Silicon Scrooges

It's the day before Thanksgiving on the east side of the richest area in the world. A line of families snake through a church parking lot waiting with glum, resigned faces for paper bags containing turkeys, canned cranberry sauce, generic sandwich cookies and other holiday foods. Seventy-two-year-old Gwen Peters, the tiny, bustling woman in charge of San Jose Neighbors That Care, is relieved that a last-minute shipment from the Second Harvest Food Bank means no one will have to leave without a bird for tomorrow's dinner.All the same, for Peters, like those heading many grassroots San Jose, California nonprofits, the famed prosperity in the area hasn't made their jobs any easier. Somehow, Silicon Valley's boomtown riches haven't filtered down to Peters' all-volunteer charity, even as skyrocketing rents have made people increasingly desperate for her services. Donations are down 20 percent, she says. This year, San Jose Neighbors That Care took in a mere $50,000 compared to $70,000 in 1998. Peters and the charity's other volunteers stretched it to distribute food to 17,000 people, buy new coats for 500 kids and new shoes for 765.Peters herself is raising a 4-year-old girl, Veronica, whose mother gave birth while serving a prison sentence and is still unable to care for her, and Peters is hoping to establish a trust fund to provide for Veronica's future. But even Peters' commitment is no match for the ever-growing needs of the poor in the most economically stratified region in the country. While nonprofits are certainly receiving more high-tech money than they used to get, they're definitely not getting enough to deal with all the fallout from the new economy.Giving Back the Silicon Valley WayIn the past few years, a number of reports and articles have attempted to topple Silicon Valley's long-held reputation for stinginess. A pre-holiday November 1998 report on philanthropy in the valley by the Silicon Valley Community Foundation happily concluded that Silicon Valley residents give as much or more to charity as those in other parts of the country and that corporate giving is actually on the rise. "Those who contribute to charity in Silicon Valley give an average of 2.1 percent of their incomes compared to 2.2 percent nationally, a statistically insignificant difference," said the report, "Giving Back the Silicon Valley Way." "There is also no significant difference from the national averages at any income level." When the tech titans bailed out the United Way last year, many declared that Silicon Valley had finally gotten a conscience.But behind this good news is the troubling reality of local nonprofits struggling to take care of the increasing numbers of people left behind by the area's radical growth. And Silicon Valley tycoons are not quite as generous as the report initially suggests. In its final analysis, the report concedes that corporate giving simply hasn't kept pace with astronomical increases in corporate profits. As Kristen Philipkoski reported in Wired News, only two Silicon Valley companies -- Intel and Hewlett-Packard -- were included on Worth magazine's recent list of the top 50 corporate donors. No Silicon Valley company made American Benefactor's 1998 list of "America's 25 Most Generous Companies." Additionally, corporate employee service on nonprofit boards fell 13 percent between 1994 and 1997, and some charities report that in the context of boom-time 12-hour workdays, they now have to struggle to find people who can sit on their boards. Nor are rich individuals picking up the corporate slack -- according to the Community Foundation report, one-third of households that earn more than $100,000 a year give $1,000 or less each year to charity, and 45 percent of the area's richest donors give only $2,000 or less annually.Meanwhile, as rents have skyrocketed, the demand on homeless shelters and food banks has increased significantly. "The impact of the valley's transformation into a breeding ground for dotcom millionaires has been severe on the working classes," says Maury Kendall, communications manager for the Emergency Housing Consortium, the area's largest shelter operator. EHC shelters are seeing more families than ever before, he says, and it can't meet the need. Between six and 10 families have to be turned away each week, and there are 125 families on the waiting list for one temporary housing program that has just 10 places. Some people in Silicon Valley are even going hungry. "The food banks are seeing people more times a month," says George Manalo-LeClaire, senior policy analyst at California Food Policy Advocates. Many families spend their entire income on rent and "food stamps last two weeks at the most … so they're relying on food banks, and the food banks just can't provide," he says. According to Second Harvest, the area's largest food bank, the average family seeking emergency food spends nearly 70 percent of their income on housing.Trickle-Down TrickeryIf the richest area in the world is reasonably generous, how can that be? One answer is that while a lot of money -- $49 million in 1997, according to the Community Foundation -- is being given away in San Jose, changing patterns of foundation giving and entrenched entrepreneurial values sometimes prevent the money from reaching the people who need it most. In a Dec. 12 front-page story headlined "Prosperity Yields a Lag in Charity Towards the Poor," New York Times reporter Peter T. Kilborn wrote that while overall donations are up 11 percent nationally since last year, about 90 percent of the money goes to "religious organizations, some of which operate services for the poor, and to other organizations that cater mostly to the rich and the middle class like the opera, ballet, museums and universities." Kilborn reported that according to Giving USA, an organization that tracks philanthropy, contributions to traditional human services charities represented just 9.2 percent of all giving last year, down from 13.9 percent in 1970.Tech millionaires that get involved in philanthropy tend to focus their money on education and job-training programs rather than old-fashioned charity. The buzzword is "venture philanthropy," a form of giving that's modeled on venture capitalism. "The culture in this valley is one of results. I think people have high expectations and high standards," says Carol Welsh Gray, director of the Center for Venture Philanthropy