Under the leadership of Emmett Carson, the Silicon Valley Community Foundation has over the last decade grown to become by far the largest community foundation in the world, with assets of more than $8.2 billion. In fact, the Silicon Valley Community Foundation (SVCF) is now one of the largest foundations of any kind, facilitating last year more than 108,000 grants valued at $1.3 billion.

Those are impressive numbers, and if the size of assets and grants were what mattered most, you’d have to say that the SVCF has reached the pinnacle of philanthropy. But the real test of a philanthropic organization is what impact it has. And in the case of a community foundation, what impact it has on its community. By that measure, the SVCF’s performance is more mixed.

As Marc Gunther writes in “The Charity That Big Tech Built” in this issue of Stanford Social Innovation Review, “More than half of its [SVCF] grants leave the San Francisco Bay Area, and many that remain go to global institutions like Stanford University—local community-based organizations and advocates for the poor feel neglected.” That’s because nearly all of the SVCF’s assets sit in donor-advised funds (DAF), which in theory are controlled by the SVCF but in reality are controlled by the donor. And many of the donors to the SVCF’s DAFs have little interest in donating to Silicon Valley organizations. Instead, most of those donations go to nonprofits outside of Silicon Valley.

Carson makes no apologies for this. For him, “community” is a malleable concept, and it’s up to the donor, not the foundation, to decide what his or her community is. And because many of the SVCF’s donors originally hail from outside of
Silicon Valley, their community might be Mumbai, or Munich, or Memphis.

The SVCF isn’t the only community foundation to have an expansive definition of community. The Foundation Center and the Council on Foundations recently released a report showing that a growing number of community foundations are making grants overseas. But the SVCF has taken this much further than any other community foundation.

Without a geographic focus, the concept of a community foundation begins to lose its meaning. Community foundations were created to marshal and direct philanthropic resources to tackle the problems of a particular geographic community. Because they are a part of that community, they can better understand its needs and which organizations best address those needs.

What the SVCF is becoming is something more akin to Fidelity Charitable, a place for the wealthy to park their money and take an immediate tax write-off until they decide where they want to donate. DAFs are fine, particularly in Silicon Valley, where people can come into large sums of money in a short period of time. But the primary purpose of a community foundation DAF should be that most of the money will eventually go to a nonprofit serving its community, not sent abroad.

Community foundations need to reaffirm their unique role, and nowhere is there a greater need to do that than in Silicon Valley, a place of tremendous wealth but also extensive poverty. Nearly one-third of residents rely on public or private assistance to make ends meet. The cost of housing is sky-high, and public transportation is woefully inadequate.

It’s a siren’s song for community foundations to go after donors with little regard as to what that money will be used for or where it will go. Instead, community foundations should focus on what they do best and put “community” first.

Read more stories by Eric Nee.