoped to set this change in motion, helping wealthy donors “recognize that because they live here, local giving needs to be part of what they do. Doesn’t have to be all of what they do, but needs to be a significant part of what they do,” said Foster.
For Open Impact’s Culwell, the giving code in Silicon Valley both is and isn’t changing. “You have all of these growing organizations and efforts to help donors, and that’s working, but the scale of the philanthropic assets, the amount of money donors can give, is kind of outpacing our efforts to help them give it away.”
Despite this, Culwell remains hopeful. The combination of “role model” donors like MacKenzie Scott and the turbulent times we are living in have started to change attitudes. “I think donors are finally waking up, that they need to take these issues seriously and they’re looking for solutions.”
A giving community forms
Although Magnify did not seek out to build a donor community, that is in essence what happened. In one of its blog posts, Magnify noted that it came to define its norm-changing work as donor organizing, as opposed to donor services. Magnify held monthly, “no frills” briefings via Zoom, which became an important part of the work.
The connections made through Magnify helped lay the groundwork for even greater collaboration among pledgers with similar interests. Magnify stressed that its focus was on connecting donors to each other and motivating them to action, and not “creating a new club” for donors. Instead, these planned events helped create an identity as part of a learning and giving community.
“What I really appreciated about Magnify, quite frankly, is the opportunity to have conversations, especially during the pandemic, and to be exposed to leaders in the community that were doing the work,” said Kwan. “It encouraged me to give more with confidence.”
Although Magnify Community has sunset, the connections it helped forge will continue. Its work will live on at the Philanthropy Workshop (TPW) as the Silicon Valley Action Lab. Magnify’s team hopes their work and the findings will be helpful for others looking to increase local giving. Really, the whole goal of Magnify was to create things that other people could carry forward, Foster said.
“This work is possible and it is doable,” Foster added. “We were able to do what we did in three years with a tiny team, and that’s not because we’re superhuman. That’s because… we had great support. We had a great network of allies to lean on. We had a vision. We had a sense of purpose and urgency, but this is doable.”