in San Jose. "They want to know what the return on their investment is. They expect accountability for the results process the same way they would in their work."The first effort of the Center for Venture Philanthropy, for example, is the Assets for All Alliance, which Gray describes as a "five-year plan to invest in low-income families and help them develop the goals of college education, starting or managing a business, starting a retirement fund or buying a home." Enrollees attend money management classes and are required to deposit a certain amount in a savings account every month. The program provides double matching funds. "If Jose puts away $20, $40 goes into a parallel account that goes toward their goal, up to a maximum of $6,000," Gray explains. If Jose misses too many payments, though, he's dropped from the program and the money in the parallel account goes back into the program.This philosophy helps explain why charities that serve people with little prospect for social advancement aren't benefiting from Silicon Valley's economic windfall. Wanda Alexander, the executive director of Act for Mental Health, an organization that serves developmentally disabled and mentally ill adults, says that hardly any of the area's riches have trickled down to her group. "The problem I see with the money giving is that, while Hewlett-Packard has been wonderful, many companies are very restrictive for what they will give money for. They want to give money for things like education and training, which is understandable in a way. Our problem is that the population we serve … they can work to a limited extent, but not to the high productivity pace that the valley requires. We find it difficult to get understanding from mega-corporations that this population needs a way to feel more human."Like most of the people involved in the nonprofit sector, Alexander doesn't think that people in Silicon Valley are callous or stingy -- it's just that the area's hyperkinetic work culture leaves little room for values that run counter to pure capitalism. "Volunteering is down for us," she says. "It's hard to find people who have time to be board members or to work for an agency or the community. It's very tough, because the pace of the valley is so intense that people in the Silicon Valley industries don't have time to think about their own family relationships, so how are they going to think about someone in another income strata?"The Cuteness FactorMark Osaki, director of development at Second Harvest, confirms Alexander's analysis of the trends plaguing small nonprofits. "A lot of foundations are now focusing strictly or primarily on children's needs or education," he says. "Before, a lot of your local charities could always depend on something from a foundation. Nowadays, partly because boards of directors for foundations are trying to increase their impact, foundations are concentrating on two or three areas, and if you don't fall within those criteria you're out of luck."While giving is up, says Osaki, money is needed tremendously by agencies that serve people with mental disabilities and that type of funding is very difficult to find. This is where the philosophy of venture philanthropy becomes a problem. Paulina Borsook, a former Wired contributing editor and the author of the upcoming book "Cyberselfish: How the Digital Elite Is Undermining Our Society, Culture, and Values," believes that part of the problem is that the values of business and engineering culture often clash with those of the social service sector. "I wouldn't rate MBAs and geeks as high in empathic imagination. They don't have an understanding of how someone could be in need or socially vulnerable," she says."The social investment stuff -- on the one hand it's great because it says, 'Let's look at programs that work.' But there's this MBA free-market mentality and engineer we-can-tweak-it mentality which leads to the fantasy that all problems are fixable. If you just throw a copy of Photoshop at a fifth-grader, it will solve all her problems."Borsook points out one of the biggest problems with philanthropy in the valley is the let-them-eat-microchips idea that computers can solve all the ills of the poor. According to Peter Hero, president of the Community Foundation of Silicon Valley, 48 percent of local corporate giving is in the form of product. What that means is that much of the lauded charitable increases of the last few years stem from companies giving away their old computers, many of them to schools. The most cynical explanation for companies' propensity to donate product is that they're reaping big tax breaks while developing a new generation of loyal customers. Borsook has a more generous interpretation -- she calls it the cat/dead-rat syndrome. "If a cat really loves you, it will give you a dead rat whether you want it or not," she says. "In the same way, geeks will say, 'Let's throw computers at problems -- this is what we love, how can you not love it too?' "Throwing Computers at the ProblemBut there are plenty of reasons for nonprofits not to love computers. Despite the promise of opportunity, their clients have found that breaking into the technology sector often isn't enough to get out of poverty. In this brutal housing market, many of the homeless are already gainfully employed, while others are facing obstacles far too great to be surmounted by HTML. "Easily" 40 percent of the people who use the Emergency Housing Consortium already have jobs, Kendall says. "Far too many of them are working what in any other area would be jobs that would create enough income to support housing and a family. You can easily have good computer skills and still be homeless -- we have lots of proof of that here."For example, Tracey Lovett, 34, has been living at an EHC shelter with her 4-year-old son for almost three months, despite the fact that she's been working full time for the past month in accounts payable at QuadraMed, a Silicon Valley company that specializes in software and consulting for the healthcare industry. A smiling, extremely articulate woman in a neat brown turtleneck, she knows Microsoft Word, Excel and Oracle and earns $11.50 an hour plus benefits, easily enough to get out of homelessness in most cities. But she and her boyfriend, who earns $13 an hour at the San Jose Medical Center, haven't been able to find anywhere to live."We've been filling out so many applications, but