By David Callahan. Originally published on Inside Philanthropy.
The rising philanthropy of the U.S. tech sector has come in waves.
In the first wave, the big winners from the early boom in computer hardware and software shifted billions of dollars into major foundations, creating the Hewlett, Packard, Moore and Gates foundations—all of which emerged as new powerhouses in American philanthropy around the end of the 20th century with global and national agendas. Other tech leaders who began ambitious giving in this first wave include Steve Case, Michael Dell, Pierre Omidyar, Jeff Skoll and Tim Gill.
In the second wave of tech philanthropy, starting around 2010, a new crop of tech leaders began to embrace giving. Philanthropists who emerged in this wave—or dramatically stepped things up—include Mark Zuckerberg, Marc Benioff, Sean Parker, Dustin Moskovitz, Sergey Brin and Larry Page.
Now, it feels like a third wave of tech philanthropy is underway. This one is less about high-profile billionaires turning to giving and more about the rapid spread of philanthropy norms through the world of tech startups and early stage companies. It’s about a culture of giving emerging throughout the younger provinces of the tech sector, with millennial entrepreneurs breaking down the divisions between business and philanthropy. It’s also far more local, with techies looking for ways to make a difference in their own communities.
While people like Bill Gates and Gordon Moore exemplified yesterday’s approach to tech giving—first, you make your pile over decades, then you give it away with plans to eliminate polio or save the Amazon—many younger tech leaders are looking to integrate philanthropy into their businesses early on, even before their companies go public. And quite a few are more likely to be interested in, say, helping a neighborhood tutoring effort than combating climate change.
Marc Benioff, the founder of Salesforce, has been the leading figure preaching this approach in the tech world in recent years. When Benioff founded his company in 1999, he pledged to give away 1 percent of equity, 1 percent of product, and 1 percent of employee time. Benioff’s mantra is that “the business of business is to improve the state of the world.” And through the Salesforce Foundation, which was founded in 2000, his company has successfully executed the 1+1+1 model, channeling nearly $130 million in grants to nonprofits, as well as millions of dollars of software and over one million hours of employee volunteer time. Quite a bit of that largesse has been focused in San Francisco, where Salesforce has its global headquarters and is closely involved in helping the local public school district, and where Benioff has personally given over $200 million to build hospitals, as well as rallying tech leaders in the region behind new anti-poverty efforts.
Suzanne DiBianca was the first president of the Salesforce Foundation, and is now Salesforce’s chief philanthropy officer and executive vice president for community relations. In a recent interview, she said that she and Benioff were keen from the start to spread the 1+1+1 model throughout the tech community. The biggest early convert was Google. The co-founders Brin and Page pledged 1 percent of Google’s equity before its 2004 IPO—a move that resulted in some $1 billion set aside for philanthropy after the company went public.
A few years later, in 2008, DiBianca and a colleague from Google developed a campaign to get more pre-IPO tech startups to pledge 1 percent of equity, product and time. That first effort fizzled, but got back on track in 2013, with the help of two tech companies that had quietly embraced the 1 percent model. One was Atlassian, a cloud-based software firm based in Australia; the other was the Boulder-based Rally Software, which also made cloud-based software and went public in April 2013.
Rally was part of a group of four tech companies that had come together in 2007 to create the Entrepreneur’s Foundation of Colorado, which worked to get companies in that state’s thriving tech sector to pledge a portion of equity for charity or annual earnings for charity, pre-IPO. Over ensuing years, a number of Colorado startups joined this effort.
DiBianca recalls that around 2013—as a new tech scene surged and more companies went public—Salesforce started getting a “deluge” of requests from tech leaders interested in the 1+1+1 model. “Something shifted,” she said regarding the new momentum. “It became more acceptable to leverage your company for social change.”
One factor at work, here, surely, was the rising salience of philanthropy in the tech world, as Zuckerberg and other second-wave donors stepped forward. As well, DiBianca says the “new paradigm” of responsible business, embodied in the 1+1+1 model, meshed naturally with the worldview of millennials coming up in the tech world: These folks were far less likely than earlier generations to put business and social change into separate compartments.
In 2014, Salesforce, Atlassian and Rally launched Pledge 1 Percent as a global campaign to get young tech companies to commit to the 1+1+1 model. DiBianca saw it as a “grand experiment” and wasn’t sure what would happen. But the effort exploded, with five hundred tech companies joining the pledge in the first year. That number now stands at over 1500. Of these, around 70 percent have pledged equity and half have pledged the full trifecta of equity, product and time.
Pledge 1 Percent was originally housed at the Entrepreneur’s Foundation of Colorado, and since then, has moved to Tides in San Francisco. Three staff now coordinate the work. (EFOC has rebranded itself as Pledge 1 Percent Colorado.)
