Silicon Valley Community Foundation challenges donors to address local problems

'I like to think about community as an ecosystem,' says CEO Nicole Taylor

Over the last decade, Silicon Valley Community Foundation has become one of the favorite destinations for tech philanthropy.

Counting Mark Zuckerberg, Jack Dorsey and Reed Hastings among its donors, SVCF has quietly become a philanthropic powerhouse. As a community foundation, it made $126 million in grants in 2018 in San Mateo and Santa Clara counties (the latest year for which numbers were available), but its true power comes from the nearly $9 billion in donor-advised funds (also known as DAFs) it oversees.

DAFs have become popular among wealthy donors in recent years because they carry the tax benefits of a donation without requiring that an immediate donation be made. They also courted controversy, with critics accusing them of being a vehicle for tax sheltering.

Not so, says Nicole Taylor, SVCF’s CEO and president. Appointed a year ago after her predecessor was ousted in scandal, Taylor is working to change the image of DAFs while challenging her donors to take on the Bay Area’s unique challenges, like housing, inequality and transportation. I spoke to Taylor about how the tech sector can do better with its giving.

TechCrunch: Let’s start by explaining how a community foundation works?

Nicole Taylor: Community foundations are a vehicle for people who want to give that come with a far better tax advantage and advising advantage than setting up private foundations [whose] overhead is costly. Most people don’t want to go there; they want a place that helps them with their giving and they want to have that connection back to their local community.

Community foundations were started in the Midwest and are over 100 years old. There are over 800 of us. We serve particular geographic areas. Our core focus [at SVCF] is the Silicon Valley region, the two counties here – Santa Clara and San Mateo.

We happen to be the largest funder of nonprofits in the nine-county Bay Area region because of our donors. They are extremely generous. Over a billion dollars, $1.2 billion was granted out, estimate, in 2018 and that just speaks of the testament of the generosity of the donors here.

Our endowment is actually just a portion of our total assets. The primary vehicle [our donors] use with us is a donor-advised fund. Over 90% of our assets are actually in that donor-directed, donor-advised vehicle.

Silicon Valley Community Foundation is just one of the many community foundations around the country, but it is also an outlier in that it ranks among the top foundations in the country in terms of assets. Can you talk a little bit about how you’ve dealt with those dual identities?

For me, it’s not a duality, it’s more of how do we understand what our donors care about, what they’re passionate about and also bring to their attention the solutions that are working on the issues that they care about and what are the solutions that are working on the issues that are right here in their backyard. That, to me, is a critical role of a community foundation anywhere: How do we become that resource, that hub for information and connectivity that this region needs us to be. How do we harness those resources for the good of the community?

What does that look like?

You come to us, you want to open a donor-advised fund and you work with our team to figure out what you care about. You might have an idea of a few [organizations] that you care about. Our team might say, “you care about literacy with children,” so we can point you in the direction and help you figure out organizations that would fit your goals. Then you make recommendations on which organizations you want to fund and we literally cut the checks and get them out to the organizations.

And what is the minimum to start a donor-advised fund?


How has your model evolved?

We’ve been really good at the transactional: helping donors get the funds in and helping them get it out. We are now wanting to be more transformational and relational: how do we bring [our donors] ideas, how do we connect [them with] other donors with like-minded or interest in similar topics? How do we bring the experts to the room with a donor so they can understand? How do we get donors out into the community to see the organizations that are really working and may just need to scale what’s happening? How do we create models that other communities might want to replicate? How do bring all the sectors together?

I like to think about community as an ecosystem, we are one ecosystem, our donors are an ecosystem, nonprofits are an ecosystem, the government is an ecosystem. How do we be that hub to bring all of those players together around particular issues? We’ve been doing some of that throughout our lifespan of 11-12 years. Now I want to amplify that and have that be the core in what people know us for. I [want to] put the community back in the community foundation.

You came here after a difficult period in the foundation. Your predecessor was ousted amid accusations that he had allowed a toxic work environment and even contributed to it. What steps have you taken to right the ship?

