Is the Silicon Valley Community Foundation the world's most influential foundation?

Courtesy of Michaela - Unsplash

Courtesy of Michaela - Unsplash

I am going to start this blog by making a rallying cry. If you have any interest in philanthropy and how it relates higher education, please read on. If you are going to bother reading any blog on this website, please take the time to read this one because what I am attempting to show is how philanthropy in higher education is evolving, and that change is set to open up all sorts of funding opportunities world over. One look at the Silicon Valley Community Foundation begins to explain what’s going on.

There is always a risk by using hyperbole to make a case, and as someone who has spent much of my career and political and corporate communications, I am very cautious instinctively about being hyperbolic. But on this occasion – and in the context of university philanthropy – I think it is warranted.

And the audience I want to engage – and stir – is not necessarily those in the US, the UK and countries such as Australia or Switzerland where philanthropy and its role in higher education funding models is well established.

No, my focus is on those universities in Africa, Asia, Europe and Latin America which may not have fully woken up to the philanthropic opportunities that exist to support their efforts or, if they have, to prompt them into action and to tell them clearly “don’t miss out”! Cease the day! The reason for my excitement is the latest piece of research we have conducted into the Silicon Valley Community Foundation and its giving to universities.

Community foundations are a distinctive character of US society.  The first one emerged in Cleveland in 1914 as an initiative of the Cleveland Trust Company. Its President Frederick Goff had a vision that local trust banks had a responsibility to give back to the communities which they served. He went on to demonstrate – very successfully as it turns out – how the Cleveland community foundation model could work for all trust bank communities. It’s a fantastic history and I recommend taking the time to read all about it at the Cleveland Community Foundation website which has plotted both its rich past and the community foundation movement really well.

According to the Council of Community Foundations in the United States, in 2017, there were around 750 community foundations across America, distributing an estimated $5.5 billion to a variety of non-profit activities in fields that included the arts and education, health and human services, the environment, and disaster relief.

They have a phenomenal reach and impact – which has now taken off globally – and they are important for a number of reasons which has been set out extremely well in a paper entitled The Growing Importance of Community Foundations by the historian Eleanor Sacks and published by the Lilly Family School of Philanthropy at Indiana University.

“In 2017, there were around 750 community foundations across America, distributing an estimated $5.5 billion in funding.”

Ms Sacks observes that given their long history and widespread acceptance it is remarkable that community foundations are not better known or understood. This is, of course, true of philanthropy as a whole.  We know from the likes of Harvard and the Organisation for Economic Cooperation and Development there is a significant lack of understanding and a dearth of data about philanthropy.  So perhaps it should come as no surprise when Ms Sacks writes of community foundations “they are the least studied form of philanthropy… As a result, both within the United States and around the globe, the reasons for their founding, where they fit in the overall landscape of philanthropy, their structures and their purposes are not apparent to the majority of people, even those who have a special interest in philanthropy – international funders, individual and corporate donors, and academic researchers”. I suspect she is right.

So what are community foundations, and what is their significance? And why am I getting so excited about our latest study about Silicon Valley and its community foundation? As Eleanor Sachs explains so well, community foundations make a number of important contributions to American society. They include:

  • Teach and promote philanthropy. One of the chief roles of community foundations is to teach individuals and the community at large about the values of philanthropy and taking personal responsibility for improving their local areas. This role crosses cultural and state boundaries. And in the context of Silicon Valley – where the Tech industry has sucked in talent from all around the world – entrepreneurs and business people there are using the community foundation to learn about and test out their philanthropy. 

  • Act as intermediary organisations: Community foundations do not in most cases provide services directly to individuals or operate programs in the community. They are organisations that collect funds and make grants to non-profit organisations in order to support the local (but in the case of Silicon Valley it is often international) charitable infrastructure and address changing community needs.

