June 1, 2000 | Read Time: 2 minutes
By CONSTANCE CASEY
The financial magazine Worth (June) attempts to explain how the United Way of Santa Clara County, based in the middle of California’s Silicon Valley, in San Jose, with its many high-technology millionaires, nearly went broke a year ago.
The board of directors, which included executives of Nasdaq and Hewlett-Packard, apparently failed to respond to signs of impending disaster. The United Way of Santa Clara County and the Bay Area organizations it supported were ultimately rescued by $5-million from the Bill & Melinda Gates Foundation and millions more from other high-technology leaders.
The organization’s troubles began when, faced with flat giving from the traditional pool of workplace donors, its chief executive, Eleanor Jacobs, decided to pursue high-end donors. She held expensive galas to attract potential donors, parties that were “a tad too black-tie for a Levi’s community like the Valley,” according to Worth.
She assured the board that major donations would soon be coming from prominent Silicon Valley business leaders, including the head of Cisco Systems and the former chairman of Hewlett-Packard. The coveted gifts didn’t materialize, and other pledges were entered in the books as if they were cash. Meanwhile United Way’s cash reserves dwindled as fund-raising expenses rose. Instead of the $11.4-million the board expected to send to local charities, the amount available was just over $1-million.
As problems mounted, the board shied away from holding Ms. Jacobs accountable because of what Worth terms “the nice-nice atmosphere of general consensus.” Ultimately the board fired Ms. Jacobs and all the members later tendered their own resignations.
The article argues that the episode raises questions about the future of board service “in a new economy that can provide the most desirable benefactors with oodles of money to lavish on their charity of choice yet may leave them with no time for the thoughtful participation that would be more beneficial.”
The magazine observes that, in general, highly pragmatic new philanthropists prefer to give to organizations that are helping to solve problems. United Way-supported charities may be unappealing to the newly wealthy because they often deal with the problems like drug addiction and alcoholism that don’t have easy solutions, the magazine speculates, and therefore the United Way may just be too old-fashioned for Silicon Valley. “In an era of boutique-style philanthropy, with chic, single-interest causes,” the article says, “United Way is like a department store in an old, crumbling downtown.”
The problems faced by the Santa Clara United Way could spell trouble for all United Ways, argues the magazine. “If Silicon Valley is indeed the future, United Way might not have one.”
The article is available at Worth magazine’s Web site, http://www.worth.com.
