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Topexecs give

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   http://www.cnn.com/2001/TECH/industry/07/31/venture.philanthropy.idg/index.html

http://www.cnn.com/2001/TECH/industry/07/31/venture.philanthropy.idg/index.html

Top execs give when they have little

By Scott Harris

(IDG) -- It's another down day on the Nasdaq, and Steven Kirsch -- wearing a white polo shirt bearing the logo of Infoseek, the startup that made him rich -- clicks up a portfolio heavy in tech stocks. "Thirty-four million," he says. Down from a March 2000 peak of $90 million. "Bummer."

So shrinks the fortune of the Steven and Michele Kirsch Foundation, just one of many philanthropies seeded by the Internet boom of the late 1990s.

The tech bust of 2001 is taking its toll on charities -- corporate giving is down, and layoffs have hammered workplace donations to outfits like the United Way. Private foundations, including powerhouses with assets measured in the billions, are expected to give less.

But some tech philanthropists are rising to the challenge. True to their startup roots, they're embracing an entrepreneurial approach to their charitable giving.

For instance, Kirsch, now CEO of San Jose, Calif., software company Propel, is defying conventional philanthropic wisdom by donating as if he expects stocks to rebound any day now. His foundation has given more than $5 million to such causes as medical research, nuclear disarmament and political reform. It's a slight decrease in dollars from pre-bust days, but a larger proportion of the foundation's assets.

Kirsch's actions reflect one reason why tech's troubles don't have too many philanthropy watchers wringing their hands. Dot Rising, president of the Council on Foundations, suggests that the new economy has created a new approach to philanthropy. "It's a risk-taking mentality," says Rising, whose Washington organization serves as a trade group for philanthropic foundations.

This new philanthropy has authorities and nonprofit veterans anything but gloomy even as the prime holiday-giving seasons approach. Rising expects a dip in donations, but she says the recent setback underscores just how profound the impact of high-tech philanthropy has been on the landscape and culture of American charity. In the western states, tech contributions have helped foundation endowments surpass those in the Midwest and the South (while still lagging the northeastern states). Like John Rockefeller, a monopolist of another age, Bill Gates has become the world's leading philanthropist, recently adding $2 billion to a $23 billion foundation that focuses on health care and education. The Bill and Melinda Gates Foundation is in a league of its own, spending about $3 million a day on good works. Those in the multibillion-dollar club include foundations created by David Packard and William Hewlett, as well as the new $5 billion foundation established by Intel co-founder Gordon Moore.

But for all the megabucks, some observers suggest that the new philanthropy's biggest contribution has been to shake up a stodgy, conservative tradition long on noblesse oblige and short on innovation. In recent years, tech entrepreneurs and venture capitalists -- notorious for their egos, competitive zeal, appetite for risk and conspicuous materialism -- have applied their sensibilities to giving. "Instead of looking at the world and saying, 'What are the rules I have to follow?' they say, 'What can I build here that will make a difference?'" says Kim Smith, president of the New Schools Venture Fund, which supports educational initiatives. "They bring that m.o. to the table."

One way they do that is by practicing "venture philanthropy," a buzz phrase that dates at least to the early 1970s but is very much in vogue these days. Smith's New Schools operation, founded by Kleiner Perkins partners John Doerr and Brook Byers, is a prime example, attracting such "investors" as tech luminaries Jim Clark and Jim Barksdale. The group provides seed money and management help, and closely monitors progress for a selection of nonprofit and for-profit education startups, aiming for "scalability."

The winner-take-all mentality is also revealing itself, as august institutions such as Harvard and Stanford prepare to battle each other at Oracle chief Larry Ellison's behest, to win a $150 million center for the study of technology's influence on politics and economics. "I love that. That is what we're all about: competition," says Vanessa Kirsch, executive director of New Profits in Boston (and no kin to Propel's Steven Kirsch). New Profits advises tech philanthropists, and Kirsch calls herself a "social entrepreneur" who helps donors "make charitable investments" and "pick winners."

Techies have brought innovation to community-based giving as well. In 1997, wealthy Seattle-area executives chipped in to create Social Venture Partners, which provides money and volunteer help to local educational and environmental nonprofits. Similar groups have sprung up in other tech hubs. In Silicon Valley, venture capitalist Gib Myers added a twist by creating the Entrepreneurs' Foundation, which encourages startups to donate pre-IPO options to designated charities. A few grants have been made, but given the moribund IPO market, most of the donations are more virtual than real.

In Texas, the Austin Entrepreneurs Foundation arranged for option donations from 141 startups. So far, only six of those companies' options have been converted to cash via acquisition or IPO. "It's Monopoly money, but we have lots of it," executive director Paula Fracasso concedes.

Someday, some real options lucre may reach nonprofits like the Pediatric AIDS League of Austin. When the news broke last summer that technology consultancy Sapient was negotiating to buy a Texas startup called Human Code, no one was happier than the folks at the AIDS League. Human Code had pledged to donate stock options to the nonprofit, and the Sapient deal was looking like a $40,000 windfall for a charity with an annual budget of about $100,000. Then Sapient's stock took a nosedive. By the time the deal was final, the Pediatric AIDS League's options were worthless.

But executive director Clif Loftin says he no longer worries that the tech crash took his charity's cash. The AIDS League is focused more on the future, planning a dinner fundraiser that was financed by a $10,000 donation from the Dell Foundation. Tech may have tanked, Loftin says, but there's still money out there looking for a good cause.






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