John Sobrato is a family man running a family business, plus a family philanthropy.
The only child of two hardworking Italian immigrants, during his sophomore year of college Sobrato started helping his mom with her real-estate investments, and selling homes in Silicon Valley for $20,000. A year after his graduation in 1960, the mother-son duo organized their first industrial project for a major company—a 14,000-square-foot building for Lockheed. The Sobratos were now developers, and Silicon Valley would never be the same. Forbes currently estimates the net worth of the Sobrato family to be $6.9 billion.
The Sobrato Organization still has no outside shareholders, but it has grown to manage more than 75 commercial properties in the Valley, with a particular niche in high-tech headquarters like the custom buildings created for Netflix, Apple, and other premier tenants. While expanding this business, the Sobrato family has given over $379 million to nonprofits in the region through their family foundation, in addition to personal gifts distributed across the country and world. In 2012 John and Susan Sobrato and their son John Michael became the first two-generation family to sign the Giving Pledge, agreeing to leave their estates to philanthropy.
Philanthropy: The first real-estate investor in your family was your mother. How did she get into the profession?
Sobrato: My parents immigrated from Italy almost a hundred years ago. My father had a very successful restaurant in San Francisco called “John’s Rendezvous.” His busiest time was during the war years, when everything was rationed. You couldn’t get vegetables, you couldn’t get chicken. So my mother had the idea to buy a ranch. They bought a couple of acres in Atherton, tore out the lawns, and raised produce and poultry for the restaurant. My dad worked hard. In the restaurant business, you have to be there on a daily basis. He never got home before one or two in the morning. Then he’d leave the next morning around ten.
After the war, my parents didn’t need this two-acre estate in Atherton anymore, so they sold it. They made more money on that property than they did all the years of working 18 hours a day during the war. That’s why I’m in real estate, and not the restaurant business.
Philanthropy: Can you tell me about your parents’ philanthropic priorities?
Sobrato: When I was about ten years old, my mom used to take me on her volunteer trips to St. Anthony’s soup kitchen. She would cook and serve meals one or two days a week, my first introduction to charity. And my father always had a wad of bills in his pocket, being in the restaurant business. I can remember waiters and bartenders coming up and saying, “Hey John, I have this problem. Can you lend me some money?” He’d whip out his wad of cash and hand bills over to his workers.
Philanthropy: Tell me about your family foundation.
Sobrato: The foundation focuses on Silicon Valley grants. Of course, there’s also a lot of need outside of Silicon Valley. So less than half of my giving is through the foundation.
My wife Susan and I have three children and seven grandchildren, and the Sobrato Family Foundation has voting members from all three generations. Our grandchildren are allowed to attend foundation board meetings, and they can vote on grants after their twenty-first birthday.
When we donate appreciated real estate to the foundation, half the amount is deposited in each child or grandchild’s donor-advised fund, and they can make grants out of that fund however they wish without having to come to the board for a vote. We hope that by doing this we encourage the family to continue giving together rather than drifting apart.
When we set up trusts for our grandchildren we stipulated that they start receiving distributions at age 25, and those payments increase at age 30, 35, and 50. But in order to receive those funds, we require that they grant a similar amount to charities of their choice. To get $100, they have to give away $100.
For example, my grandson John Mathew is 31, and he has a passion for teaching high school to low-income students. He is now vice principal at Latino College Preparatory Academy in East San Jose. When he turned 25, he gave some of his trust distribution to deserving students for scholarships so they could attend college. Now he is paying for half the cost of a new academic building, and I am paying for the other half. It’s an $11 million project.
We thought it was important to encourage our grandchildren and children to do as we do. There’s enough wealth that they’re comfortable, but not to an excess. And our kids aren’t selfish, so they’re okay with this. They don’t have to have three airplanes and five houses.
Our giving also keeps us close. Making decisions on our shared priorities creates a natural process for learning each other’s passions and opinions.
Philanthropy: Tell me about the foundation’s focus on office space for nonprofits.
Sobrato: Like the cost of housing, the cost of office space in Silicon Valley strains the budgets of our local nonprofits.
