If philanthropy in the Silicon Valley is booming, why are so many nonprofits in the Valley hurting? If the region is awash in wealth, why do almost 30 percent of its residents rely on public or private assistance? Those troubling questions lie at the heart of a new report, “The Giving Code: Silicon Valley Nonprofits and Philanthropy," by Alexa Cortes Culwell and Heather McLeod Grant.

Silicon Valley, according to the report, now has more than 76,000 millionaires and billionaires, and more than 12,000 households have more than $5 million in investable assets. Nonetheless, demand is rising for nonprofits’ services to address homelessness, poverty, and inadequate public education, and funding for community organizations is diminishing. This is part of what Culwell and Grant call the “prosperity paradox.”

The two researchers are part of Open Impact, a team which conducted over 300 interviews for their report. Its title – “The Giving Code” – refers to a new approach by philanthropists, defined by a desire to find solutions that are innovative, disruptive, scalable, and have a high impact. These donors also want to be personally involved in their charitable work, but a wide chasm exists between these donors and the nonprofits in the Silicon Valley. Among other things, the region lacks intermediaries who can connect the two groups, and the philanthropists themselves have nearly unlimited options on where to give money – they may feel they can have a greater impact in other parts of the country or the world with more explicit poverty. The nonprofits, meanwhile, often don’t understand the philanthropists’ criteria for contributions, don’t move in the same circles with would-be donors, and don’t even speak the same technical language.

To narrow this gap, both sides will need to make an effort. The report suggests that philanthropists and nonprofit leaders need to better understand each other through “learning journeys,” which include workshops and training sessions. And we need far better coordination and collaboration among all the players.

“The Giving Code” does not identify specific remedies so much as it defines the problem and broadly frames the solutions. We hope everyone involved takes heed of this well-researched report, because the Silicon Valley clearly has the expertise, resources, and passion to transform philanthropy as it has so much else in our world.  

To learn more about proposed solutions and insights of the “Giving Code,” read the full report here, or the executive summary here.