Pacific NW Cover Story
Spreading the wealth
These kids have an odd mission: figuring out over the course of a school year how to most effectively give away $20,000 provided by the nonprofit Seattle Foundation. This is philanthropy boot camp.
It's Sunday night, Seattle's Museum of History & Industry is shut tight, and yet inside 17 teenagers surround a conference table littered with Pagliacci pizza boxes and Dorito chip bags. They sip soda and study a whiteboard that facilitator Lauri Conner of Seattle Academy has filled with goals, numbers and arrows.
It's an odd hangout, but then these kids have an even odder mission: figuring out over the course of a school year how to most effectively give away $20,000 provided by the nonprofit Seattle Foundation. This is philanthropy boot camp.
Matt Reneris, 15, hadn't even heard that fancypants word for giving when he was introduced to the strategy of charity, but he likes the responsibility. "It's fun, and we can have an impact now."
"Lots of people don't know how to make a difference," says his twin, Greg.
Lily Dickens, 16, already wants "to give back to the community."
"I'm big on equal rights and human activism," says Ryan Katz, an 18-year-old senior already active in politics.
Greg Smith, 15, expects an inheritance and expects to give much of it away. "I consider myself very privileged, and I'm interested in how to give back."
What seems odd may become routine for Seattle, one of the charity capitals of the United States. With the rise of local wealth from the digital revolution has come an explosive rise in giving. There is so much money, for so many causes, that parents involved with the Seattle Foundation — an umbrella organization dating to 1946 that helps coordinate local philanthropy — want their children coached and indoctrinated in a skill as basic as algebra or driving.
Participating teens are from local private schools and apply in a competitive process. Not all are wealthy, but all have an interest in giving, and signing on to the Youth Grantmaking Board helps satisfy public-service requirements of schools such as Lakeside and Overlake. Knowing that their dollars go only so far, the students meet monthly to reach consensus on a deserving charity, visiting examples and learning how money is raised and used.
"Boston and Atlanta have done this, too, but we've taken it further than most," says Sarah Wirz, who oversees the youth program now in its second year. Seattle has a summer "philanthropy camp" to expose teens to needy agencies, and an impressed adult donor doubled the grant for last year's group.
This Youth Grantmaking Board is an example of how money is changing Seattle, and how Seattle is molding the nation's concepts of wealth and responsibility.
While some critics contend Americans are obsessed with money and materialism, we're also generous. The United States ranked first in the world, from 1992 to 2002 (the latest available year) in the percentage of gross domestic product — that's 1.85 — donated to charity. And in 2001 the Washington Regional Association of Grantmakers put Washington at 46 percent above the national average in giving, per capita.
King County is king. The county contributes more to United Way each year in individual donations than any other American county, averaging about $100 million. (If you add in foundation and corporate grants, United Way of King County vies year-to-year with New York.)
The organization hit $122 million last year in a furious drive to meet a Gates Foundation "challenge grant," the push led by former Microsoft power couple Tricia and Jeff Raikes — who have another foundation of their own. Jeff Raikes will also take over as chief executive of the Gates Foundation in the fall, managing its $37 billion endowment. The 10-year goal that Bill Gates set for United Way (he matched $55 million in contributions and has promised a $40 million bonus) was met three years early.
It's an example of donation piling on donation: Microsoft employees gave $436 million to charity overall in 2006, on top of the scores of separate foundations that retired executives from Gates on down have established.
Boeing workers are usually the top givers to United Way, in total dollars. And the Chronicle of Philanthropy reported that in 2006, Washington Mutual employees pumped out $50.5 million to various organizations, Weyerhaeuser employees $15.7 million and Costco employees $15.6 million.
According to federal tax filings, King County counts for two-thirds of the state's charitable organizations and 93 percent of both giving and receiving in Washington.
"We're one of the most generous cities in the nation," says Phyllis Campbell, director of the Seattle Foundation, who at midlife took a substantial pay cut by leaving the presidency of U.S. Bank Washington to focus on philanthropy. "We have an unusual sense of the moral responsibility of wealth."
Regional grand totals aren't available, but Philanthropy Northwest did report that grants to foundations in the Pacific Northwest (which are estimated as one-fifth of charitable giving) rose to $725 million in 2004. The region was also unusual in that 26 percent went for global instead of domestic programs, as opposed to just 3 percent in gifts abroad as a U.S. average.
Even all those sums don't begin to reveal the full scope of nonprofit money-raising and spending. Nationally, there were 1.5 million nonprofit organizations in the U.S. recorded by the IRS in 2006, or nearly one for every 200 Americans. As of 2004, they had $1.1 trillion in revenue, gave $1 trillion, and had $1.9 trillion in invested assets.
The "independent sector" of charitable groups — foundations, museums, churches, private universities and the like — employed 11 million people in 1998, an Urban Institute study concluded, or 7.1 percent of the American workforce.