my boyfriend has really yucky credit, and landlords want you to earn three times the rent, so we've been getting rejections," Lovett says. "They judge you on your past. We're telling these people we will even pay double the amount of whatever they want for a deposit on top of the rent, because there are programs that, once you find stable housing, will help you with your security deposit. What more can we do?" The cheapest apartments Lovett has seen are $1,000-a-month one-bedrooms "in the worst, most torn-down apartment complexes." Even if she finds a place for around $1,000, she says she'll probably have to rely on food banks to feed herself and her son, at least for a few months.Kendall, of course, doesn't want to dismiss the value of technology-training programs. There are some that work, he says, but only if they have comprehensive job-placement plans that can move people into positions that pay enough to afford the huge deposits and high rents required to live in the area. For example, Kendall lauds Cisco Systems, which is opening a training academy for networking technicians in an Emergency Housing Consortium shelter. Jeff Goodell, author of the forthcoming book "Sunnyvale: The Rise and Fall of a Silicon Valley Family," published an article in Rolling Stone last month about the class divide in Silicon Valley in which he interviewed several workers at high-tech companies who slept in homeless shelters. "There's this engineering hubris that all kinds of problems can be solved on a whiteboard. It's a way of distancing oneself from problems, a way of intellectualizing them. These are really complicated problems. The forces against these people are huge, and they're just not going to be solved by some sort of magic, 'Oh, we'll put a computer in a shelter and everything will be OK.'"In some cases, Goodell says, old computers can cause nonprofits more problems than they solve. "That whole dumping of old computers on people, it's a nightmare, it doesn't work. There are the complications of setting them up and getting them running. It's that whole sort of silly fantasy that all you do is put a computer in a classroom and kids are measurably smarter. It's really simplistic thinking."Emotional RescueComputer skills classes won't do much good for people like Robert, a middle-aged client of Act for Mental Health. Robert worked as a programmer at Stanford until he was laid off in 1991. He claims to have an IQ of 150, and there's little reason to disbelieve him, but he also has physical and mental problems that have made it impossible for him to find work. "I have 20 years' experience computer programming but no wants to hire me," he says angrily.At first, he says that his problem is that he doesn't have the right kind of experience for today's companies. "They usually want three or more years' experience putting up commercial shrink-wrapped products, and all my programming is supportive research and that kind of stuff," he says. Laid off during the recession of the early '90s, Robert says that no one was hiring between 1991 and 1993, and by the time economic recovery set in, "no one was willing to hire someone who'd been unemployed two years."While what Robert says is plausible -- Borsook points to the "ruthless age discrimination" in high tech -- he also has serious emotional problems that neither computers nor training can solve. "There are agencies that are supposed to help people get jobs despite their disabilities, but none of them have been able to help me," he says. "The California Department of Rehabilitation qualified me for their services, but then they said they couldn't help me. They say I'm too disabled, I don't have enough social skills to work in an office environment." They may have been right. During our interview, he announces several times that he's never had a friend in his entire life. He abruptly asks me for a hug and then accuses me of feeling sorry for him. Even with Silicon Valley's low unemployment rate, it's unlikely that Robert will find work any time soon.Right now, what he needs isn't a computer -- he needs cash. He receives a monthly check from the government, but it was cut a few years ago and now it's not enough to pay his rent. He survives on credit cards, signing up for as many as he can and then paying the minimum amount each month. Unless someone intervenes he'll eventually become homeless.People like Robert, who can't easily be integrated into the economy, are precisely the kind of person likely to be overlooked by the new breed of results-oriented Venture Philanthropists. Sometimes, after all, people can't pull themselves up by their bootstraps. They just need to be cared for. Old-fashioned charity may be outmoded, but it did recognize that reality. In Search of the Measurable ResultThat's not to say that Venture Philanthropy-style programs aren't valuable, just that they only work for those who already have some potential for upward mobility. Assets for All, which currently has 53 people enrolled, certainly has the potential to change lives, but only those who have at least a few assets to start with. One danger of Venture Philanthropy is that, if giving is tied to an organization's success rate, charities may be more likely to serve those most likely to succeed. "We could increase our success rate by only concentrating on the clients most likely to have success," Kendall says. "I think that's our challenge, to stay true to our roots and our mission. Maybe some new nonprofits will come along based simply on a business model with fairly rigid standards of capitalistic thought behind them, but they will always be outnumbered by those of us that just want to work for the social good."As ACT shows, though, some charities that just want to work for the social good may be left behind in the new order. "For people in business, I don't think the bottom line includes human values or human quality of life," ACT executive director Alexander says. "The bottom line is money. That's a sickness of our culture, that money's the only value. Even ecological things have to be counted in terms of economic value. I don't think it's going to change. You can be righteous and say they owe humanity something, but not with that value system." As that value system spreads more and more into philanthropy, those who serve the poorest of the poor may find they just can't compete.

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