Peer-Pressure Philanthropy

when Ralph C. Wilson, the businessman who founded the Buffalo Bills football team in the fifties, died last year at the age of ninety-five, he left behind the tiny, little-known Ralph C. Wilson Foundation. It’s hard to learn much about the foundation—a Google search doesn’t turn up a Web site—which might be partly because it didn’t do much: its assets, as of 2013, were under two million dollars, according to public records. While he was alive, Wilson had dabbled in philanthropy, giving money to medical institutions and others, but none of his public contributions had been particularly large. When he died, though, he left instructions for the Bills to be sold and for most of the proceeds, about a billion dollars, to go to his foundation. With that contribution, he became the second most generous philanthropist of last year, according to the Chronicle of Philanthropy, which, on Sunday, published its annual list of the fifty most generous donors in the United States. It was the first time Wilson had made the list at all. That sort of narrative isn’t unusual. Rich people of years past have often held on to most of their fortunes while alive, contributing it to charity only after death. Others, like the number-three donor, Ted Stanley, whose fortune comes from a collectibles company he founded, have waited until later in life before starting to make big gifts. The top philanthropist of the year was Bill Gates, who is fifty-nine years old; along with his wife, he gave $1.5 billion to the Bill and Melinda Gates Foundation. But other names at the top of this year’s list look different. The fourth, fifth, and sixth most-generous philanthropists were Jan Koum, a co-founder of WhatsApp, who is thirty-eight; Sean Parker, the investor, who is thirty-five; and Nicholas Woodman, the founder of GoPro, who is thirty-nine, along with his wife, Jill. Combined, the fifty top philanthropists gave nearly ten billion dollars; twelve of the people or couples were aged fifty or younger. I recently spoke with Maria Di Mento, who helped compile the report, and she told me she believes this is the first time there have been so many young people on the annual list, which the Chronicle has been publishing for fifteen years. (She and her colleagues haven’t consistently tracked the ages of donors, so she couldn’t give historical figures.) The main reason for this, as far as Di Mento can tell, is straightforward: “People are making gobs of wealth earlier.” Last year, Facebook acquired WhatsApp for twenty-two billion dollars; Koum now has a net worth of about seven billion dollars. GoPro went public last year and, at one point, more than tripled its initial stock price; Woodman, the founder, is worth more than two billion dollars. In the past, the most affluent people often accumulated their wealth over many decades. Last year, a number of people did so in the span of a couple of hours of trading. People like Marc Benioff, who is fifty, also might have something to do with the surge in giving. Benioff, the founder and C.E.O. of the software company Salesforce.com and a generous philanthropist, seems to subscribe to a peer-pressure model of charity. He talks openly about his own giving, showers praise on friends of his who contribute, and disapproves of those who do not. Last year, he and his wife, Lynne, contributed a hundred and fifty-four million dollars last year to the University of California, San Francisco, in part to help establish a new children’s hospital campus, placing the couple at number fourteen on the list, and Benioff has aggressively courted his friends to make similar donations. Last year, he and the Salesforce.com Foundation launched an initiative called SF Gives to persuade Silicon Valley companies to contribute to poverty-fighting programs in the Bay Area. I spoke with him on Thursday—he and Lynne were on their way to visit the hospital—and he spent most of the conversation rattling off the names of several other Silicon Valley philanthropists who he felt should get credit for their good works. Not only did he mention people who have given marquee donations but he also singled out others who have made smaller, less-noticed contributions to U.C.S.F. and other charities. “I was just talking to a friend of mine, and I said, ‘You know, it’s become a cool thing to give money,’” he said. “Now it’s like, if you’re not giving money to the schools, to the hospitals, to the homeless programs, to the vets, you’re not doing your job.” Di Mento said that philanthropists of the past were often reluctant to disclose what they were giving, because they were protective of their privacy or worried that they would seem to be gloating. In Silicon Valley—home to many of the young donors—where many of the wealthiest people post daily, public updates on Twitter and Facebook about their private lives that may be less the case. Along with the rise in wealth and the public focus on giving, though, there seems to be a third explanation for the rise in charitable contributions by young people, which is far more controversial. As I’ve written in the past, in recent years, there has been a sharp rise in contributions to what are known as donor-advised funds, or D.A.F.s—special funds that are managed by foundations on behalf of donors. People can put as much money as they like into these funds and reap the tax benefits of having made a charitable gift. Donors can then take their time to choose what to have the foundation do with those funds, with no obligation to make a decision within a particular time period; in the meantime, the foundation manages the money and can offer advice about what to do with it. (Each year, foundations must pay out at least five per cent of the assets they manage, but no such rule exists for donor-advised funds.) Contributions last year by Koum and Woodman, for instance, took the form of donations to the Silicon Valley Community Foundation, which created donor-advised funds on their behalf. And part of Parker’s contribution was to a donor-advised fund run in his name by the Fidelity Charitable Gift Fund. There are good reasons for people to use donor-advised funds. “In the case of Koum and Woodman, those were two real big windfalls, and they’re young,” Di Mento, of the Chronicle, said. “I would bet that they knew that, at some point in their lives, they would want to give away a lot of money to charity, so putting it into a community-foundation D.A.F. can be really good for a couple of reasons. One, it’s someplace safe to put it, while you’re figuring out where you want to give, how you want to give. It can earn some interest. And you have well-informed people to help you if you need it—people who understand the nonprofit and philanthropy world.” She added: “If you have a ton of money and you know you want to give it to philanthropy over time, but you don’t know where and when, this is a really good way to do it.” But, to critics, this can amount to reaping the benefits of charitable giving without putting the money to good use. “People have given their money away, they’ve gotten their tax deduction, but it hasn’t really gone to a philanthropic source,” Benioff told me. “There’s nothing wrong with the Silicon Valley Community Foundation or Charles Schwab or Fidelity or Vanguard”—there are Charles Schwab and Vanguard charities that offer donor-advised funds, too—“but saying they’ve given charitably to a D.A.F. is not giving money away,” he said. In an interview last April with San Francisco magazine, referring to a big contribution by Mark Zuckerberg, the thirty-year-old head of Facebook, and his wife, Priscilla Chan, to a D.A.F. with the Silicon Valley Community Foundation, Benioff was even more pointed: “Where’s it gone? What good is it doing now? I’m sure his intentions are positive, but we need to see that money get distributed.”

