Growing number of big US funders based on the West Coast

The Bill & Melinda Gates Foundation headquarters and Lake Union in Seattle, Washington. Photo by: edgeplot / CC BY-NC-SA

SAN FRANCISCO — The Bill & Melinda Gates Foundation accounted for 51 percent of global giving from United States foundations from 2011 to 2015, according to a new report by Council on Foundations and Foundation Center. The largest foundation in the world now accounts for 72 percent of giving to sub-Saharan Africa and 80 percent of giving to international health.

But “The State of Global Giving by U.S. Foundations,” released on Wednesday, also highlights a number of other important trends for organizations working to better navigate the giving landscape — particularly on the West Coast of the United States, where technology giants are helping redefine philanthropy.

The William and Flora Hewlett Foundation, David and Lucile Packard Foundation, and Silicon Valley Community Foundation are among the top 10 funders by international grant dollars, taking the 5th, 8th, and 10th spots respectively. Each of these funders is based in the San Francisco Bay Area, as is the Gordon and Betty Moore Foundation, which is number 12 on the list, and among its priorities is one that sees great interest from West Coast funders: Environmental conservation.

While the Los Angeles-based Conrad N. Hilton Foundation does not come up in the report, its endowment will double from $2.5 billion to $5 billion making it larger than the Ford Foundation, which is currently 3rd on the list.

The report highlights how a number of the biggest global funders are based on the West Coast and underscores a few trends in their grantmaking that global health and international development practitioners should follow closely.

The Gates effect

“The reason why we bring the Gates Foundation up early on and carry it throughout the report is how big of a chunk they represent,” said Inga Ingulfsen, research analyst for global partnerships at the Foundation Center, and an author of the report. “They’re actually so huge, and they have such a specific focus on global health issues, that they really actually skew the entire dataset.”

She also said that the Council on Foundations and Foundation Center needed to be able to say something about international grantmaking by U.S. foundations without the Gates Foundation, because of the Gates’ huge influence on the field.

“Health is a huge chunk of the funding, and the growth of the health funding internationally is really sharp in these years, and that’s almost entirely driven by Gates,” she continued.

While the Gates Foundation encourages its grantees to diversify, it can be difficult for organizations, countries, or entire issue areas that get funding from Gates early on, to attract other donors, and it points to a problem that extends across the sector.

“Because of the size of the funding coming from Gates, I think a key takeaway is how does this influence the development agendas in those countries?” said Lauren Bradford, director of global partnerships at the Foundation Center. “If you were to say Gates doesn’t exist tomorrow, what does that do for these countries, these organizations receiving these funds, these subjects such as major public health issues that are being funded?”

Given its influence, each time the Gates Foundation changes its strategy, it risks putting many organizations and population groups in a difficult situation overnight, she continued.

Just this year, the Gates Foundation launched new initiatives focused on gender equality and global education. Despite the size of its grants and the level of its influence on the field of philanthropy, the foundation often pushes the message that its resources are only a fraction of what is needed, that public and private partners are critical for progress, and that philanthropy cannot fill gaps that might be left by a decline in official development assistance.

More West Coast money

At a webinar about the report on Wednesday, one of the polls presented was on how many of the top 12 largest global grantmakers have been created or established since 2000.

The answer was one East Coast entity, Bloomberg Philanthropies, and three West Coast foundations: The Gates Foundation, the Silicon Valley Community Foundation, and the Gordon and Betty Moore Foundation.

All of the West Coast funders on the top 12 list come from tech wealth, even back to the Hewlett and Packard Foundation established in the 1960s. The trend continues today as individuals  Jeff Bezos, the founder of Amazon and richest man in the world, consider how to engage in philanthropy.

There are a huge number of West Coast funders that do not make it into this report, whether because of scale of giving — such as the Emerson Collective, founded and run by Laurene Powell Jobs — or structure — such as the Open Philanthropy Project, founded by Facebook billionaire Dustin Moskovitz and his wife Cari Tuna, which was set up as a limited liability corporation.

The growing influence of tech wealth on philanthropy is part of what led the co-authors of “Money Well Spent” to come out with a second edition.

“The nature of these new donors has somewhat changed philanthropy,” Paul Brest, co-author of the book and former president of the Hewlett Foundation, told Devex. “There is no question there is a group of foundations and an emerging group of philanthropists who are outcome-oriented, and that’s really the key. Whether it’s service delivery or long-term systems change that you really care about, the outcomes then marshall your resources under the framework of a good strategy to lead there.

