Learning from the History of Philanthropy in the San Francisco Bay Area

Cable car going down hill in San Francisco

The San Francisco Bay Area is one of the most prosperous places in the United States, home to technological giants, entrepreneurial universities, and cities where more billionaires per capita reside than almost anywhere else in the world. But the Bay Area is also one of the nation’s most economically unequal places, marked by widening income inequality and under-resourced nonprofits. Alarmed by the region’s “prosperity paradox”—which intensified during the coronavirus pandemic—Northern California Grantmakers and Open Impact called on philanthropy “to chart a course toward a more caring, connected, and equitable region.” While inequality in the Bay Area has gained renewed attention in our time, the region’s simultaneous extremes of progress and poverty also concerned donors of the past. Their giving attempted to resolve disparities in wealth and political power in the region, and their successes and failures provide lessons for philanthropists of our era.

Philanthropy can allow some disadvantaged groups to influence civic life

Philanthropy served a vital function in the early development of the San Francisco Bay Area. Weak government and a growing population made philanthropy a necessity. Following the discovery of gold in the Sierra Nevadas in 1848, the Bay Area welcomed thousands of newcomers while confronting crises eerily familiar to those of recent times. “Our city is growing up like magic, peopled with natives of every country,” reported a resident in 1849. But crises hauntingly similar to those of recent times followed the magic. Outbreaks of disease accompanied the city’s growth, while wild booms and busts ruined businesses and pushed thousands out of work. With limited government capacity, San Franciscans often had to rely on charitable giving to meet their day-to-day needs.

Conditions that made private giving necessary to meet the needs of the most marginalized community members, those same conditions also allowed groups that otherwise confronted discrimination to become noted philanthropists. German-Jewish merchants enjoyed success in the Bay Area, finding a region that “needs for skill, experience, and capital” made “anti-Semitism too expensive a luxury.” The Haas, Koshland, Stern, and Zellerbach families, among others, repaid the opportunities the region afforded them by becoming multi-generational philanthropists. Artifacts of their philanthropy still exist in the Bay Area, from the Sutro Baths, Mount Zion Hospital, to Sigmund Stern Grove, as well as in the foundations that carry on their names.

In addition to Jewish families, women were prominent philanthropists in the Bay Area. As the historian Marta Gutman argues, women were excluded from well-paid positions or political participation, yet they influenced the politics and culture of the region through their charitable giving. Women led many of the organizations that provided essential services for locals, while leveraging the value of their charitable work to influence legislation with tax-avoidant politicians. Jane Stanford, Miranda Lux, and Phoebe Apperson Hearst, among others, led efforts to create free public kindergartens and expand college access for other women.

While philanthropy afforded some groups the opportunity to shape the Bay Area’s civic life, the region by no means shared that opportunity equitably. Economic inequality and racism intensified at the turn of the 20th century, as civic leaders scapegoated Chinese residents for the region’s various problems. Many Chinese people worked in the businesses of philanthropists, yet those donors—including Adolf Sutro and Levi Strauss—promoted or otherwise relented to anti-Chinese xenophobia. Some fired and barred Chinese workers from jobs, while others encouraged their deportation.

The paradox of philanthropy in the Bay Area was apparent from the region’s beginning. Philanthropy allowed otherwise excluded voices and views to be heard and seen, but also did little to fundamentally alter the inequitable conditions that existed, or to prevent those inequities from carrying into future generations. However, in the legacy of the philanthropies left behind, were the seeds of more radical change.

Philanthropy can address public sector gaps

The Bay Area also demonstrates that philanthropy has a special ability to fund causes that would otherwise go unsupported by government or business. As the political theorist Rob Reich argues, philanthropy can experiment because of its lack of accountability to voters, customers, or investors. While Reich helped popularize the idea, Bay Area funders were well-aware of philanthropy’s capacity to serve as society’s risk capital in earlier decades. For example, in 1957, Roy Sorenson, president of the Rosenberg Foundation, explained that the foundation practiced “the ‘venture capital’ principle of foundation policy [and thus funded] programs with little chance for initial support elsewhere.”

While Bay Area philanthropy funded many experimental ideas, perhaps the brightest demonstration of private giving’s role as risk capital can be found in the region’s darkest periods.

