Many of these Internet pioneers were Bay Area newcomers without ties to local non-profits; they were also working for new companies that had yet to establish the traditions of charitable activity seen in the East. For people in their 20’s or 30’s, often with first-generation wealth, the world of philanthropy was unfamiliar.
Laura Arrillaga-Andreessen a well-placed West Coaster (she is the wife of Netscape founder and Facebook board member Marc Andreessen) came up with a strategy to get young tech moguls started. In 1998, Arrillaga-Andreessen, who founded the Silicon Valley Social Venture Fund, or SV2. The group embraces an approach dubbed “venture philanthropy.’’ Just as venture capital firms nurture tech startups, SV2 looks for promising non-profits with proven methods that are ready to scale up and expand their impact.
In keeping with the collaborative spirit of tech start-ups, SV2 invites donors to pool their contributions and decide together which causes to support. The group also encourages non-profits to share tactics with each other — even their competitors for grants, says SV2 board vice chair Nancy Heinen, formerly general counsel at Apple, Inc . “It’s totally Web 2.0,’’ Heinen says.
In addition to funding, SV2 donors provide non-profits with expertise in areas such as business management, law, and marketing, said Lindsay Louie, SV2‘s executive director. That hands-on engagement often spurs donors to make private contributions that exceed the donors’ annual commitments to SV2’s pool of funds.
SV2 gives out about $500,000 a year, but in 2011 members gave an additional $850,000 to non-profits that applied for funds. “It creates a ripple effect across the donor community,’’ says Louie.
Like Silicon Valley itself, SV2 is an interlocking network of networks. Members find promising non-profits through their own contacts, while SV2 taps its network of fellow grant-makers to find partners in bigger funding projects.
Kathleen McCarthy, director of the Center on Philanthropy and Civil Society at The City University of New York, said the hedge and tech tribes are both adapting time-honored philanthropic practices. But Silicon Valley’s innovation, she says, is slowly effecting a sea change.
Funders like The Omidyar Network are blurring the lines between non-profits and for-profits, investing in businesses that can yield public benefits. Omidyar, started by eBay’s founder and his wife Pam, invests in mobile technology companies to expand communication and markets in underserved nations such as Zambia.
McCarthy said Silicon Valley’s use of technology is stretching the boundaries of charitable giving. This can be as simple as sharing of photos from disaster areas taken with mobile phone cameras by relief workers. “It’s enabling people to re-imagine what we mean by community,’’ McCarthy said.
It’s inevitable, perhaps, that the techs’ bent for upsetting expectations will lead to some surprises. Facebook founder Mark Zuckerberg’s first major donation, of $100 million, was not only given to a traditional cause — Newark, N.J.’s public schools — but in the hedgies’ backyard.
As the two donor pools find success, they are smart enough to watch what the other is doing. Both Robin Hood and SV2 have been instrumental in helping small non-profits to become multi-state organizations, guiding them up the ladder of larger and larger grant-making institutions, increasing the scale of their funding. Robin Hood donors, like SV2 members, contribute their professional expertise to grantees, and both groups invite donors’ children to get involved in their projects.
“We’re all learning from each other,’’ says Robin Hood’s Saltzman.