“In my more pessimistic moments, I think that’s going to remain a small minority, even, of ultra-rich individuals. I see a general trend but I don't see it accelerating. My hope would be for the third edition we would say today what it means to be a philanthropist is to be oriented to outcomes, but I think we're getting there as a snail’s pace, and that’s huge.”

Whereas the report from Council on Foundations and Foundation Center focuses on the numbers, this book focuses on the approach, narrowing in on strategic philanthropy — which the authors say is based on the belief that better outcomes will come from expert intuitions informed by evidence rather than institutions alone.

New giving vehicles

Reports such as “The State of Global Giving by U.S. Foundations,” rely on data that foundations make publicly available. Bradford said she expects that West Coast philanthropy will only grow in influence, but it might be harder to track — as other vehicles do not require things such as the 990 Internal Revenue Service form. Foundation Center, Council on Foundations, and other organizations that track international grantmaking will have to navigate how to get the data and capture the giving of models beyond foundations.

Consider Mark Zuckerberg, the founder and CEO of Facebook. Whereas David Packard and his wife Lucile Salter Packard, and William Hewlett and his wife Flora Lamson Hewlett, launched foundations, Zuckerberg and his wife Priscilla Chan launched the Chan Zuckerberg Initiative as an LLC. Meanwhile, Zuckerberg has also donated stock worth more than $1.75 billion to the Silicon Valley Community Foundation.

The Silicon Valley Community Foundation is the largest community foundation in the world. Earlier this year, it announced it has $13.5 billion in assets, outpacing those of the Ford Foundation. The Silicon Valley Community Foundation has risen in the ranks of international grantmaking largely due to its donor-advised funds, the fastest growing vehicle for giving in the charitable sector, which allows donors to receive immediate tax benefits but wait to distribute their money.

Natalie Ross, vice president of external relations at the Council on Foundations, also mentioned corporate advised funds. The latest example of this is the Dropbox Foundation, launched by the co-founders of the company, with an endowment of $20 million for organizations focused on human rights. Because the foundation will work with the Silicon Valley Community Foundation to manage its funds, there will be no form 990. Ross said that it’s a trend she expects will continue as Silicon Valley foundation and others work as aggregators of different funding opportunities from tech wealth on the West Coast.

Finding and filling gaps

The report outlines an analysis of trends divided up by issue area, geographic region, and population group, while also breaking down support of the Sustainable Development Goals by U.S. foundations and official development assistance.

“Equipping social sector leaders with the knowledge they need to be more effective is at the core of Foundation Center’s mission,” said Bradford K. Smith, president of the Foundation Center, in a press release about the report. “This data will help funders and civil society organizations identify gaps, improve approaches, and better align strategies as they work to solve some of our most critical global problems.”

For example, as the endowment of the Hilton Foundation doubles, it may fill important gaps in international grantmaking by U.S. foundations, given that it funds issues other foundations tend to indicate less of an interest in such complex humanitarian crises.

One key finding from the report was that grants focused on climate change represented just 2.4 percent of international giving by U.S. foundations. Between 2011 and 2015, U.S. foundations gave $1.3 billion to climate change: $835.6 million internationally and $480.8 million domestically. But the authors of the report said that West Coast funders stand out for their focus on climate change, and pointed to a $100 million grant awarded by the Hewlett Foundation to the San Francisco-based ClimateWorks Foundation in 2012.

While the Gates Foundation may skew the dataset, in future reports,the foundation might find itself in better company, as new West Coast funders through foundations or other vehicles increase their influence on global giving.

Update, August 16: This story was updated to clarify who made the comment on corporate advised funds.

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    Catherine Cheney

    Catherine Cheney is a Senior Reporter for Devex. She covers the West Coast of the U.S., focusing on the role of technology and innovation in achieving the Sustainable Development Goals. And she frequently represents Devex as a speaker and moderator. Prior to joining Devex, Catherine earned her bachelor’s and master’s degrees from Yale University, worked as a web producer for POLITICO and reporter for World Politics Review, and helped to launch NationSwell. Catherine has reported from all over the world, and freelanced for outlets including the Atlantic and the Washington Post. She is also the West Coast ambassador for the Solutions Journalism Network, a nonprofit that trains and connects journalists to cover responses to problems.