Philanthropic foundations offered support to Japanese-Americans, who confronted racism and xenophobia in the Bay Area during World War II. In particular, the Rosenberg and Columbia foundations—the earliest private foundations in the Bay Area with staff—offered aid to Japanese-Americans even as public opinion and the state turned against them. In 1942, the federal government forcibly removed Japanese-Americans to “relocation” camps, gutting once vibrant Bay Area neighborhoods and upending thousands of lives. While offering no direct challenge to the government’s policies, Rosenberg and Columbia nevertheless supported Japanese-Americans by funding scholarships, programs on interracial understanding, research on the internment camps, as well as supporting Japanese-American led organizations.

The HIV/AIDS crisis of the 1980s further demonstrated private giving’s capacity to confront controversy and serve the needs of marginalized populations. By 1981, the same year health officials became aware of AIDS, the disease claimed the lives of many lives—most of them gay men. Many more people would perish to the disease. But homophobia, misperceptions of AIDS as a “gay plague,” and President Reagan’s reluctance to acknowledge the disease meant the epidemic raged with little intervention by federal authorities.

Instead, volunteers and donors were the first to protect the Bay Area from HIV/AIDS. The Kaposi’s Sarcoma Research and Education Foundation, established in 1982 and later renamed the San Francisco AIDS Foundation, provided critical early support and educational resources. Private giving sustained the foundation’s work as well as the broader fight against AIDS. The San Francisco-based Horizons Foundation, created in 1980 as the first community foundation by and for gay people, was one of the San Francisco AIDS Foundation’s earliest sponsors. The Levi Strauss Foundation was also the earliest corporate foundation in the nation to support education on AIDS. By the time President Reagan delivered his first major speech on AIDS in 1987, activists, volunteers, and donors had already waged a five-year battle with the disease throughout the Bay Area.

Philanthropic involvement in Japanese internment and the HIV/AIDS crisis demonstrates how private giving can serve the needs of BIPOC and marginalized populations, even, and especially, when public institutions are slow to act.

Philanthropy can divert or strengthen social movements

If philanthropy’s lack of accountability can enable it to provide resources to people and organizations unlikely to secure support from government or business, it can also be a burden to the beneficiaries who must rely on philanthropic support. Funders can redirect the efforts of nonprofits by virtue of their power to decide how philanthropic wealth should be allocated. At times, funders can use this power to impose their preferences on the organizations closest to social problems, even when a donor’s vision is contrary to that of the nonprofits they fund.

The challenge of funder influence is prominent in the history of philanthropic support for social movements. For example, during the 1960s, the San Francisco-based Rosenberg Foundation became one of a small number of foundations to support the farm workers movement in California’s Central Valley. Rosenberg, long supportive of migrant families, wished to aid workers in their quest for better wages and working conditions. However, the foundation refused to fund the strategies favored by workers, including organizing labor unions and direct challenges to the agricultural industry.

Rosenberg’s reluctance to trust the knowledge of its beneficiaries hamstrung the effectiveness of its funding partners. The scholar Erica Kohl-Arenas argues Rosenberg privileged its understanding of the problems confronting farmworkers, focusing on leadership training and cross-cultural education rather than the methods preferred by workers themselves. While well-intentioned, Rosenberg’s conditional grantmaking constrained and redirected the work of its funding partner away from confrontation with the farm industry. Kohl-Arenas and the political scientist Megan Ming Francis refer to this outcome as “movement capture,” the result of philanthropic funders using their wealth to shape the strategies of political movements.

While philanthropy can capture movements, history also records funders who strengthened political movements without imposing their vision upon them. In the 1970s, young and wealthy activists created a model of philanthropy that they hoped “would take the power, as well as the money, out of donors’ hands and put it into the pockets of activist organizations.” The Vanguard Public Foundation, created in San Francisco in 1972, was one of the earliest products of their work. Described as an “alternative fund,” Vanguard collaborated with activists to fund causes “too controversial or too risky” for other funders. While Vanguard’s donors held full control over grant decisions, the foundation decided in 1977 that “if it were really serious about redistributing power in society, that redistribution had to include the power to give money.” To that end, Vanguard created a community board of activists and community leaders to make grant decisions.

By enlisting community participation in its grantmaking, Vanguard presaged the participatory philanthropy of our era and helped fund grassroots civic activism. The foundation’s work anticipated philanthropy’s more recent move to place greater trust in the expertise of funding partners and those closest to social issues, showcasing the reality that funders can build more equal relationships with their funding partners. While Vanguard dissolved in controversy in 2011, the foundation leaves behind a legacy of support for women’s rights, prison reform, anti-war activism, and alternative media.

Places can shape how we give

If history serves as a warning about philanthropy’s potential to abuse its power and control funding partners, it also furnishes insights into how much place informs how donors think about and practice giving. Silicon Valley is a strong example of how the character of local industry affects how philanthropists think about and wish to engage in their giving. Compared to San Francisco, Silicon Valley’s history of philanthropy is much more recent, and its giving reflects the region’s history of technological innovation and entrepreneurship.