  • Serve as a forum for community leadership: Dr Sacks explains there are many things that community foundations do beyond their grant-making that impact their communities. As experts on the local non-profit infrastructure and on community needs, they are in a position to convene key local decision-makers to develop a coordinated program that will have greater impact than any one actor could do on its own.

  • Promote community development: Community foundations have the ability to marshal external resources to address community needs in ways that are managed and controlled by local leaders who, sensitive to the needs of their communities, set the development agenda.

Silicon Valley Community Foundation is the United States’ biggest community foundation – by far. Established in 2007, it is also one of the youngest community foundations and that, perhaps, is equally as important in the context of our latest research as its financial firepower.

“The Silicon Valley Community Foundation is playing a key role in that re-defining of philanthropy.”

Yes, Silicon Valley Community Foundation disburses huge sums of money and its importance is down to the fact it represents a wide group of philanthropists – often internationally by background or instinct – who have chosen to channel their philanthropy through the Foundation. According to Forbes, the Silicon Valley Community Foundation has grown by 800% in the past decade to $13.5 billion following a wave of generous donations from tycoons in the Valley and beyond. And it is these tech titans who are influencing and informing both the direction and character of US and international philanthropy from their base in California. And the SVCF is playing a key role in that re-defining of philanthropy.

What we know about the major philanthropists who are giving through SVCF, is that often times they are donating both through their own private foundations, as well as through donor-advised funds that they run at the foundation. According to the Chronicle of Philanthropy, since 2010 Mark Zuckerberg and his wife have given an estimated $4bn to philanthropy, some of it through their own foundation; some of it through SVCF. In the autumn of 2020, they made a donation of $350m through their SVCF donor-advised fund for reliable voting initiatives in the run up to the presidential elections.

“The Zuckerbergs are considered to be representative of a new generation of philanthropists.”

Now, the Zuckerbergs are considered to be representative of a new generation of philanthropists which I have written about in a previous blog prompted by a thoughtful paper - Stepping off the Sidelines - published by the California economic think-tank the Milken Institute which looked at emerging trends in philanthropy.

The Milken Institute anticipates a change in philanthropy and philanthropic behaviour, based on recent giving and what it describes as the “financial morality” of younger ultra HNWIs who consider philanthropy to be not a “nice-to-do” but a “must-do”.  Moreover, as the Milken Institute explains, these younger, bolder philanthropists have a higher tolerance and appetite for risk in their philanthropic actions with an appetite to have greater social impact.

This changing behaviour is, Milken considers, set to revolutionise philanthropy which will be characterised by:

  • Greater risk in giving;

  • Supporting less established organizations; and

  • Engaging in new forms of social impact.  

“In 2016, the Silicon Valley Community Foundation disbursed $61m to 260 universities in 29 countries. In 2019 it disbursed $206m to 287 universities in 40 countries.”

These are the same individuals who – like Sergey Brin, Jack Dorsey, Dustin Moskovitz and, yes, Mark Zuckerberg – are turning to Silicon Valley Community Foundation to manage and steward their global philanthropy.

And the signs are there in our latest research of Foundation funding to universities which we publish today. So, the headline is that in 2020 SVCF reports it has disbursed $1.8 billion in funding. According to our analysis, this is the highest sum of funding it has given over the past five years – and probably ever – as donors in Silicon Valley and across the US responded to the global pandemic. 

Silicon Valley Community Foundation funding to universities suffered in 2020. Arguably this shouldn’t come as a surprise. But as always with philanthropy, the key thing is to look at the longer-term trend – and that’s what makes me so excited.

Five years ago, in 2016, the Foundation disbursed – it reports – $1.2bn in funding of which 5 percent ($61m) went to 260 universities and higher education institutions in 29 countries – which speaks, in large part, to the international character and make-up of Silicon Valley.  48 of those universities were non-US institutions.  By 2019, just three years later, it disbursed around $1.2bn in funding again, but funding to higher education had jumped to 17 percent ($206m) representing a phenomenal 238 percent increase. 287 universities in 40 countries were recipients of Silicon Valley Community Foundation funding in 2019, 71 of which were non-US universities sharing $27m in funding. 

