Are Tech Philanthropists Leaving Out Local?

Photograph: Dominic Lipinski/AFP/Getty Images

Today’s tech companies are global players with an international reach. Generating billions in wealth, it’s not surprising that tech founders would put their philanthropic dollars behind large-scale missions, like completely eradicating a disease or ‘defying death’. 

In this series, we’ve established that the tech sector is the driving force behind modern-day philanthropy. As society continues to grapple with emergencies like climate change, it’s easy to argue that transformative action on major scales is critical. 

At the same time, we must consider community organizations in the push for solving problems at home; are the grassroots groups focusing on local housing, mental health, elder care — being slowly isolated by tech philanthropy?

“200 years ago, people would start great companies and give back to their community,” said Iain Klugman, President & CEO of Communitech, a Waterloo-based innovation hub supporting over 1400 tech companies. “There was a sense of responsibility, a social contract — and that social contract is something that we have been discussing a lot lately.”

What’s Different About Today’s Tech Philanthropist?

Today’s philanthropists look different to the industrialists that came before them. Tech founders’ entrepreneurial spirits can make them ‘completely open to disruptive innovation’. They favour speed, global impact, data-driven solutions, and transparency about how their philanthropic dollars are being used. 

With these characteristics, it’s understandable why some tech founders may have ambitious goals even when giving back; PayPal’s Peter Thiel, Google’s Larry Page, and Oracle’s Larry Ellison put hundreds of millions towards anti-aging research. Elon Musk is donating millions to human space exploration, while Bill Gates has famously pushed the scientific community to eradicate malaria.

The numbers are staggering. In 2014, nearly 25 percent of the money donated by the top 50 US philanthropists came from tech entrepreneurs — a leap of over 30 percent from 2013. That number continues to grow, and as it does, in the next decade, tech philanthropists play an ever-increasing role in deciding which global issues get funded.

One concern flagged by a group of US business consultants is that, even when working towards a solution for the same issue, a lack of collaboration between community organizations and tech philanthropists can be detrimental. For example, by funnelling enormous funds into one specific issue (such as a ‘single school district’), tech philanthropists risk pushing out governments, private investors or grassroots organizations already working in the space, who generally have more issue expertise. Another concern is that some tech philanthropists may also be less likely to back issues that are unlikely to generate a global return on investment.

Silicon Valley is a stark example of this. According to one report, despite its 76,000 millionaires and billionaires, 2.6 million residents face financial difficulty, with 29.5 percent relying on public or private assistance for basic needs. 

While philanthropy is booming in Silicon Valley, a majority of investments don’t go to local causes, and service providers struggle to keep up with the housing demands. In fact, only seven percent of donations go to local non-profits — and less than half of that goes to smaller grassroots organizations.

Tech Philanthropy in Canada

Across Canada, communities are facing complex local issues like the affordable housing crisis, with 800,000 Canadian households spending over 50 percent of their income on rent. Over 4 million Canadians are estimated to be facing food insecurity, and research shows that only 1 in 5 children in need of mental health services receive support. 

Tim Jackson, President and CEO of Shad — a charity offering STEAM and entrepreneurship programs for students — believes that tech companies must step up. “The tech sector has to recognize that they are now a significant piece of the workforce, and therefore have a responsibility to build local community.”

Some tech companies are working towards solving local challenges. Salesforce invested more than $60 million into communities where they’re based, including Canada, the US, and the UK. Last year, Wealthsimple launched their foundation to help one million Canadian children from low-income families save for post-secondary school. 

Gerry Remers, Community Impact Coach at the Kitchener Waterloo Community Foundation, highlighted Michael Litt, CEO of Vidyard, a Waterloo-based tech company. “Gentrification and homelessness are huge issues for [Vidyard]. [They are] creating relationships with local service providers and are engaging very intelligently, looking not just to give financially or volunteer, but to also build capacity.” 

For Vidyard, one of these strategies has been to create non-profit Plugin, a regular series of fundraising events in Kitchener with proceeds going to local charities. By 2018, Vidyard had served more than 1750 meals to the House of Friendship, and generated $15,000 in community donations. 

This kind of community engagement becomes more and more important as charities and non-profits face a shifting landscape. While Canadian donations reached $9 billion in 2015, numbers have plateaued in the last ten years. Moving forward, non-profits must work with these kinds of tech companies. 

Elizabeth Heald, President & CEO of the Kitchener Waterloo Community Foundation (KWCF), remarked on new trends emerging from these collaborations. “We are seeing an increase in methods of interaction that parallel tech experiences,” she said, “Like hackathons or pitch competitions hosted to support local charities with tech solutions or funding to build capacity.”

This capacity-building is key to a non-profit’s success, helping them stay competitive in a demanding local market. “Our experience has shown that these relationships continue to flourish over time as both organizations learn more about one another,” added Heald. 

What We Can Learn From Tech and Community Leaders

Stories like this signal a shift towards community giving within the tech sector, and these modern philanthropists must continue to be strategic with their support. One example of this is the The Upside Foundation, co-founded by Mark Skapinker. “The Foundation asks founders to gift a percentage of their ownership to a charity of their choice, in case they have a liquidity event in the future,” Klugman explained. “Those types of initiatives need to be emulated.”

At the same time, service-providers must also adapt. “Non-profits have to understand how the technology sector works, and recognize that [tech] entrepreneurs tend to be global and results-driven,” said Jackson. “They come at it with an engineering mindset.” Tech founders must generate a return on investment and provide data that proves the validity of their companies to investors. This model of success, driven by measurable statistics, makes tech founders more likely to favour non-profits that can demonstrate their impact in clear numbers.

What we learn from leaders like Klugman, Jackson, Remers, and Heald is that, regardless of where their clients are based, tech companies have a duty to solve local issues in the very communities that nurtured their success. Meanwhile, for even greater impact, non-profits must understand this new philanthropic landscape. 

“It really is going to be about normalizing the responsibility that each and every one of us has to our communities, to our country and to the planet,” said Klugman. “People are going to call for a greater code of accountability, and technology is going to help people rally around that.”

While the large-scale action being taken by tech philanthropists is important as we tackle global issues, so is supporting those making a difference at a local level. And as we start the last decade to achieve the UN Sustainable Development Goals, community-minded tech philanthropy is surely everyone’s best bet for a better future. 

Tell us this made you smarter | Contact us | Report error