The 'Black Hole' That Sucks Up Silicon Valley's Money
The San Francisco Bay Area has rapidly become the richest region in the country—the Census Bureau said last year that median household income was $96,777. It’s a place where $100,000 Teslas are commonplace, “raw water” goes for $37 a jug, and injecting clients with the plasma of youth —a gag on the television show Silicon Valley—is being tried by real companies for just $8,000 a pop.
Yet Sacred Heart Community Service, a San Jose nonprofit that helps low-income families with food, clothing, heating bills, and other services, actually received less in individual donations from the community in 2017 than it did the previous year. “We’re still not sure what it could be attributed to,” Jill Mitsch, the funds development manager at Sacred Heart, told me. It’s not the only nonprofit trying to keep donations up—the United Way of Silicon Valley folded in 2016 amidst stagnant contributions.
That’s not to say that Silicon Valley’s wealthy aren’t donating their money to charity. Many, including Mark Zuckerberg, Elon Musk, and Larry Page, have signed the Giving Pledge, committing to dedicating the majority of their wealth to philanthropic causes. But much of that money is not making its way out into the community.
There are many reasons for this, but one of them is likely the increasing popularity of a certain type of charitable account called a donor-advised fund. These funds allow donors to receive big tax breaks for giving money or stock, but have little transparency and no requirement that money put into them is actually spent. Fidelity Charitable and Schwab Charitable, two of the biggest charities with donor-advised fund programs, held $2.2 billion in donor-advised funds from clients located in San Mateo and Santa Clara Counties in 2014. That’s a 946 percent increase from 2005, according to The Giving Code, a 2016 report about philanthropy in Silicon Valley.
Donor-advised funds are