 

But, to critics, this can amount to reaping the benefits of charitable giving without putting the money to good use. “People have given their money away, they’ve gotten their tax deduction, but it hasn’t really gone to a philanthropic source,” Benioff told me. “There’s nothing wrong with the Silicon Valley Community Foundation or Charles Schwab or Fidelity or Vanguard”—there are Charles Schwab and Vanguard charities that offer donor-advised funds, too—“but saying they’ve given charitably to a D.A.F. is not giving money away,” he said. In an interview last April with San Francisco magazine, referring to a big contribution by Mark Zuckerberg, the thirty-year-old head of Facebook, and his wife, Priscilla Chan, to a D.A.F. with the Silicon Valley Community Foundation, Benioff was even more pointed: “Where’s it gone? What good is it doing now? I’m sure his intentions are positive, but we need to see that money get distributed.” In the case of Zuckerberg and Chan, the money does seem to be getting distributed—which, if the peer-pressure theory holds true, could set a good precedent. The month after Benioff’s interview was published, Zuckerberg and Chan pledged, through their D.A.F., a hundred and twenty million dollars to schools in the Bay Area. And, as it happened, on Friday, a day after I spoke with Benioff, Zuckerberg and Chan announced a seventy-five-million-dollar gift, also through their D.A.F., to San Francisco General Hospital and Trauma Center; the hospital will be renamed Priscilla and Mark Zuckerberg San Francisco General Hospital and Trauma Center. Afterward, Benioff emailed me a link to an article about the donation. “Pretty cool,” he wrote, with a smiley-face emoticon.

Zuckerberg and his wife Priscilla Chan are giving a $75 million to the hospital foundation. That's the largest single private gift ever to a public hospital in the United States. San Francisco General is the city's largest health provider for people who can't afford insurance. The grant will help the hospital complete its new acute care and trauma center with state-of-the-art technology.

http://www.empowernetwork.com/braintrick?id=9737076