Tech company good will is in short supply

After the recent birth of his first child, Mark Zuckerberg made a dramatic vow. He plans to give away 99 percent of his Facebook shares, currently valued around $45 billion, and make massive investments in health, education, and other goals. The move was widely hailed: The creator of a social network that extends around the planet had accepted responsibility, on a grand scale, for the well-being of its inhabitants. And he'd contrived a new vehicle--a limited liability corporation that could operate more nimbly than a nonprofit--to carry out his good works.

Yet Zuckerberg's announcement foreshadows a crisis for traditional charities, at least on the local level. Even as they eclipse a whole range of local businesses, cutting-edge technology firms aren't showering funds on social problems and raising the question of whether anybody will make up for the charitable contributions of industries now being disrupted.

The dynamism of the startup world hasn't done much to fix the poverty, homelessness, and addiction that exist even in the nation's most prosperous cities. If anything, the march of technological progress has aggravated certain social ills by rendering lower-skilled workers redundant and concentrating greater amounts of wealth in fewer hands.

If tech companies don't start writing bigger checks to charity, who will?

On the upside, tech culture has brought out new ways of thinking about social problems, and individuals within the local tech ecosystem have been generous with their expertise.

One Saturday in November, an educational nonprofit called Generation Citizen held a "civic tech challenge," which brought middle-school students together with tech-savvy professionals to brainstorm about gun violence, youth homelessness, and other problems. Held at Microsoft's New England Research and Development Center in Cambridge, the event drew inspiration from hackathons, tech-industry jam sessions where engineers improvise simple solutions on the spot.

At one point, Emilie Reiser of the MIT Media Lab was helping two seventh-graders sketch out a website that would promote mental-health counseling for children exposed to violence. The students wanted to put elaborate elements on the homepage. "I don't want to have just three things on there," a charismatic boy named Keith said. "It makes it boooo-ring."

Reiser nudged the middle-schoolers toward simplicity. Let's just figure out the basics, she urged, and bring it to the tech team.

This was sage advice. In policy circles, it's easy to devise elaborate plans that may never be implemented. Techies know that a merely adequate solution that's easy to build today can achieve far more.

Then again, every tech entrepreneur who walks into a venture capital office knows something else: Most problems are more readily solved when somebody ponies up a lot of money.

The United States depends far more than other advanced economies on private money for social welfare. In September the Boston Business Journal identified 79 corporations that gave more than $100,000 to charity in Massachusetts in 2014. The list includes some of the state's largest employers, such as Liberty Mutual and Partners HealthCare. Retail giants such as Wal-Mart and CVS made the list too. But other than Microsoft, the tech industry is poorly represented.

There's plenty to say about the stodgy, clubby culture of Boston's business establishment. But if nothing else, those companies see value in making cash donations. In general, large corporations have donated most generously to causes in their home cities; they also give in places where they have a conspicuous brick-and-mortar presence.

Today's tech giants transcend geography. Google pulls in more ad revenue than all U.S. newspapers combined. Apple's phones let users get by without cameras, thermometers, radios, and flashlights--and the stores that used to sell them. Amazon's growing influence in the retail world further increases the pressure on Main Street. The disruption of intermediaries such as wholesalers and car dealers could prove hugely beneficial for consumers, but it bodes ill for local nonprofits seeking business donors.

Critics of Silicon Valley's stingy giving have faulted the messianic attitudes that founders sometimes exhibit. Steve Jobs, by reputation, treated Apple's products as the company's gift to the world, and showed little outward interest in making high-profile donations. (Under successor Tim Cook, the company has taken a more public philanthropic role.)

Emerging companies hold back from charitable affairs for more concrete reasons. Lean firms with a few 20-something employees working around the clock to get a product on the market aren't likely to spend their early-stage funding on charitable contributions. Startups that grow quickly can amass huge valuations on paper without making reliable profits or establishing a tangible geographic presence.

In some corners of the tech world, there's a basic suspicion of traditional forms of corporate philanthropy. Established charities with high overhead look a lot like the incumbent industries that startups set out to best; buying a table at a charitable event looks like a hokey publicity stunt.

It's also fair to ask why social policy should rely on the whims of tech entrepreneurs to begin with. What if the money that the industry generates were taxed in a fair and timely manner and allocated to public needs through the democratic process?

In practice, however, such principle is hard to apply. Tech companies with international ambitions have been particularly adept at evading taxes through exotic accounting measures. Skeptics note that Zuckerberg's new LLC could limit his tax exposure while preserving his control of his Facebook stock.

For the foreseeable future, traditional nonprofits will play a prominent role in the provision of social and educational services, and tech companies need to step up and be involved with them. Gillian Pressman, the Boston site director for Generation Citizen, says many financial companies are used to being asked for contributions. "They understand how philanthropy works," she says. "You join boards and write checks." In the tech industry, people sometimes assume that foundations provide the funds.

Tech professionals who learn the ways of the nonprofit world by serving on boards for new initiatives can graduate to more established entities. These efforts will be fruitful if techies bring along their skills and tech firms open up their wallets.

At this point, everyone in the tech world understands that it's capable of overturning entire industries and creating multibillion-dollar businesses seemingly out of nowhere. But tech has been too slow to recognize its power and its obligation to keep the fabric of an unequal society intact.

Editorial on 12/13/2015

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