The New York Times

Friday, February 11, 2000

After Breaking the Mold in Business, the E-Wealthy Do It Again in Giving

By SAM HOWE VERHOVEK

SEATTLE, Feb. 10 -- At 25, Nicholas Lovejoy left his $27,000-a-year job as a math teacher in suburban Seattle, took a pay cut and went to work for a friend, Jeff Bezos, just then establishing a start-up site on the World Wide Web. He was the fifth employee in the door at Amazon.com.

Nicholas Lovejoy and his wife, Barbara Gordon, at the Bradner Gardens in Seattle. They run the Gordon- Lovejoy Foundation, which supports conservation demonstration projects like this community garden.

At 28, proud of the company's strategic success but also conflicted about what he called its mission of "trying to be the Wal-Mart of the Internet," Mr. Lovejoy sold his car, stored his belongings and took off with his girlfriend, Barbara Gordon, to travel around the world with a backpack. Even then, he could not help getting rich, as the value of his stock options kept multiplying.

"We had this one trip on a sailboat for three weeks where we were totally out of contact with civilization," Mr. Lovejoy recalled, describing a voyage from Tahiti to the Cook Islands in the South Pacific in the summer of 1998. "And when we got done," he added, shaking his head in wonder, "the stock had tripled."

Now 30, Mr. Lovejoy is back in Seattle, and he and Ms. Gordon, who is now his wife, have a new vocation: philanthropy.

The Internet has created a spate of young millionaires, and many of them, like Mr. Lovejoy, are turning their attention to philanthropy in their own hands-on ways. They describe their activities as "venture philanthropy," modeled on their business experiences, and some promote the concept of "e-philanthropy," which involves finding ways to make charitable giving easier, much as "e-commerce" is making it easier to buy things. Rather than giving to traditional charities, they see themselves as investing in programs that will bring about long-term change in fields like education and the environment.

Whether all this will change the nature of philanthropy itself, as some experts predict, remains to be seen. But there is no question, they say, that as measured by both the dollars involved and the soaring numbers of small family foundations being created around Seattle and the Silicon Valley in California, there has been a burst of philanthropic activity.

With assets of about $2.5 million, the Gordon-Lovejoy Foundation is unlikely to overtake the $22 billion Bill and Melinda Gates Foundation. But, like Mr. Gates and other young Internet philanthropists, Mr. Lovejoy and his wife are thinking hard about how best to use not just their unexpected wealth, but also their talents and time.

And, lest anyone think the job is easy, Mr. Lovejoy, a deeply earnest young man with a blond ponytail and a quick smile, offers words that seem to echo the oil titan John D. Rockefeller Sr.'s famous observation that he found it harder to give away money intelligently than he did to make it.

"It is a harder problem," Mr. Lovejoy said. "To figure out how to sell books on the Internet may be a hard problem. But to figure out what you want to change about the world and how to change that in an effective way that makes people better off, it's just a far vaster problem."

The philanthropy going on here is certainly notable for the strikingly young age of many of the benefactors, said Vartan Gregorian, the president of the Carnegie Corporation and an informal adviser to Mr. Gates and many of these junior philanthropists.

"Bill Gates, despite all the criticisms against him for waiting, has still broken the age barrier," Mr. Gregorian said. "He's done away with the whole rationale that you have to wait until you're Rockefeller's age, Carnegie's age, the last decade of your life and so forth, to decide what to do with your wealth."

Rather than speaking of their legacies or putting their names up on buildings -- not yet, anyway -- many young philanthropists speak of expecting to live for another half-century or more. Thus, in talking about what motivates them to get into philanthropy, they often tend to speak about the need for systemic change.

Among the most forward-looking of these Internet philanthropists is Rob Glaser, the billionaire founder of RealNetworks in Seattle, whose Glaser Family Foundation has assets of about $200 million.

The Glaser Foundation, among other things, is financing a program at the University of Washington called the Progress Project, whose goal is no less than to help redefine how society measures progress.

"For me -- maybe it's because I'm 38 and not 68 -- but I look at this from a long-term perspective," said Mr. Glaser, a former Microsoft executive whose company makes software for sending audio and video over the Internet. "I am focused on making the greatest and deepest long-term impact, and not necessarily doing something that has an immediate impact but only scratches the surface.

"Everyone looks at how much the Nasdaq went up, or how much the Dow Jones average went up," Mr. Glaser continued. "But there are all kinds of values embedded in having those be the metrics we use. By not talking about global population growth, by not talking about greenhouse gas emissions, by not talking about these other highly measurable things, we're making value judgments. And if we really step back and ask if those are the kind of value judgments we should be making, most people -- not everyone -- would say no, those aren't."

Jim Pitofsky, director of SEA Change (Social Entrepreneurs' Alliance for Change), an umbrella organization based in New York and San Francisco that helps young entrepreneurs hook up with philanthropic causes, said many people were seeking both immediate and long-term ways to help.

"They say they don't want to be involved with just a Band-Aid, or alleviation of conditions," Mr. Pitofsky said. "They're also interested in changing the conditions."

Some young philanthropists describe their activities as a "second career," but one that may well precede a return to the business world.