To put $1 trillion in perspective, it stacks up with federal spending, which is pegged at $2.8 trillion for 2008. Americans spend more on nonprofits (including churches) in a single year than the Defense Department says it will spend on the Iraq War over six budget years.
In fact, philanthropic giving has grown so fast — eight times just between 1970 and 1998, according to the Urban Institute — that nonprofits have become a new kind of shadow government and social safety net, albeit a fiercely competitive and uncoordinated one.
The biggest recipient is religion, which gets one third of American giving. That's why Utah, where Mormons are asked to tithe 10 percent of their income to the church, is ranked as the most generous state per capita. By that measure, "unchurched" Washington, which has a great deal of new wealth but relatively little old wealth, ranks only in the middle of the states.
Education is next most popular, getting 13.6 percent of donations. Then the causes multiply. They can be as basic as disease — experts have estimated 30 percent of the private research money into HIV comes from Seattle — or as refined as the arts.
Half of Seattle Opera's budget comes from donations, not ticket sales. For the symphony it is 45 percent. Even at Woodland Park Zoo, 18 percent of operating revenues come from donations. The Seattle Art Museum relies not only on grants, donations and memberships for 45 percent of its operating budget, it also draws on a thousand works of art donated from 40 private collections.
The annual Poncho auction that draws Seattle glitterati gave $1.2 million to 74 arts groups last year.
Such altruism is nothing new, and in fact has a long history in the Northwest.
Indian tribes in Washington and British Columbia practiced the potlatch, in which social status was achieved not by the accumulation of wealth but by the ostentatious giving of it away: even to the point of burning it before rival chiefs. The practice so bewildered white pioneers that the state and province outlawed it in the late 19th century.
The Seattle Foundation was started by Dr. Richard Fuller, founder of the Seattle Art Museum, as a way to pool wealthy giving after World War II. In the following decades, community notables such as Mary Gates, Ned Skinner, Norton Clapp and Jim Ellis set a standard of giving the present generation has tried to live up to. Ellis suggested "Give 5" — five hours of time or 5 percent of income.
Still, the sums being given today set a standard that's nothing short of astonishing.
In the face of widespread generosity, scholars have been moved to ask why humans give to each other at all, given Darwin's "survival of the fittest."
One theory is that giving, be it a thoughtful Christmas present or creation of a foundation, carries prestige and satisfaction the way the potlatch did. Neuroscientists reported in 2006 that giving stimulates the same "reward pathway" in the brain that lights up during food or sex.
Charity has its own social protocol, however. The HBO satire "Curb Your Enthusiasm" featured a clever episode in which Larry David's gift of a new museum wing is overshadowed by rival Ted Danson's gift as "anonymous" — but an anonymity carefully revealed to all Ted's friends. Danson's willingness to have his name taken off becomes even more prestigious than Larry's leaving his name on.
Another philanthropy theory is that the giving instinct is in our genes because as social animals, we have the best chance of related children surviving to carry on our DNA if the tribe survives as a whole.
A corollary in the natural world is slime mold, which operates as single cells until food runs short. Then the cells congregate in a mass, some sacrificing themselves to feed the others, so that the slime mold can metamorphose and become a fruiting body that shoots spores to a new location where food may exist.
As for humans, it's in our culture. Oprah Winfrey, a leading philanthropist herself, has tried to tap the impulse with her program "Oprah's Big Give," in which contestants compete to change the lives of strangers by giving. This being TV, the altruism champion gets to go home with a $1 million prize.
But the really big givers — at least many of those around here who donate millions — want to do more than satisfy an impulse. They seek to effect social change. Mike Hanlon, an early employee of Amazon and board member of Seattle's Social Venture Partners, tried to explain what's going on in a 2004 essay titled "Why I Give."
"Finally, I give because I want to reduce society's long-term demand for social services, especially those provided by the government," he said in part. "Politicians, attentive to short-term realities like elections, are not very good philanthropists."
Campbell is equally frank: "People don't trust government to spend their money properly."
Unlike paying taxes to the IRS, private generosity allows control. Not to mention a tax deduction, recognition in donor lists and occasionally awards, social status with wealthy peers, and even thanks. Nonprofits often send a note of appreciation for a donation, something Uncle Sam never gets around to.
The biggest givers also tend to be highly successful workaholics used to being in control. Former Microsoft executive Scott Oki estimated he worked standard 100-hour weeks for three years with only a single day off before retiring and creating his Oki Foundation. Many have a specific cause.
For example, Bill and Melinda Gates have targeted malaria, Paul Allen has underwritten research into the human brain, Ida Cole revamped the Paramount Theater, Bruce and Jolene McCaw founded the Talaris Foundation to improve prenatal and infant development, and Paul and Debbi Brainerd built IslandWood on Bainbridge Island for environmental education.