When my mother died about 15 years ago, we decided to convert a multi-tenant business park in Milpitas that she bequeathed to the family into a center for free office space for nonprofits. It proved so popular that we converted another building in San Jose, and then another campus in Redwood Shores. We now have about 350,000 square feet of office space housing 75 nonprofits free of charge. We also have free meeting rooms and conference facilities for up to 150 people at each center that any nonprofit can reserve, which saves the cost of renting hotel conference facilities. Last year alone we hosted 8,400 meetings for 176 nonprofits in our region.
In order to set up an office in our space the nonprofit has to have a budget of at least $300,000, and it has to have been in business for a number of years and have good leadership. The executive director of a charity makes a big difference.
Philanthropy: Your foundation is known for giving general-operating support.
Sobrato: Our general-operating grants can be used however the group wishes. We see it as a sign of our trust. Our only stipulation is that the second-year payment is conditioned upon the organization providing proof that it was able to match our grant with pledges from new donors or increased giving from existing donors. Nearly 100 percent of our grantees over the years have succeeded at matching our dollars, and a large portion raise more than is required. The nonprofits tell us that a Sobrato gift is an imprimatur that helps them with other funders.
Philanthropy: How has Silicon Valley changed in your lifetime?
Sobrato: When I was selling houses in the 1960s, you could buy a nice home for $20,000. The population really started to boom around the early ’70s. Now we have a lot more people, and very little developable land anymore. Supply and demand are out of whack.
Realistically the only solution is to build more housing. I believe we will eventually see neighborhoods accept taller buildings, more density. We can’t fill the bay, we are surrounded by mountains and open space that we cherish, so the only solution is to build up. The typical complaint is that more density will bring more traffic, but I think autonomous vehicles and ride-sharing will become the norm and our existing roads will be able to handle more people without more cars.
Philanthropy: Do you think that Silicon Valley is a generous place?
Sobrato: Much of the wealth in Silicon Valley has been created by entrepreneurs who came here from other regions of the U.S. and from all over the globe. Astoundingly, over 60 percent of the high-tech workers here are foreign-born. So it only stands to reason that many want to give back to the countries they came from. But for my family, when we founded the foundation 21 years ago, we wanted to give our resources and time to where we built our success, so the vast majority of our foundation’s grants are invested in local causes.
There has been a lot of press lately about the Silicon Valley Community Foundation, that it should do more to convince donors of pressing needs right here in Silicon Valley like homelessness and hunger. Nearly 25 percent of our population here lives in poverty—mostly Hispanic people living in the shadows.
Philanthropy: You’ve been very involved with homelessness.
Sobrato: I serve on the board of Destination: Home, which is encouraging corporate gifts to leverage a $950 million bond that was approved by Santa Clara County to build affordable housing for homeless people. Cisco and Schwab have each pledged $50 million, and Kaiser Permanente is offering $200 million.
We face stiff opposition, though, from homeowners in the neighborhoods where these homes would be built. They’re concerned about poor people walking around, accosting their children, breaking into cars. And a lot of homeless people will need support services—they might have drug habits, mental issues. We think those services can be placed on-site, and the neighborhood issues can be solved with the right management. But some neighbors threaten to use the California Environmental Quality Act to file lawsuits and delay projects for years and years.
There is legislation moving through the state right now saying that if you’re going to build for the chronically homeless you don’t have to go through the CEQA review. That would make a huge difference in getting these projects going. But you still need a local government that is sympathetic, and residents often threaten to vote to recall elected officials that support these projects. That’s why a lot of these buildings aren’t getting built, even though we now have a pile of money for that purpose.
Philanthropy: What causes in the Silicon Valley receive lots of support, and which ones are more neglected?
Sobrato: Stanford gets an inordinate amount of support. Its endowment is over $20 billion. Meanwhile there are thousands and thousands of people that rely on the food banks here to survive.
There are a few high-tech CEOs involved. Charles Robbins, the CEO of Cisco, is working on this homeless issue. Sheryl Sandberg, the COO of Facebook, is focused on hunger. The Chan Zuckerberg Initiative is national, but it is spending a lot of money in Silicon Valley trying to improve educational outcomes. So a few executives are into local causes. But they’re the exception. Most executives focus on where they were born.
