Charity has a hard time in the Valley

Only in Silicon Valley could raising money be turned into a competitive sport.

On Sand Hill Road in Palo Alto, home to the nation's premier venture capital companies, one morning in September stood 40 hand-built soapbox derby cars, each bearing the name of their venture capital sponsors (VCs). The VCs had put up a minimum of $1,000 (£680) per entry, with all proceeds to local charities.

Much more than money was on the line for these highly image driven companies. There was pride, prestige and the great fear of not winning.

So tens of thousands of dollars were invested in making the box-cars into winning machines. In fact it was strongly rumoured that the winning car, designed by the leading product design firm in the Bay Area, cost $100,000 to manufacture.

This was the top end at the other end was the car put together (literally) by local businessman Mr Fred Boos, on behalf of his sponsor Baccharis Venture Capital. Mr Boos described the winning car as looking like a "big red piece of candy. I used old bicycle and washing machine parts, bungee cords and pieces of kevlar", he said. Mr Boos's humble entry finished a very respectable 6th place.

Some 15,000 spectators showed up at the event, which raised more than $100,000 for charity. It had everything the Valley looks for in a charity event prestige, competition, celebrity (in this area, venture capitalists are the rock stars), slight danger and not inconsiderable selfpromotion.

Other local charitable events mix the same ingredients. At a fund-raiser during the summer, someone bid $30,000 to have dinner prepared and served by Hewlett-Packard chief executive, Mr Lew Platt.

Earlier this month, feisty chief executive of Cypress Semiconductor, Mr T.J Rodgers, vowed that he'd write a cheque from his own account to ensure that his company retained a trophy for the area's largest donation to a local food bank.

Up and down the peninsula, all sorts of enterprises help the less fortunate citizens of the area. In economically disadvantaged East Palo Alto, for example, a group of Stanford business graduates has formed "Start Up", securing funds from venture capital companies to give microloans to new businesses.

However, these high-profile activities mask a dirty little secret here in Silicon Valley. Although many of its denizens are awash with money they are (to quote a recent edition of American Benefactor magazine) "misers . . . with a reputation for being notoriously tightfisted. Or socially negligent. Or maybe both".

Of the 50 major metropolitan areas surveyed by the Chronicle of Philanthropy, San Jose ranks last in charitable giving. During the same period the San Francisco Chronicle ranked executives at the top 50 companies in the Valley. It found their median compensation last year to be $684,700.

The real wealth, of course, is not in pay but in stock options, and the survey found that new stock options for 166 executives in the top 50 companies averaged $1,294,200. Even this sum hides the many millions of dollars executives have earned from public offerings of their companies' stock.

Why, with all this wealth, do Valley executives have such a dismal reputation for charitable giving on a significant scale? Why is there no Lawrence J. Ellison-wing of a local hospital, museum or civic centre? Mr Ellison, the head of Oracle Corporation, is the richest man in California and the second richest, after Mr Bill Gates, in the technology business. He is known for his lavish spending on cars, boats and planes, but not for his philanthropy.

Another multimillionaire, Sun Microsystems chairman, Mr Scott McNeally, gave this comment to Newsweek magazine when asked about his personal philanthropy. "If you want to redistribute wealth, you liberals, why don't you go out and earn it and give it away. Redistribute your own wealth."

There are exceptions to this attitude, the most significant being Mr David Packard, co-founder of Hewlett-Packard. Mr Packard gave most of his wealth to the 38-year-old Packard Foundation when he died last year. The foundation now has assets of more than $7 billion. All three Packard children serve on the board, which has supported small-scale causes such as the Heaven Sent mothers' house cleaning co-operative in East Palo Alto, as well as multimillion dollar projects including a children's hospital in Palo Alto and the magnificent Monterey Bay Aquarium.

Apologists for the Valley will say that executives are too busy to consider how to really apply their wealth. They will say that so much of the wealth is in stock options that it isn't "real money" and so can't be given away. Others, like Mr Gates, whose lack of charitable giving is constantly highlighted, will vow to give everything away before they die. A sort of let-me-be-good-but-not-yet approach to philanthropy. Mr Gates has given 0.85 per cent of his net worth to charity over the past decade, so he has quite a long way to go.

There's a strong libertarian streak here. As Mr David Bunnell, chief executive of Upside magazine says: "Most people in the Valley think folks should fend for themselves." They see philanthropy as a languorous pastime of East Coast old-money.

But that may change. When CNN founder Mr Ted Turner pledged $1 billion to United Nations causes recently he said that he was "putting every rich person in the world on notice" that he would be calling them to support his foundation. Quite a few in Silicon Valley can expect to get that call.

Frank O'Mahony lives and works in Palo Alto, California. He can be reached at frank@liffey.com