How Green Is the Valley?

Scrutinizing the "generosity" of high-tech entrepreneurs


Before the Heaven's Gate suicide gripped our attention, the media were targeting another variety of high-tech weirdos: Silicon Valley entrepreneurs who haven't given away "enough" of their newfound wealth. In its 1996 year-in-review issue, Newsweek fumed about "The Wealth and Avarice of the CyberRich." A Los Angeles Times story sniped at "digital-era Scrooges." And the cover story of the new quarterly American Benefactor blasted the "misers" of Silicon Valley. "In philanthropic circles," the magazine intoned, "the Valley holds a reputation for being notoriously tight-fisted. Or socially negligent. Or maybe both."

Americans donated a record $140 billion to charity last year, around 2 percent of GDP. The press is taking notice of the high-tech world, in part, because cyber-entrepreneurs have started giving their money away. Over the past few months, David Duffield of PeopleSoft has donated $20 million to Cornell University. Charles Wang of Computer Associates has promised to give as much as $25 million for the construction of an Asian-American cultural center at the SUNY-Stony Brook campus. And in February, David Filo and Jerry Yang, creators of the Yahoo! Web search engine, pledged $2 million to underwrite a professor's chair at Stanford.

But Silicon Valley remains under attack for the "stinginess" of its wealthy inhabitants. Of 50 major metropolitan areas surveyed by The Chronicle of Philanthropy, San Jose ranks last in individual charitable giving. "The libertarian streak that runs through much of Silicon Valley," gripes Newsweek, "prevents many techno-millionaires from seeing themselves as their brother's keeper."

Even though his company is based in Redmond, Washington, no one has felt the charity watchers' wrath as much as Microsoft's Bill Gates. Newsweek chides Gates for giving only about one-third of 1 percent of his net worth to charity. "By merely tithing his assets (something a good many poor people do on a regular, non-whining basis)," suggests The American Benefactor, "Gates could raise [the level of American philanthropy] by $2 billion or more."

"Despite all of his wealth, [Gates] is miserly in terms of the things that he does for charities and social change," the Institute for the Future's Paul Saffo told Upside, "and that's a scandal." The Times story even faults Gates and Microsoft because "only 15% of [the company's charitable giving] was in the form of cash–the rest was software that was valued at the retail price but cost the company almost nothing to produce."

To some extent, this grousing is predictable chattering-class envy, a typical response of persons who routinely treat commerce as an evil practice and consider wealth something you get out of the mailbox. And the writers don't disclose how much of their incomes they give away. How many prestige-press journalists are like James Atlas? He sheepishly admitted in The New York Times Magazine that, after paying mortgages on a Manhattan co-op and a Vermont farmhouse, his annual charity "budget" is $25. That's right. One Jackson and one Lincoln.

Along with their antipathy to commercial activities, these commentators seem to know little about the ephemeral nature of wealth in emerging industries. The compensation of entrepreneurs and employees alike is often heavily linked with a company's stock; a minor miscalculation can cause a business's value to vanish overnight. High-tech wealth isn't as liquid as the paychecks most of us deposit in the bank. And given the youth of many cyber-entrepreneurs, relatively low charitable giving should not be a surprise: They still have plenty of time to consider worthy causes–or go broke–and often still have families to take care of (or start).

Yet in their ham-fisted manner, these stories ask an important question: When Information Age entrepreneurs become philanthropists, who will benefit? Wage slaves may agonize over the proper time to bump up their United Way payroll deductions or slip another $20 in the Sunday collection plate. Aside from the perpetual tax code problems, however, giving away thousands, even millions, of dollars is (and ought to be) a serious affair. Apple's Steve Jobs started a charitable foundation in the 1980s but abandoned it soon after he discovered how time-consuming such business can be. Yahoo!'s Filo told National Public Radio that he and Yang wouldn't again give away a large chunk of money until "we have more time to think about what we want to do with it and what kind of cause we want to give it to."

Guilt-mongering hasn't swayed some in the Valley. Hectored by Newsweek about his personal giving, Sun Microsystems Chairman Scott McNealy said: "If you want to redistribute wealth, you liberals, why don't you go out and earn it and give it away. Redistribute your own wealth."

McNealy is on to something. As Saffo's invocation of "social change" suggests, this campaign isn't exactly about good works and voluntarism: It's a thinly disguised attempt to promote a redistributionist agenda. And it looks like a sure thing. High-tech entrepreneurs can let their "socially conscious" critics mau-mau them into supporting the critics' favorite causes. Or they can take a tough line and look like selfish cheapskates–the very image critics hope to pin on Silicon Valley and, often explicitly, on libertarian politics. That's why you'll never see a critic wondering whether the income tax erodes rich people's philanthropic instincts or whether it's best to be your "brother's keeper" by creating jobs and wealth–and possibly taking care of your literal brothers–or by adopting a reporter's favorite causes.

But McNealy is also wrong. Free market entrepreneurs have no monopoly on money-making skills. Just a few hundred miles to the south of Silicon Valley there are lots and lots of redistributionists making piles and piles of money and giving plenty of it away, sometimes to traditional charities and just as often to trendy leftist causes. From David Geffen to Ted Turner (and Turner's wife), lots of superrich people use their millions to push policies and ideas inimical to entrepreneurial capitalism. Those gifts buy them good press. But they also buy policies that could impoverish future generations.

Personally, I don't care whether the "cyber-rich" give away their millions (unless, of course, they give them to REASON). Through their own good work, they've already contributed enormously to the betterment of human life. They do, however, have a "social responsibility" to take their money seriously: to resist suggestions that they should rush to give it away without considering the effects on the very freedoms that have made them prosper.