So, put really simply, there was a 48 percent increase in three years in the number of non-US university recipients of Foundation funding, while the amount of funding they received increased by 669 percent to $27m.  That Silicon Valley Community Foundation university philanthropy is becoming increasingly internationalised cannot be disputed.

“Between 2016-19 there was a 48% increase in the number of non-US university recipients of Silicon Valley Community Foundation funding, while the amount of funding they received rose by 669 percent.”

2020 was always likely to have a skew effect on the numbers.  Funding to universities dropped from 17 percent of total funding, to 7 percent ($107.6m), which was shared among 266 universities, 51 of which were non-US institutions in 14 countries. This, I think, shouldn’t come as a surprise as philanthropists shifted their funding to more health or socially-related programmes of activity. But I don’t think we should be deterred.

While the pandemic presents a significant dislocation, as the world begins to take steps to recover from the impact of Covid-19, support for higher education is likely to return and, in my view, the trajectory that emerged in the three preceding years will very probably resume. It is the particular character of international high net worth wealth on the West Coast and, in particular, Silicon Valley which will probably inform SVCF funding for many years to come. Moreover, as the Milken Institute has set out, the appetite for greater social impact among these new generation of international philanthropists, is likely to have a greater influence on who benefits from their giving and where.

So, where does the past six years of Silicon Valley Community Foundation university funding go and what does it tell us?

Well, arguably, it holds up to the Milken view that philanthropy is changing and that SVCF philanthropists, at least, aren’t always giving to the already well-endowed and well-established Ivy League institutions.

Perhaps it should come as no surprise that a Californian university – and one in Silicon Valley – is the biggest beneficiary of the Foundation’s philanthropy. What is surprising is that the institution to receive the most SVCF funding is not nearby Stanford or Berkeley, rather the small and much lower profile Santa Clara University.

A private Jesuit university, Santa Clara has the distinction of being California’s oldest seat of higher education, established in 1851. With a student population of around 5,000, it is small. But what it lacks in size, it has made up amply by its ability to dramatically grow its funding

In 2015, the University received $810k in funding from the Foundation, well behind Stanford, Oxford, NYU and Berkeley. By 2019 it had stewarded the relationship to donations topping $26.6m. Between 2015-20, it has received $96.9m in SVCF funding making it the single biggest beneficiary of the Foundation's philanthropy.

The top five non-US university beneficiaries between 2015-20 are:

The top five non-US beneficiaries in 2020 were:

Overall funding to international universities dropped by 43% between 2019 and 2020, with Asian universities most affected. Curiously, European universities saw an increase in funding in 2020 receiving nearly $12m (2019: $10m).

So, what characterizes these institutions. Well, Oxford can be reasonably described as “elite” but is Haifa University elite? I don’t think elitism characterizes Silicon Valley university philanthropy per se. Take a look at the top five institutions in 2015:

“European universities saw an increase in Silicon Valley Community Foundation funding in 2020 receiving nearly $12m (2019: $10m).”

But what I think is a reasonable assumption is that those universities that have benefitted from the Foundation’s funding have resources, indeed, like OxBridge may be very well-resourced, but all have them are likely to have invested some time and energy to building relationships with it and its associated donors.

Aside from the fact that opportunities exist, and universities should step up resourcing to benefit from those opportunities, the important take-away in all this is that philanthropy is changing. And there are some very important centres and vehicles that are at the helm of that change, and which are influencing the direction of philanthropy. Silicon Valley Community Foundation is one of them. And if it is reporting a pattern of increased internationalization in its university philanthropy, others will – in time – follow.  

 
Andrew WigleySilicon Valley, Silicon Valley Community Foundation, Mark Zuckerberg, Sergey Brin, Jack Dorsey, Technology, Next generation, Philanthropy, Philanthropists, California, Santa Clara University, university