Everyone from retirees to small-time investors has benefited from the bull market, but few have prospered so dramatically as a subculture of high-tech entrepreneurs and venture capitalists clustered in a half dozen enclaves around the country.
Paul Brainerd hails from the Seattle enclave. In 1987 Brainerd went public with his firm (Aldus Corporation) having already coined a term (desktop publishing) to describe the company’s wildly popular new product (Pagemaker), only to sell the firm in 1994 for $130 million as desktop publishing grew to a $3 billion industry.
In 1997, after first establishing his own foundation (Brainerd Foundation, assets $40 million) Brainerd midwifed the creation of a consortium of Seattle grantmakers known as Social Venture Partners. The consortium announces its first round of grants this spring. Philanthropy caught up with Brainerd as he was preparing to board a plane for Europe.
PHILANTHROPY: What is Social Venture Partners?
MR. BRAINERD: We have about 60 partners, although we encourage couples to participate so we have roughly 100 participants. Each partner contributes a minimum of $5,000 a year, for a minimum of two years, and that all goes into a pool. The entire Partnership was asked to identify their areas of interest, and in 1997 they selected two main areas of focus—children’s issues and K-12 public education.
Two grantmaking committees were formed, with about 16 people on each, to narrow the areas of interest. They then went out in the community and interviewed key people in each of their areas. The committee met with community leaders and issue experts, and sought their advice. We drafted grant guidelines, and letters of inquiry were solicited. We received 87 inquiries from nonprofits and [the committees] will be reviewing them and ranking them [and will] announce grants to probably five or six of them.
PHILANTHROPY: Social Venture Partners has been described in the New York Times as forming a kind of “vanguard” of younger benefactors who are new to philanthropy. Your own materials refer to “a new kind of philanthropist—the social entrepreneur,” and speak of using the “venture capital model.” Aside from being new to the field, how is Social Venture Partners different from a typical foundation or consortium of grantmakers?
MR. BRAINERD: Social Venture Partners is designed to engage people in their 30s and 40s who have generated new wealth, mostly in the high-tech industries in the Seattle area, and to get them involved in philanthropy at an earlier age than they would otherwise. We want to teach them Philanthropy 101. But it’s more than dollars and cents that are being donated. We are looking at also donating time and energy to the organizations that we are supporting. As part of the grant guidelines, we ask people to outline what their needs might be beyond financial assistance. Do they need a marketing plan? A computer network? What is it that they need to be successful that goes beyond just dollars and cents?
PHILANTHROPY: So you respond more favorably to proposals that ask for more than just money?
MR. BRAINERD: Yes. When we solicit letters of inquiry we specifically ask what else besides the check they would like from SVP, and that will be one of the criteria we will look at. If we receive two equal proposals but one favors more engagement of the Partnership, that would be the one selected.
PHILANTHROPY: If we were to do a survey of your members and ask them, a year from now, how much time they expect to be devoting to helping the local nonprofit, what do you think we would hear?
MR. BRAINERD: You would hear a whole range, but I would expect the top 25 percent would be spending five or ten hours a week.
PHILANTHROPY: Denis Hayes, President of the [Seattle-based] Bullitt Foundation, says that you approached the creation of SVP as though you were creating a business. How has your career in the high-tech world influenced your philanthropy?
MR. BRAINERD: What I was trying to do here is create a model that appeals to the younger generation that is in business today. I chose a business metaphor—venture capital—in other words, looking in the community and finding out where the needs and solutions are, in the same way that a venture capitalist would be out there trying to find the innovation and entrepreneurship in new companies. Another aspect of venture capitalists I wanted to replicate is their tendency not just to find a company and make an investment of dollars and cents, but also to look at the company’s overall needs and help ensure its success.
PHILANTHROPY: You have said that on leaving Aldus you were surprised by the gulf that existed between the corporate world and, for instance, some of the environmental nonprofits you were dealing with. How different is your role of being a grantmaker from your previous life in the private sector?
MR. BRAINERD: In the corporate world we were accustomed to having support infrastructure for handling things like computers, databases, marketing, public relations, and in the nonprofit world that very seldom exists. The gap is especially great in the technology area. I was amazed to find out how far behind these organizations were in using technology as compared with the corporate environment I came out of. When I reflected on the fact that 80-90 percent of what these groups do is communicate with the public without having access to modern communications tools, I realized that they were at a distinct disadvantage in getting their messages out.
PHILANTHROPY: You speak of getting the message out, and have yourself been involved in supporting advocacy efforts such as opposing Washington State’s property rights initiative. Can computer technology support advocacy?
MR. BRAINERD: It’s a very cost-effective way to reach out to a base of people to activate them to get engaged in the community citizenship activities that people should be engaged in. A basic example would be knowing the email addresses of a nonprofit’s supporters, and when there is a key issue they can send out an alert so that people who are already members of their organization can call their local public official and express their opinion. We’re helping other [organizations] get the capacity to do that.
PHILANTHROPY: Are you concerned about such networks being used by nonprofits in such a way as to exceed the limits on the amount or type of advocacy or lobbying that they can do?
MR. BRAINERD: We know exactly where the lines are and we urge the directors of all the nonprofit groups to make sure that they are advised properly as to what they can and can’t do, but a lot of issues have nothing to do with electoral politics or a particular piece of legislation. An example would be where the Forest Service is going to let a contract to cut a particular section of old-growth forest. That has nothing to do with electoral politics or pieces of legislation.
PHILANTHROPY: Since Ted Turner’s pronouncement that the rich are not doing enough for charity, there has been a slew of press stories that the large and rapid accumulation of wealth in the computer and computer software industry has not produced much in the way of philanthropy. What do you make of Turner’s criticisms?
MR. BRAINERD: I don’t take that too seriously—there’s more going on than perhaps Ted Turner is aware of. The focus tends to be put on Bill Gates, but there are literally hundreds of people in the Seattle community that are giving very generously to the community. This city is already very dependent on this next generation in any number of ways. These people are not public figures, they are not well-known names, but they are giving their time and money.
Second, these people are 35 years of age, they’re not 65 years old. They’re still early in their life, they have children, they are still working and they haven’t—at age 35—decided what their passions are in terms of charitable activity.
PHILANTHROPY: Speaking of Bill Gates, in a recent issue of Commentary, Thomas B. Fordham Foundation President Chester Finn Jr. writes (“Open Letter to Bill Gates”) that:
[T]he philanthropic word has developed a virtual civil service of “professional” employees who move from one foundation to the next while scaling the career ladder. Like federal bureaucracies, foundations are regularly lobbied by their “constituents,” employ lots of consultants, and are caught in the hammerlock of political correctness. And, like government, they have become smug, self-referential, and ossified.
Do you share any of these concerns and is that why you structured SVP the way you did?
MR. BRAINERD: Yes, I do share those concerns, but SVP is all about hands-on philanthropy of the people participating. Believe it or not, SVP has no staff. The partners do all the staff work. The Partnership is literally them coming together and learning by doing. There’s no way that kind of ossification is going to happen here.
PHILANTHROPY: Any closing thoughts?
MR. BRAINERD: The potential of this next generation to give back to the community is a 100 times greater than anything SVP is doing. The amount of wealth that is going to be transferred in this country over the next ten to fifteen years is just unbelievable. I want people to have that experience at an earlier age.