The region’s early tech industry produced philanthropists, but those donors did not serve as strong role models for later givers. William R. Hewlett and David Packard, who co-founded Hewlett Packard in 1939, funded arts and cultural institutions and were lifelong supporters of the natural environment. But as Peter deCourcy Hero, then executive director of the Silicon Valley Community Foundation explained in 2000, “Most people did not identify with [Hewlett and Packard] because of the scale of their wealth and the enormity of their generosity was beyond people’s capacity.” Hewlett and Packard also committed to philanthropy late in their life, while later generations were relatively young and reluctant to step away from their businesses.

Silicon Valley’s later generations were drawn to forms of giving that allowed them to combine their entrepreneurial ability with philanthropy. Steve Jobs, co-founder of Apple, is the perhaps the most famous early example. Jobs left little record of monetary contributions, admitting to not having enough time do such giving well. He instead committed himself to his business, which he believed produced more social good than charity. Jobs also led a campaign in 1982 to create more generous tax breaks for companies that donated computer equipment to primary and secondary schools.

Perceptive advisors understood that Jobs and other entrepreneurs were reluctant to follow in the footsteps of their predecessors, and cultivated forms of giving that suited local preferences.  Peter Hero, remembered as “the man who sold Silicon Valley on giving” inspired donors by promoting what he called “venture philanthropy.” Drawing from the language of local industry, Hero described venture philanthropy as the “Silicon Valley way of giving,” one that involved strenuous involvement in the giving process, a commitment to achieving measurable returns, and a focus on evidence and innovation rather than emotional appeal and tradition.

The case of Silicon Valley demonstrates how much place and local culture can inform how donors think about and practice their philanthropy. Hero, along with many other philanthropic advisors, educators, and foundation staff, helped translate the preferences of local donors into forms of philanthropy that suited their preferences. By understanding how context shaped locals in Silicon Valley, they were able to cultivate an enduring tradition of giving in a region once uncharitably defined as “Stingy Valley.”

The Landscape of Philanthropy in the Bay Area Today

Bay Area philanthropy was once the purview of a small number of foundations and funders, largely located in San Francisco. Today philanthropy is not only more common, but more diffuse and varied throughout the region. Philanthropy’s growth and diversity makes broad generalizations about giving in the region more difficult than in the past.

Yet certain patterns from the past persist. Donors with roots in the Bay Area continue to enrich the region with their giving, from the descendants of Jewish philanthropists to those with a more recent history in the region, including the Acton, Castellano, and Sobrato families. Families also continue to draw on the region’s tradition of philanthrocapitalism, including the Laura and Gary Lauder Family Venture Philanthropy Fund, while others reach back to models pioneered by alternative funds, such as young, next-generation donors, who often cede the authority to make decisions about their philanthropy to activists and community leaders.

There are also signs of change in Bay Area philanthropy. Ongoing challenges to democracy and racial justice continue to incite discussion about how philanthropy can be more equitable. Trust-based philanthropy is one form of practice for donors who believe philanthropy has too often been an agent of inequitable outcome. The San Francisco-based Whitman Institute, which spent out in June, 2022, was a major proponent of this model of giving. The Whitman Institute promoted practices such as unrestricted and multi-year funding, the reduction of paperwork and bureaucracy, transparency, and the solicitation of regular feedback from grantees. Another example of trust-based giving is the Rosenberg Foundation’s Leading Edge program, which provides unrestricted funding for movement leaders.

Other donors move from listening to their funding partners to involving them in the grantmaking process. Proponents of participatory philanthropy cede the power to decide how funds should be distributed to people closest to the issues of concern to donors. As an example, the Oakland-based Solidaire Network allows donors to aggregate their contributions with other donors in a pooled fund, while a committee of movement leaders makes grant decisions. Similarly, RSF Social Finance, based in San Francisco, offers clients donor-advised funds in which people with lived experience of the causes that concern donors make distributional decisions.

Many challenges still confront the Bay Area and the world, but the history of philanthropy suggests that donors in a region long known for innovative thinking and experimentation will dedicate themselves to their resolution.

Michah McElroy is the Associate Director of Research for the Effective Philanthropy Learning Initiative at Stanford’s Center on Philanthropy and Civil Society

The views and opinions expressed in individual blog posts are those of the author(s) and do not necessarily reflect the official policy or position of the National Center for Family Philanthropy.