Before I got here the board did quite a bit. They rolled up their sleeves and really took on the challenge that was presented with them. There was an interim CEO who did a tremendous amount of work with the staff. A culture task force was created from staff across the organization to really think about what kind of culture do they want to build. They created an amazing set of values, five values that are core to what and who we are: courage, collaboration, inclusion, respect and accountability. We are at the point of figuring out how do we actually live those values.

We’re really trying to listen to our staff in terms of what do they want out of working here and what does it mean to be part of this organization, why are we really here. I rebuilt a senior team and there have been other people that have come on board throughout the organization and they’re bringing new energy and excitement.

What areas are you focused on right now?

Our donors give, as you can imagine, to many, many issues. Right now we have five areas that our dollars work on: immigration, financial stability, education, housing and transportation. We are looking to see as we go through strategic planning do we need to refine what that looks like and where can add the most value to the biggest needs in the region.

How do you measure your impact?

I think one, it’s not just the dollars in [or] the dollars deployed on the ground — obviously the more resources we have the more they get deployed — but we’ve got to look at the data that we have in terms of where our donors are giving and where the organizations are really moving the needle in all those areas, and look at that all the time.

Do your donors think of impact any differently?

Some people really want to see what’s the biggest ROI, if you will, for lack of a better term, of their dollars on any particular issue and what organizations can really … and ROI meaning lives changed or the needle moved. Others say there’s some pressing urgent need.

I was at Second Harvest Silicon Valley, the food bank. People are hungry, which is an urgent need, [but] then we need to figure out why people are hungry. Some people want to double down: “Let’s make sure people are being fed, we can’t just focus on why people are hungry and then let people go hungry.” Others are like, “How do we get upstream and prevent hunger in the first place?”

Our donors are used to doing things at scale and innovating and disrupting at scale. It wouldn’t probably surprise any of your readers that that’s what they’re interested in, in terms of social change in their philanthropy as well. Our donors really want to understand the impact, they want to understand solutions that are working and many want to do it at scale.

That leads to my next series of questions. You’re obviously not formally connected to the tech industry, but —

Yeah, we’re connected.

Silicon Valley’s on the letterhead.

It’s in the name and it’s who are donors are and the companies we work with.

And it’s where you are.

It’s where we are.

So how does that proximity affect your strategy and your culture?

I’m going to harken back to what a community foundation is. If we were in a different region in the country, we would be connected to whatever the leading industry or industries would be, both civic and business leaders, and the people who have the philanthropic resources.

We are connected to the tech industry pretty deeply because we are here, as well as the private equity and the financial industry that also fuels this region. Because of that, we respond and partner with our donors and companies that work with us to leverage who they are in terms of the individuals and what they care about and how they think about change and how they think about investing in change. Then with the companies, how do we leverage what they bring, what their companies do and harness those resources, both in terms of intellectual capital and human capital and dollars.

Does that mean integrating technological solutions?

Yes, I think so. We’re working with companies now to figure out how do we capitalize on their technological capability. There’s companies who are amazing at analyzing big data sources and how can they be deployed to really scope out what the need is around housing and homelessness, for example, or how do we really understand who’s food insecure, which is a leading marker of poverty. We have companies here who can understand, get their arms and their brains around what does that mean and how would that data help.

Has the slowdown in IPOs over the last year negatively impacted you?

No, because you might have slowdown in IPOs, but established companies are doing quite well and want to give back.

Obviously the footprint of the tech industry has both benefited but also created a lot of the problems here in the Bay Area. Do you think that the tech sector and its philanthropists have a special responsibility to the region?

What I can tell you is that I’ve been in conversations with people in the tech industry who have said we are part of this with what has happened. There’s an acknowledgement of some culpability not in creating the whole problem, because we have to then talk about public policy. But they understand that their rapid growth and their needs have contributed to what we’re seeing.