Philanthropy: You’re also a funder of the Alliance for Catholic Education, which channels talented college graduates into teaching positions at poor Catholic schools, much as Teach For America does for public schools.
Sobrato: I met Father Tim Scully, who leads the ACE program, based out of Notre Dame in South Bend. They run an intensive summer program where recent graduates learn how to educate and mentor young kids. While they work in their assigned school for two years, the ACE instructors live together in a group house, where they reinforce each other’s growth in teaching and in faith. We started out by sponsoring a cohort of six teachers in Silicon Valley.
I met the teachers, and was impressed with what they were accomplishing. And the receiving schools were very happy with them. So I said we also had to create some successor effort locally. At Santa Clara University we started a similar program called ExCEL that I’m very involved in. Like ACE, ExCEL participants live in community and teach within the Diocese of San Jose. After three years they earn a M.A. in teaching from Santa Clara University. We graduated our first group this year.
I also started sponsoring another program at Notre Dame where they take students who have taught for two years through the ACE program, and train them on how to be a good principal of an urban Catholic school. They are called Sobrato Scholars, and we’ve doubled the number of participants since we started this program a year ago. Notre Dame receives between 200 and 300 applications from across the country every year for 60 to 70 spots.
This is not foundation money, it’s personal giving. The foundation focuses on Silicon Valley. The family does things in other places through our individual gifts. So I support ACE, and institutions like Catholic Relief Services and Cross Catholic International, which is based out of Florida and works with the poorest of the poor in third-world countries, in concert with local priests who identify needs. Right now, we’re building a preschool in Belize and CRS is distributing food to Syrian refugees.
Philanthropy: You’ve also worked closely with the Catholic diocese here in San Jose to create a strong governance model for managing its parish schools.
Sobrato: A diocese has a bunch of parishes, most with their own Catholic school, and the pastor is in charge of that school. Unfortunately, the pastor has a lot of demands on his time. There are funerals, weddings, sermons to prepare. Pastors really don’t have the time and expertise to run a school.
In San Jose, Father Brendan McGuire, who’s the vicar general, came up with a model for providing oversight of the schools through the diocesan offices rather than the local parish. They just hired a new superintendent for the San Jose diocese, who incidentally is an ACE leadership graduate.
Education is the surest way out of poverty. You need to have a good education to get a job that can pay you enough to live here. Amazingly, you have to make about $150,000 a year to rent a two-bedroom apartment in our region.
Philanthropy: And you’re very involved with Cristo Rey, the network of Catholic high schools that combine high academic standards with work in healthy businesses.
Sobrato: I was at a friend’s winery in Napa five years ago, having a glass of wine and talking to the fellow next to me. He said he was on the board of Cristo Rey in Denver. I asked him, “What’s Cristo Rey?” I had no idea. He explained the model, and I thought we ought to have one of those in San Jose, so I reached out and started working on it.
We created a founder’s circle of about a dozen people, had Father Foley come out to make a presentation, and did our best to raise money. Then I told Bishop
P. J. McGrath that I wanted to start a local Cristo Rey school, but needed a location. He told me about a school the diocese closed five years ago because the families in the neighborhood couldn’t afford the tuition. The building was vacant except for periodic catechism classes. I took a look, and it was a very small site, but I thought we could make it work.
We started with 130 students. Now we have 470. We just put up two additional buildings on campus, after raising $25 million.
The average income of a Cristo Rey family is less than $40,000 a year, with both husband and wife working. Consequently, many of our students’ families live by doubling or tripling up in apartments, or living in garages. So we offer nutritional meals at school for breakfast, lunch, and dinner for some students. But we still require families to pay something, even if it’s $50 or $100 a month for their child to attend. We want the family to have some skin in the game. After the family contribution, everything else is paid for. It costs us about $17,000 per student a year because we have to pay decent salaries to get good teachers in this area.