In another sign of the momentum in tech philanthropy, a few new local efforts have sprung up to get tech startups focused on giving. Last fall, Pledge 1 Percent Boston launched under the auspices of the Boston Foundation, which is incubating the effort. Tim Smith got this going after moving back to Boston from the Bay Area, where he had been director of the Full Circle Fund, a network of professionals engaged in giving and social change. In that job, he had collaborated with Salesforce and Suzanne DiBianca, and closely followed the Pledge 1 Percent effort.
Smith sees the Boston pledge as a critical next step in knitting tech firms into the nonprofit sector, by making local connections that are needed to develop these ties on a day-to-day basis. “There was a gap,” he said. “The gap was to make this more than a global movement and connect to local causes.” Pledge 1 Percent Boston, he said, is “really about connecting people at successful tech companies with what’s going on locally.” He says that the Boston Foundation is a strong platform for this work because it’s involved in so many causes throughout the city. It also has the capacity to handle the actual giving by tech firms, offering a cheaper alternative to creating a company foundation.
Since Pledge 1 Percent Boston launched in October, 30 local tech companies have joined. “There’s been a ton of interest,” Smith said. Even some VC firms are getting involved. The group’s initial programming is focused on helping tech leaders leverage their skills to bolster nonprofits by sitting on boards and such, while also helping them learn about social problems in the city like homelessness. Pledge 1 Percent Boston will be launching a drive later this year with the hope of doubling or tripling its membership.
Meanwhile, earlier in 2016, Pledge 1 Percent launched in the U.K., with 25 tech firms joining right off the bat. Pledge 1 Percent has also made some inroads in New York City’s tech scene, although there is not yet an official local campaign that’s recruiting companies in the city to join.
Most recently, an effort by the Annenberg Foundation to galvanize tech engagement in Los Angeles launched just this week. The initiative, dubbed AnnenbergTech, comes amid the explosive growth of L.A.’s tech scene, which is mostly clustered on the city’s west side, on “Silicon Beach.” As these companies have matured, most notably with Snap now preparing to go public in a multi-billion-dollar IPO, interest in philanthropy has also been growing.
Last month, we reported on the decision by Snap’s co-founders, Evan Spiegel and Bobby Murphy, to donate 13 million Class A shares of Snap stock to the company’s foundation over the next 15 to 20 years. With Snap’s last private valuation at $25 billion, it could mean that hundreds of millions of dollars will flow into philanthropy in coming years.
Snap is part of the new Annenberg initiative, which grew out of a series of meetings with L.A. tech leaders who expressed interest in connecting to local nonprofits but needed help finding their way around. As well, in the last year, the Annenberg Foundation conducted a survey of nonprofits in L.A., finding that many of them wanted to make better use of technology to advance social change, but struggled to do so, facing challenges around capacity and know-how.
AnnenbergTech aims to connect some important dots here, linking together L.A.’s tech scene with the city’s nonprofit sector. It could also be a place to nurture some major new givers among a local tech elite that’s gotten much richer lately (both of Snap’s co-founders are billionaires). Wallis Annenberg, who leads the foundation, said, “The leaders of these companies today are our philanthropists of tomorrow, and we hope AnnenbergTech can serve as a hub for this next generation to convene and create new models of civic leadership that will lift up and inspire all Angelenos.”
The new initiative has a few moving parts, including leadership events and also capacity building to help nonprofits with their technology needs. If it succeeds, it could fuel a Southern California philanthropy scene that’s been surging lately, as we’ve reported.
So where does this burgeoning tech philanthropy movement go next? More local efforts like the ones in Colorado, Boston and L.A. seem likely—spreading to Seattle, Austin and elsewhere, as well as globally.
Suzanne DiBianca sees this kind of localization as all-important, since it creates ownership and is needed to forge ties with nonprofits in communities. But she is also hoping that new efforts will embrace the Pledge 1 Percent idea, saying “you need a brand to build a movement.” She adds: “You’re so much more powerful when you’re part of a movement.” Tim Smith suggests that offering local groups hands-on advice and support is critical to scaling tech philanthropy communities in more places, and hopes that Pledge 1 Percent at Tides could play that role, perhaps with a franchise-type approach.
However things unfold, it does feel like the tech world has turned a real corner lately in terms of waking up to its need to engage in local communities and use its resources—both financial and technical—to solve pressing social problems.
This awakening could hardly come soon enough, since concern has been rising in many places, starting with the Bay Area, that the wealth of the tech community is driving inequality upward and that the sector’s highly educated knowledge workers are pulling away from their fellow citizens. How to close this rising divide is a longer conversation. But one part of the solution, certainly, is for tech leaders to roll up their sleeves and open their checkbooks to really start helping their neighbors in need.