I think we’re seeing companies step up in a way they haven’t before. They are trying to figure out how to deal with the problem. They’re also feeling it in not just visibly, in addition to visibly seeing the number of cars on the road, the lack of transportation solutions, homeless on the street, RVs on the streets, their own workforce is struggling to make it. These are people with well-paying jobs and they’re employed and they’re struggling here. They’re seeing it also just in visceral and very real ways and understanding that they want to lean in and step up and help too.

Speaking of public policy, there’s been a particular debate around the DAF model upon which you rely, which allows donors to claim an immediate tax benefit while differing their giving. Now I’m sure that most of your donors are giving in good faith and are wanting to give, but how do you discourage, I don’t want to say improper use of DAFs, but —

People just sitting on it.


The good news is our folks aren’t just sitting on it. Our donors gave out $1.2 billion in grants in one year. They’re actively working to get their assets out the door. I think as a field, unfortunately, we have not done a good job of telling that story. I think people think that our donors are sitting on it. They actually give out more than private foundations do on average. It’s been anywhere from 9% in some years to 10-15% on average that donors have been giving out. The private foundations have a 5% payout.

We should be much more proactive about telling the stories of what our donors are actually doing. We have dormant fund policies that ensure that when you sign up to open a fund that you can’t just sit on it. You have to be making grants actively and if you don’t within 15 months we start making grants on your behalf. [SVCF later added that if a fund goes two years without disbursing a grant, its funds will revert to SVCF’s endowment.]

The other thing that goes beyond just the policy is the practice. We have a donor engagement team that get[s] in touch with their portfolio of donors every quarter, just to make sure are you getting grants out, do we have a plan, do you want a plan?

We want to figure out how do we work with our donors to ensure that more resources get out. The money’s getting there, but having run a nonprofit myself, the need is constant, so how do we work to make sure that folks are feeling the giving.

Some of the different proposals I have seen include aligning DAFs with foundations with a 5% mandatory distribution, splitting the tax benefits at donation time versus disbursement. Are there measures that you would support?

The thing that I worry about [is that] we are a nonprofit and we do our own giving. We work in [a] community. If a donor gives to us and they don’t get the full tax break, what does that do to my tax status? That one troubles me because it would disincentivize donors to work with us.

We’re actively in conversations with people who are proposing that idea; we’re not just fighting and putting up defenses. I want to really understand what they’re proposing and I want them to understand the real and maybe unintended consequences.

In terms of payout, I worry about setting it too low [and then a] 5% payout becomes a ceiling. Our donors are already giving out far more than 5%, [so] I worry about having that as the marker and then giving actually goes down because [doors] only have to give out 5% and you could have been giving out 10-20% a year.

I also want [giving] to be effective. I don’t just want [our donors] writing huge checks to maybe some large institutions [that] are doing great, [to get] the money out the door. We want the money to be effective and strategic and sometimes that takes time.

Recently there’s an accusation going around that so-called big philanthropy is part of the problem, especially because of the power it gives to elite donors, especially the elite donors that frankly are giving to you. How do you respond to those critics? Would we be better off simply with higher taxes and having that money not necessarily go through philanthropy?

Well, the last tax bill did the exact opposite of higher taxes, which means that we’re actually getting less money by the government system into organizations, and into counties, and into cities to solve these problems. If we did away with philanthropy I don’t know how the needs of individuals, neighborhoods, communities would get met. I believe particularly community foundations, community philanthropy and donor-advised funds are democratizing giving. It’s not just “big philanthropy.” Most money is given to charity by the average person. “Big philanthropy” gets the most attention because they give in big chunks, but they’re actually not the biggest givers in terms of nonprofits and charities around the country.

I’ve always thought and believed that you need the public sector and then you need the risk capital that taxpayer money shouldn’t be going to. Philanthropy has been risk capital and taken chances on ideas that public sector dollars just couldn’t and wouldn’t do. I think there’s a vital role and that’s what’s allowed many things like universities and research and ideas around getting people off the streets and homelessness and rent subsidies and low interest loans to get low-income housing built. I think there’s a place for both and that’s a conversation I think we need to have.