Our students work in industry one day a week and go to school four days a week, over an extended day, and an extended school year. We teach them how to type, work a spreadsheet, and other entry-level business skills so they can do meaningful work for our corporate partners, who pay the school $34,000 a year for the work done by a team of four students each putting in one day a week. We have students at tech firms like HP, Cisco, and Google, as well as local hospitals and law and accounting firms. Most of our students are bilingual so, for example, in hospitals they can translate for patients coming in who don’t speak English. The salaries they earn cover about 50 percent of the school’s operational costs, and our students see firsthand why it’s important to finish high school and go on to college.
We graduated our first senior class of 110 students this year. Every one was accepted to college and is planning to go. To give you a sense of how this has been received by the community, our graduation ceremony had to be held at Santa Clara University, even though we just built a multi-purpose hall that seats 500, because so many family members wanted to come.
Philanthropy: You’re also a proponent of blended learning, the educational method that uses intensive and personalized computer instruction to supplement classroom teaching.
Sobrato: Educational software is really improving dramatically. It’s amazing. It provides teachers with immediate, detailed feedback on exactly where a particular student is struggling.
That’s one of the reasons we’ve had such great success at Cristo Rey in San Jose. We’ve been able to raise test scores, especially in math and in English, by using blended learning. There are 34 schools in the Cristo Rey U.S. network, but we were early to start with blended-learning strategies, being in Silicon Valley. And they’ve worked so well that a lot of other Cristo Rey principals have come out and visited with us.
Philanthropy: Can you tell me about the Sobrato Early Academic Language model?
Sobrato: The idea behind SEAL is to quickly teach enough English to Spanish-speaking kids so that by the time they’re in third grade, they’re academically literate. Some of these kids can speak English, but not of a quality needed to answer an academic question. The focus, starting when the kids are three, is to make their vocabulary richer, not just in English, but also in Spanish. It is a dual-language environment; the classrooms are very lively.
We started six years ago with 1,500 kids in five local schools. Originally, we were paying 100 percent of the costs, about $3,000 a student. Now that the success of the model has been proven, school districts pay two thirds of the program cost, and we pay one third. And we’ve grown rapidly. We’re up to 50,000 students in 100 schools.
Philanthropy: You’re also not afraid to get involved with advocacy efforts when they are needed to improve the functioning of schools.
Sobrato: We’ve probably given $1 million to three or four different organizations that are working in education advocacy. We’re working with community groups to make sure that locally controlled funding dollars go to the right place. For example, when needy schools are given extra money by the funding authorities, the public-school managers often just spread the money across the board for salaries instead of focusing it on effective teaching. We have to change that type of thinking. A lot of things are screwed up in the California education system, including giving teachers tenure after two years. We’re working with different advocacy groups to try to change the rules.
Philanthropy: You recently gave a $100 million gift to your alma mater Santa Clara University for a new STEM building.
Sobrato: The irony is that I almost flunked out of Santa Clara because I wasn’t any good at math. As a freshman engineering major you also had to do very careful printing for drawings, and I had sloppy penmanship. I switched my major to business and was on the dean’s list from then on.
The first Sobrato gift to Santa Clara was from my mother and me—we donated a percentage from the sale of the building we put up for Lockheed back in 1962. That established the chair for the engineering dean in memory of my father.
For this latest gift, I want the building to set a new standard and differentiate Santa Clara from our neighboring institutions at Stanford, Berkeley, and San Jose State. Those institutions offer STEM programs, but at the graduate level. This building will support both undergraduates and graduate students; focused specifically on working in collaboration across disciplines. We’re going to start construction at the end of this year. We hope to have it finished by 2021.
I’m on campus about every two weeks, meeting with the staff and the architects. I’m very involved in the design and the materials—the stone, the doorknobs, the amount of glass in the building. I’m trying to make it more like a typical high-tech headquarters.
For example, in the past, all professors insisted on a little private office, a place where they can lock the door, have all their books on the wall. Their little cave. This is going to be different. Professors are going to have a private office, but it’s going to be all glass, with no lock on the door. It will look more like Facebook or Google. And I hope this will make them more accessible to students.