Silicon Valley’s favorite charity almost imploded in scandal. Now it’s asking for a second chance.
New CEO Nicole Taylor runs a $13 billion philanthropy that services people like Mark Zuckerberg, Jack Dorsey, and Sergey Brin.
Most Americans have never heard of the Silicon Valley Community Foundation, a pedestrian-sounding institution that you might think would operate a food bank in San Mateo or a small tutoring program in Palo Alto.
But for the past decade, the foundation has amassed tremendous power in the land of the mega-wealthy, collecting $13 billion in assets to become the nation’s most important, gilded, and opaque charity. And it has done so very quietly.
Until last spring.
That’s when the SVCF — the behind-the-scenes consigliere to the wealthy — became the front-of-camera story, devastated by a series of media portraits that painted the charity as riven by some of the same cultural problems that plague too many startups: a grow-at-all-costs attitude; a culture of intimidation, fear, and lewd sexual dialogue; and eventually, the messy ouster of a charismatic CEO who built a juggernaut, at least before the jig was up.
The rebuilding project has now fallen to Nicole Taylor, the foundation’s new CEO, who, in her first national interview since taking over, told Recode that she felt her powerful charity had avoided full implosion. And now she’s asking donors for a second chance.
“Last June, it might have been a very different conversation,” Taylor said at her headquarters in Mountain View, California, where she started full-time this month. “They’re glad that we’re in the place we are and ready to turn the corner.”
Taylor is running a foundation that largely houses donor-advised funds (DAFs), pools of cash that are earmarked for philanthropic projects and that come with incredible tax write-offs. Over the last bull market, they’ve become en vogue with members of the tech elite, including Mark Zuckerberg, Jack Dorsey, and Sergey Brin, all of whom have set up DAFs at Silicon Valley’s favorite charity.
The good times in the tech industry has meant good times for the foundation, which is by far the largest of the country’s 800 community foundations — thanks in no small part to the aggression of its top fundraiser, Mari Ellen Loijens, and its past CEO, Emmett Carson (who coincidentally returned to social media in recent weeks after a months-long disappearance.)
Community foundations are supposed to serve local needs — like that hypothetical food bank in San Mateo — but Carson dreamed bigger and of building a global heavyweight, turning philanthropy into a big-money business that could pump out cash to projects like combating the Ebola virus in West Africa. The group has handed out $5.6 billion since 2007, with $2.7 billion of that disbursed locally.
If the only score was collecting as many assets under management as possible, then the Silicon Valley Community Foundation was doing pretty well. But Taylor is signaling that those days are over.
“The goal isn’t going to be growth at all costs — or even really focusing on growing the [assets],” she said. “I don’t think we need to be about the fee race.”
She says she’ll leave that battle to the financial institutions that community foundations compete with — places that also house DAFs like Goldman Sachs or Charles Schwab. But that’s easier said than done, given that the fundamental incentive structure that motivated Carson’s bad behavior hasn’t changed — more cash, more fees, more power.
Taylor claims that billionaires did not flee the foundation for the safer waters of traditional finance in the wake of its scandal. She says the SVCF lost “a few” donors (she declined to be specific) and not any more than it and other foundations do any other year.
“It wasn’t what you would think. Many people think, ‘Oh, there’s going to be a run on the bank. You’re going to lose all this.’ We didn’t,” she said. “They came, they stayed, and they’re staying.”
And her staff? There was a staff exodus during the worst of the Carson days — you just need to look at the Foundation’s reviews on Glassdoor to get a flavor of why — with Forbes reporting that at least 68 of the 137 people on the foundation’s staff left in 2016 and 2017.
Taylor says that in the last year her foundation lost somewhere between 25 percent and 30 percent of its staff — a normal turnover rate in the foundation world, she said.
That’s all well and good. But running a functional, intimidation-free workplace should be table stakes for a foundation CEO in 2019. She has rebuilding to do internally, yes, but the real challenge for her will be positioning the foundation externally.
The foundation’s raison d’etre — donor-advised funds — are under attack as unaccountable and prone to outright fraud. Because donors aren’t required to disclose any giving, they have become caricatured as part of an easy tax dodge, a way for donors to earn some positive press, achieve an immediate tax write-off and, at the end of the day, actually have to part with very little of their personal net worth.
I asked Taylor if she felt donor-advised funds were defendable in an era when Silicon Valley leaders are evaluating anew their corporate responsibilities. Do the world’s wealthiest people have any personal responsibilities to be more transparent about what they claim to be doing with their charity dollars?
Taylor punted — perhaps with a political ear about what her DAF account holders might want to hear — saying she didn’t feel strongly about that.
But at a later point, she did indicate support for a law that would require something like a DAF to pay out about 5 percent a year, the same rate at which private foundations must disburse their assets. As DAFs have taken off in the world of the rich, they’ve become the subject of new scrutiny in Washington.
“It would be hard not to support it, because it won’t affect us much,” she said haltingly, claiming her donors already clear that hurdle. But a second later, she worried: “The thing that I wouldn’t like to see, though, is for people to say, ‘Well, you got to rush to get it out’.”
DAFs cannot escape politics. The philanthropy world — like every industry — is being reshaped in the Trump era. The philanthropy world has been energized by a Trump administration that has cut back on some government-supported programs, which increases the burden on private-sector charity work.
So to be a head of a major charity in 2019 is to be a political activist, and Taylor definitely flashes a political side on occasion, worrying about Silicon Valley CEOs who have employees who can’t make rent, or area teachers who can’t afford local housing.
“It starts to be just a question of our humanity,” she said. “And that’s what I think is being awakened in people.”