Are high-tech millionaires giving back?
It's widely known that Microsoft's Bill Gates's charitable urges surpass the billion-dollar mark. But the richest man in the world isn't the only one with cash to spare.
Thanks to the technology-driven economy, lots of people--not just company founders and venture capitalists--continue to reap riches through ".com" IPOs, golden stock options, and skyrocketing salaries and bonuses. The question now is whether the silicon-inspired nouveau riche are willing to give back.
Because times are prosperous, new nonprofit organizations, online charity malls, and "venture philanthropy" firms are aiming to tap the do-gooder mentality of the newly rich. Some hope to educate people about how to benefit from giving away portions of their wealth, while others are backing community-oriented companies that reserve a portion of their earnings for nonprofits.
"On one hand, we're trying to show them the emotional and societal rewards, but at the same time we're trying to show them in the language of dollars and cents that budgeting charitable giving can be extremely practical and scientific," said Tim Stone, executive vice president of the Newtithing Group, a philanthropic research organization founded in 1998.
In Silicon Valley alone, tax filers earning adjusted gross income of $100,000 or more can comfortably afford to give an additional $2 billion to charity this year, according to the Newtithing's most conservative estimate. Another widely published report by the group, Affordable Donations 1999, estimated that on the whole, U.S. tax filers could donate an extra $242 billion annually.
Newtithing is just one of many organizations popping up to encourage charitable giving by those who are cashing in on the high-tech boom. The group was founded by Claude Rosenberg, a successful investor who wrote the best-selling book Wealthy and Wise: How You And America Can Get The Most Out of Your Giving, which teaches individuals a formula for giving the most they can. Later this year Newtithing will offer a free online calculator that offers similar advice.
"Giving has always been a part of my thinking whether I've had a lot of money or not, but it's been difficult for people who've made great wealth and don't know how to give or how to give well," said Donna Dubinsky, who founded the handheld computer companies Palm Computing and Handspring.
Concerned that young women weren't interested in technology, Dubinsky decided to support the Girls' Middle School in Mountain View, California, by funding scholarships and picking up the tab for a van to transport recipients to the school.
"I thought that it was a great school, but that only rich girls would get to benefit," she added. "My donations are supporting diversity. It's just important to find something that is important to you."
The Net is not only fueling the cash flow for digital economy workers, but it's also becoming the primary platform for bolstering altruism through e-commerce sites and other online tools.
"This demographic is socially aware and socially conscious and is interested in giving back--but they don't say, 'Let me write you a check and we're done.' They want to get involved," said Eve Helfman, who is getting ready to launch Envolved.com.
The Working Assets method
Helfman's Web site will be a clearinghouse for finding information about charities. The site will help people track their investments in nonprofits and get involved in unique ways. Helfman will target individual donors and plans to make money by getting a commission from participating nonprofits.
She hopes to latch on to a model made popular by Working Assets Working Assets, which donates a portion of its profits from long distance telephone and credit card services to charity. Working Assets also is taking to the Net to raise money for its customers' favorite causes. Last year it raised more than $3 million for nonprofits.
Working Assets has successfully banked on the idea that financially healthy people--and even those with only a bit to give--would like to spend their money with companies that support their communities and other causes.
The company set up ShopForChange this year, which is an online mall made up of 60 retailers that give 5 percent of every sale to charity. Also targeting socially minded shoppers as part of the growing charity mall trend are CharityWeb, 4charity.com, and others.
Next week Working Assets will launch Give4Change.com, a site that allows people to give donations to several hundred nonprofits. Working Assets will spend $1 million to match donations.
"As people have more resources they are looking for other opportunities to give back," said Larry Litvak, Working Assets vice president for Net services. "Our approach creates a community of involvement because customers get to nominate groups for funding and to vote as to how money is allocated."
Venture capital's role
Venture capital funding also is spurring high-tech companies and their employees to donate money and volunteer. Practicing what's known as "venture philanthropy," firms often back nonprofit organizations through capital they make off tech-related start-ups.
One prominent example is the Entrepreneurs' Foundation (EF) in Menlo Park, California.
Founded last year by Gib Myers, a general partner of venture capital firm the Mayfield Fund, the foundation plans to jump-start high-tech firms, generating $100 million in stock appreciation to invest in 15 community ventures or "social entrepreneurs."
Moreover, EF hopes to build a base of about 10,000 employees from participating firms to get involved in community projects, from painting senior citizens' homes to participating in trash cleanup days.
EF is close to making its first investment in a nonprofit, according to executive director Patty Burness.
"The biggest challenge for people is they don't know where to put their money or time," Burness said. "So if we can educate individuals and companies as to what is out in the community and who these entrepreneurs are, they will know where they want to put their resources."
And giving to communities is just as good for a company's bottom line as it is for the soul.
Citing a survey by marketing strategies firm Hill & Knowlton, Burness said that "consumers are more apt to do business with companies that volunteer time than [those that] give a large sum of money."
"For us that is a great reinforcement for what we are doing," Burness added.