Illustration: Aïda Amer/Axios

Silicon Valley's new, moneyed class has a very different view of philanthropy, often inspired by "effective altruism"— using data and analysis to choose causes and approaches that will yield the most impact.

Why it matters: This brand of philanthropy is focused on large problems — like access to education and issues in the developing world — and can come at the expense of local community needs and other more traditional areas of giving (like the arts).

"Effective altruism" calls for using cost-benefit analysis to back nonprofits that can show the most measurable and demonstrable results. And in Silicon Valley, philanthropy is increasingly expected to be a two-way street — especially one that comes with clear data.

  • “Philanthropy is not altruism,” says Shannon Farley, co-founder of Fast Forward, an accelerator for tech nonprofits.
  • “We talk [to donors] about philanthropy as a way to get skills or exposure to issues" they may not know about, adds Farley.
  • Her organization spends a fair amount of time helping nonprofits show how each dollar makes a difference.

The effects of this shift in philanthropy tastes are brutal for some traditional nonprofits. The arts feel neglected — as do groups that help the homeless.

  • In recent years, less than 10% of donations from Silicon Valley (sans San Francisco) have gone to local nonprofits, and less than half of that has gone to groups like food banks that tackle community needs (instead of, say, hospitals or universities), according to the Giving Code, a 2016 report.
  • “They feel solvable,” Farley says of the focus on favorite causes like diseases. “We could cure malaria in our lifetime. But you can’t fix inequality — especially if you’re benefiting from it.”

The big picture: The line between philanthropy and business is being blurred.

  • Critics say that using limited liability corporations rather than traditional nonprofits to handle donated wealth — which Laurene Powell Jobs, Mark Zuckerberg and Priscilla Chan have done — offers less transparency about their activities, and lets these donors also invest in for-profit companies.
  • Donor-advised funds are also popular in Silicon Valley, in part as a way of outsourcing philanthropy to fund managers.

Yes, but: Some are still optimistic about increasing local involvement.

  • “We need to help people understand the interconnected challenges so many of our neighbors face," like childcare, education, housing and earning a living wage, Sam Cobbs, president of Tipping Point, which fights poverty in the Bay Area, tells Axios.
  • "If we can help people understand the many challenges and that there are solutions, we find they are more willing to get involved and give back.”

Between the lines: Not surprisingly — given that it's Silicon Valley — “impact metrics," or data that shows exactly how a nonprofit is helping people, is essential to how nonprofits market themselves to prospective donors.

  • Some local charity leaders are getting savvy, taking a lesson from the for-profit world even as they compile data about their do-good activity.
  • “Traits around creativity and innovation are celebrated in tech," said Cobbs. "So why not apply that rigor and innovation-driven approach to the nonprofits that are working the hardest to solve systemic issues?”

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