Traditional charities snubbed by high-tech companies

Gifts to United Way's Silicon Valley branch down 40% from 1990


In what may be a leading indicator of how traditional social welfare agencies are struggling even as technology yields new riches, the United Way of Santa Clara County, in Silicon Valley, collapsed this month as donations slipped, a reserve fund once brimming with $11 million went dry, and the agency ran out of money May 1.

Donations to the Santa Clara United Way, the 30th largest in the nation, are expected to total $20 million in the current campaign, down 40 percent from the $32.6 million, adjusted for inflation, that the organization raised nine years ago.

The social services agencies have faced even bigger cuts in the 1990s than these figures suggest, however, because the proportion of United Way money that donors designate to organizations other than social services agencies has been rising rapidly and now approaches half the total raised, said Michael E. Fox Sr., a San Jose beer distributor who is the United Way chairman.

While Internet millionaires in Silicon Valley have drawn attention for multimillion-dollar gifts to higher education and major arts organizations, social services charities there say they struggle with flat or shrinking support and are often spurned by high-tech companies who see no link between their business interests and social services.

Congress has slashed financing for social services charities by 25 percent since 1996, according to a study sponsored by the Nathan Cummings Foundation in New York. Donations to social services charities have slipped about 6 percent since 1990, two other studies show.

To help the 100 agencies in Santa Clara County whose financing was abruptly cut by the United Way collapse, Community Foundation Silicon Valley created a fund.

The first contributor, Steve Kirsch, the founder of Infoseek, recently put up $1 million and announced that he had asked a Who's Who of Silicon Valley billionaires and wealthy executives to match his gift. Days later, only eBay, the Internet auction company, has announced that it would match Kirsch's gift.

Eleanor Jacobs, the president of the United Way until she was fired on May 6, said that in her four years in San Jose, she approached many high-tech companies only to be told that the social services needs of the county were not important.

"The Silicon Valley way of life is one of the best in the country," Jacobs said, "but I don't know that there is a grasp on the part of residents that there are people who need basic social services -- shelters for battered wives, mental health services. I dealt with a number of companies whose officials said, `Our employees make this much money and they do not need these services, so why are you here?' "

Jennifer Tait, executive director of Friends Outside, which depends on United Way for 20 percent of the money it spends on counseling, job referrals and other help to families who have relatives in jail, said she had encountered similar responses. But Tait said the fault might lie with the charities themselves.

"Perhaps in this valley," Tait said, "we have done a poor job of educating the public" about how social ills spread when there are no services available.

United Way of America officials sought to portray Silicon Valley as an anomaly. Giving to United Way in other high-tech centers is rising. The officials cited the Research Triangle area of North Carolina, with the biggest growth, up threefold since 1984.

King County, Wash., and the high-tech community around Seattle -- which has about the same population as Santa Clara County -- raised $68.5 million in the current campaign, more than three times the amount raised in Santa Clara County.

Betty Beene, president of United Way of America, which represents 1,300 local United Ways, said the collapse in San Jose "is about a director with a good heart who made overly optimistic projections about pledges and who was trying to deal with a very high level of designations," in which donors directed which charities received their gifts.

After Jacobs was hired in 1995, she expanded the Santa Clara United Way staff to 77 from 52 even though donations were flat. Last fall, the board approved her request for a $1 million line of credit without inquiring about the state of the organization's finances, said Fox, who holds the volunteer position of Santa Clara United Way board chairman.

Pub Date: 5/30/99

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