"There's sort of a cultural anthropology to all this that's fascinating," said Catherine Muther, who worked from 1989 to 1994 as the senior marketing officer at Cisco Systems Inc., then started her own nonprofit foundation, the Three Guineas Fund, which helps women get started in high-tech industries and encourages them in philanthropic pursuits.

"At the turn of the century, the average life span was much shorter to begin with," Ms. Muther said. "But now you have people who have made a lot, very young, and they say: 'Hey, I've got another 50 years to go. I could do one or two or three more careers here.' "

One other distinguishing characteristic of today's younger philanthropists is this: many say they do not like the word "philanthropy."

"The word 'philanthropy' can be very off-putting in a way to people," said Paul Shoemaker, 39, a former marketing executive at Microsoft who left the company two years ago and is now director of Social Venture Partners, a Seattle network of 236 members, most of them drawn from the high-tech field, who pool their resources to help nonprofit organizations with both money and business expertise. "It has sort of this blue-blooded connotation to it."

Social Venture Partners, which was founded in 1997 by Paul Brainerd, a desktop publishing pioneer who sold his Aldus Corporation for $450 million in 1994, has largely concentrated on children's and educational programs. Donors typically spend 5 to 10 hours a week working directly with the groups that Social Venture Partners is supporting. Offshoot organizations with a similar mission have sprung up in Austin, Tex., and Phoenix.

Certainly, many Seattle and Silicon Valley entrepreneurs admit to having very little time, amid the cutthroat atmosphere of the Internet industry, to even think about philanthropy.

And many argue, as Mr. Gates himself did for years, that the most important thing they can do right now is to make sure their companies succeed, thus increasing the wealth they might be in a position to give away later.

Mr. Bezos, the Amazon.com founder who sought out Mr. Lovejoy as one of his first employees, has often said he hopes one day to work as hard at giving away his wealth as he does now at amassing it.

And for at least some donors, their motives may not even be chiefly altruistic: by giving away stock in their companies, especially at a time when the stock is sky-high, they reap significant tax benefits.

Still, for many who have succeeded in high-tech ventures -- some of whom have expressed befuddlement or guilt at how quickly they made so much -- the time to act is now.

"It doesn't seem fair that anybody could get that lucky," said Mr. Lovejoy, who takes no salary from the work for his own foundation. "It's like winning the lottery in a lot of ways. I mean, nobody really deserves to earn that kind of money. So I feel like now I'm responsible for handling it well and putting it to good use."

There is no precise figure for how many entrepreneurs have turned to philanthropy in a major way, but the number of family and community foundations in the United States has more than doubled in the last 15 years, and experts say there has been particular growth in Northern California and the Seattle area, where many high-tech industries are concentrated.

The nonprofit Community Foundation Silicon Valley has seen its assets grow 25 percent to 40 percent in each of the last three years, and expects contributions to double this year, said Peter Hero, president of the organization. It is now administering about 675 different philanthropic funds that have been established by "living, breathing donors" in the area, Mr. Hero said, adding that most of them are tied to the high-tech industry in some way.

"The word they use is 'invest,' " he said. " 'How do I invest in the community, how do I invest in education, and how do I measure a societal return on that investment?' A lot of these people are engineers. They're used to measuring things."

Here in Seattle, Mr. Lovejoy and Ms. Gordon are members of Social Venture Partners, which Mr. Brainerd describes in part as "a safe environment for people to learn where their passions lie." Many, he said, come in feeling that they have been extraordinarily lucky and want to give back something to the community, but are not sure of how to go about it.

The breakneck pace of the Internet industry seems to cut both ways when it comes to philanthropy.

"For many people, hands-on in Internet times means, I've got 10 minutes to give you here, 15 minutes there,' " said Denis Hayes, director of the Bullitt Foundation, a nonprofit fund that supports environmental organizations in the Pacific Northwest.

"On the other hand, that is not unrelated to the phenomenon that was involved in saving the Loomis," he added, referring to a campaign last summer in which several high-tech entrepreneurs quickly raised $13.1 million to preserve a magnificent swath of forest in the North Cascade Mountains in Washington state. "It was like a super-fast United Way campaign or something. Suddenly everyone piles on, and they want to get up to the red line on that thermometer right away."

So far, the Gordon-Lovejoy Foundation has disbursed about $120,000 in grants, most to environmental organizations and projects that reflect the couple's interest in promoting a sustainable use of the earth's resources. The couple expects that to grow as they add more to the fund and become more confident in their choices.

In a conversation over a cup of tea the other day, Mr. Lovejoy spoke at length about the ambivalence he felt during the "all-consuming" three years he put in with Amazon.com. He was the manager for financial systems in the information-technology group when he left.

"I'm not a person who necessarily tends to balance to begin with, and I was just giving up on everything else," he said. "I mean, all the other things in my life -- keeping track of family, keeping in shape.

"Even playing ultimate Frisbee, which is a big love of ours and how we met," he said, looking at Ms. Gordon and breaking into a laugh. "I mean, all those things just didn't matter."

And so he left, but he quickly added that he learned a lot at the company that he hopes to apply to his philanthropy.

"I'm absolutely convinced I can do anything that other people think is impossible, because we did it regularly at Amazon," he said. "We did the impossible on a regular basis, and that's a great experience to live through. And that's simply the attitude I want to apply to what we're trying to do now."