When Richard Weiland, one of the founders of Microsoft, committed suicide at age 53 after a lifelong battle with depression, he gave almost all his $175 million fortune to charity and donated about $40 million of it to gay and lesbian causes.
Organizations can be as traditional as the Boy Scouts or as techie as former Microsofty Trish Millines Dziko's $1.4 million-a-year program to get computers and scholarships to local students of color.
Some of the wealthy have married private wealth and public aspiration. Sen. Maria Cantwell used $10 million of her RealNetworks stock to finance her first Senate campaign, later raising money to pay herself back. Microsoft millionaire Tina Podlodowski, who is now president of Big Brothers and Sisters of King County, initially served on the Seattle City Council.
This private funding of public causes is a big change. In the aftermath of the Depression and New Deal, the assumption was that government would heavily tax the rich and then redistribute the money to cover social needs. This template prevailed through the 1960s, when income-tax rates rose as high as 90 percent.
But with Ronald Reagan preaching that "government isn't the solution, it's the problem" and George W. Bush calling for "compassionate conservatism," American society shifted in allowing the wealthy to keep a higher percentage of their income while expecting they will give more.
According to tax filings, at least two-thirds of Americans with incomes over $100,000 give to charity — more than vote or read a newspaper.
But intriguingly, giving is not confined to the rich. The Journal of Philanthropy reports that as a percentage of income, the poor often give more than the rich, black people give more than whites, and women give more than men.
There is a lot of overlap. United Way, for example, lists at least eight organizations it funds dealing with sexual or child abuse, and many more with a broader mandate that likely includes abuse. While the assumption is that the commitment and focus of private charity is highly efficient, there actually seems to be surprisingly little study of whether this proliferation of private, nonprofit organizations does a better job than, say, the state Department of Social and Health Services.
Efficient or not, the private giving — even of huge sums — doesn't escape criticism. The late Dorothy Bullitt gave away an estimated $100 million on everything from keeping classical music on the radio to green causes, for example, but conservative "wise use" activist Ron Arnold once charged that the Bullitt Foundation "funds a large, persistent and strategically orchestrated anti-industry crusade in the Pacific Northwest."
Bill Gates was accused early on of giving to causes that would use his software, and Paul Allen of backing a stadium, park and streetcar that would benefit his business interests. As their giving has mounted — Allen has donated at least $800 million, and the Gates Foundation has given away $16.3 billion to date — the carping has declined.
The simple truth is that many hard-working Seattleites feel fortunate and want to share.
For Bill Clapp, an heir to the Weyerhaeuser timber fortune and a highly successful businessman in his own right, the philanthropy bug was a midlife changeover. At age 51, "There was something missing for me," he explains. "I was taking stock of my life over the next 30 or 40 years."
Persuaded during Seattle's 1990 Goodwill Games to visit the poor in Central America, he became a proponent of "microloans" to village entrepreneurs for basics such as a sewing machine or plastic wrap to cover restaurant food. He could help people help themselves.
With his wife, Paula, a mental-health counselor who came from a middle-class family, he poured his energy into a new organization called Global Partnerships, eventually enlisting 200 other companies in the lending program. "Micro-credit really works," says Clapp, whose group by 2007 had leveraged $28 million into 465,000 loans. The repayment rate has been 98 percent.
"To me, it's spiritual work," Paula says. Like many wives, she has turned philanthropy into a partnership. "Once you have the intention, doors open."
Few couples have been as generous as the Brainerds, who put a third of the fortune Paul Brainerd received when selling his software company into their own foundation. "At a certain point you make enough money that you don't need any more," Paul says. "So — how do you give it back?"
"You become aware you could have anything you want, but the physical things don't create happiness in life," says Debbi. "Giving feeds me. It's a heart-calling."
But giving money away wisely can be as difficult as making it in the first place. Debbi worked 60-hour weeks building and administering IslandWood, which now has 70 employees. Like many donors, they found that the more they contributed, the more they were asked. "You end up not having much of a personal life," she says.
"There's a misperception that if you have a lot of money it makes life easier," Paul continues. "It makes it more complicated . . . This work really requires you to be grounded on values and your own beliefs." He went into the Alaska wilderness to consider what he really cared about, and did extensive research. "You also have to have the ability to say 'No,' clearly."
One reason the wealthy set up foundations with professional staff is to screen and evaluate all the pleas.
Yet people like the Brainerds are not backing away, recognizing that as government retreats and America's wealthy class grows, it will be asked to do more and more.
We're not back to the potlatch. But just as aboriginals found ways to share with gifts and feasts, Seattle is finding ways with auctions, corporate tables, fund drives and foundations.
William Dietrich is a Pacific Northwest magazine staff writer. Erika Schultz is a Seattle Times staff photographer.
Copyright © 2008 The Seattle Times Company
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