Charity In The New Economy

Jim Barksdale, Sunday Morning, Dec. 31, 2000

When you watch Jim Barksdale reading to kids in his home state of Mississippi, it's hard to imagine him as a high tech business mogul whose net worth is upward of $700 million. But the man who once concentrated on building companies now has a different goal: "We're going to teach little children to read whether they want to learn how to read or not," he says.

And to do it he and his wife Sally are giving Mississippi a huge chunk of the fortune he made when Netscape, the Internet company he helped run, was sold to America Online two years ago. Correspondent Rita Braver reports on the new breed of high-tech corporate philanthropists.

The Barksdales didn't have the big money very long before they decided to give it away.

"We couldn't figure out what to do with it," explains Sally Barksdale. "You can only spend so much on yourself before it just gets ridiculous. So why not do something with it while we're here to see what happens to it?"

The Barksdales have set a lofty goal: raising the reading levels of all Mississippi schoolchildren, currently ranked among the lowest in the nation. To do it, they have funded an ambitious new literacy program that includes the latest computer software, one-on-one tutoring and intensive instruction for teachers in how to identify individual reading problems for each and every child.

And in running the program, the Barksdales, like a growing number of high tech philanthropists, are applying business skills, drawing not only on goodness of their hearts, but also on the practices that made them so rich in the first place.

"In the business world you learn how to plan, organize, staff, direct, control," says Jim Barksdale. "You learn how to measure and make people accountable for it."

Accountability is the key. Under the terms of the Barksdales' gift, to keep the full $100 million, the Mississippi schools must show a marked improvement in children's reading test scores, within five years.

This new style of giving even has a new name. It's called "venture philanthropy" and it works the way venture capital works in the business world: You put investment money in, you stay closely involved in the project and you expect results.

So what will happen if it doesn't work out?

"(We) were convinced it will because it's research based; we've already tested the program across 800 first grades and their scores shot up," Barksdale says. "If it doesn't work, then there was a noble effort, and we'll figure out something else to do."

The Rockefellers and the Carnegies made their philanthropic mark at the start of the last century by funding institutions like universities and libraries that might bring about societal changes subtly.

But these new philanthropists are more interested in designing specific programs aimed at eliminating the underlying causes of poverty and other social ills.

"You don't see them demanding that they wnt their name emblazoned all over some building," says Stacy Palmer, editor of the Chronicle of Philanthropy. "They really care about the ideas and what's going on inside those buildings and they're going to provide as much money as they can to do that."

Palmer says many of the new philanthropists also steer away from more established charities like the Salvation Army or the United Way.

And many of the new philanthropists are young. Jeff Skoll, co-founder of the online auction company eBay, is only 35. His estimated net worth: $2 billion.

"Well, when Pierre and I got started on this, we didn't pay ourselves salary," he says. "I was still living on credit cards and paying off some old debt."

"I've given away probably $100 million," he adds. "To go from nothing to having all that overnight is just overwhelming."

Skoll has spent his money on projects that include bringing technology skills to young people from Guatemala to San Francisco and lots of places between. But because he is a relative novice at giving away money, both he and his company have turned to a new breed of professional helpers.

"They handle the due diligencey and the tax compliance and all the ugly stuff," Skoll says. "And that leaves us to focus on where we want to give the money to the best causes. "

Community Foundation Silicon Valley serves as a venture philanthropy management fund. It has about $650 million in assets that were donated by over 500 individuals and, in some cases, corporations.

That may be small potatoes compared to the $21 billion that Microsoft founder Bill Gates has poured into his own foundation or even the $5 billion that Intel co-founder Gordon Moore has put up. But it is enough to take on a major project in San Jose in the heart of Silicon Valley. The community foundation, working with other groups, is spending $40 million over six years trying to save an entire one-square-mile neighborhood from decay.

Rebuilding a community garden was just one project. "It was in terrible shape," says foundation presdient Peter Hero. "It was overgrown; there were no vegetables or flowers being grown....It was being used for drug deals. There was a high crime area."

Other projects involved bringing health counselors into the homes of working-class Hispanics, providing seed money for day-care centers, starting a computer academy to train the mostly unskilled workers who live here and giving residents a "can-do" attitude; for example teaching them to set up their own nonprofit community organization.

"The goal overall is to enable an entire neighborhood to design its own future and move toward it (being) driven by the people who live here, not by some outside authority," he says.

It's too early to see whether this initiative really will succeed, or indeed whether venture philanthropy is here to stay.

But Palmer of the Chronicle of Philanthropy say that some old-line charities have doubts about whether the new ones can really change even little pieces of the world.

"They tend to expect results very, very fast," she says. "And they often are asking results from people who may not ever have had the resources before to do what (they) needed to do and haven't had the experience making change happen in a very fast way."

Experts like Palmer also fear that with dot-coms folding and a current downturn in the high-tech economy, there could be a decrease in the new philanthropy.

But in Mississippi, the Barksdale Foundation money is a sure thing as long as reading scores start to rise, and Jim and Sally Barksdale have no qualms about how they're spending their fortune.