Skoll Foundation

 

Sally Osberg Address on “Starting Skoll”

September 12, 2001 by
 
 
 
 
 

Delivered by Sally Osberg to the Associazione fra le Casse di Risparmio Italiane (Rome, Italy), September 12, 2001.

I am honored to be with you today, to share my knowledge and experience in developing a new foundation: the Skoll Community Fund, today the largest supporting foundation of Community Foundation Silicon Valley. Since the foundation is still young at just over 2 years old, and since I am still new-having come on board in February of this year as our first Executive Director-I bring you experience with what is truly a work-in-progress, a powerful evolving vision for philanthropy in the new millennium.

I am particularly delighted to be in Italy again, having first traveled to your wonderful country in 1995 as a member of the first U.S. West Coast delegation to study your remarkable system of preschools in Reggio Emilia. You have in Reggio what I and many others consider to be the world’s most extraordinary system of early childhood education-one which is an inspiration to us all, studied by the world’s most prominent psychologists, social scientists and educators, and exercising a profound influence on educational practices in countries throughout the world.

Standing as you do on the threshold of a great philanthropic venture, your charge is to create change. Yes, you are creating new foundations-90 of them from what I have read!-and figuring out how to translate those billions of euros into tangible benefits for Italians and their communities, but your true work is to build organizations that will serve as catalysts, facilitators, and means for driving change.
You start with a powerful advantage, building as you are upon already vibrant community networks of robust civic associations and cultural traditions. The eminent Harvard sociologist Robert Putnam highlights in his seminal work Making Democracy Work the abundance of “social capital” in Italy. Your foundation grant-making can leverage that social capital and generate outstanding returns.

Signor Casadei has asked me to share with you my experience in developing a new foundation. In order to do so, I will first provide some context with a brief overview of foundations in the U.S.

From here, I will focus the heart of my remarks on the Skoll Community Fund-I will describe our founding, evolution, guiding principles, mission and vision development, and strategic planning process.

Finally, I will close with some reflections-lessons we’re learning and suggestions for how to take maximum advantage of your matchless opportunity.

Of all the enterprises created by human beings in the last century, the institution known as a Foundation is surely one of the most interesting and most important.

With its roots in those western cultural traditions we know as charity or “noblesse oblige,” the practice of philanthropy has a history considerably longer than 100 years, of course. Philanthropy, the word, derives from the Greek philanthropos-love of man, and has been in use in the west for millennia, its more formal activities associated on the secular side with the titled wealthy and on the sacred side with organized religion.

Here in this great city one has only to look about to see the impact of the church’s patronage and to appreciate the impact of resources conveyed for public benefit.

But what was easy for popes or for the Medici is no easy matter for those of us whose motivations are, shall we say, more inclined to social change and benefit and less to glorification or self-aggrandizement.

More than 20 centuries ago, in fact, Aristotle articulated the challenge perfectly:

“To give away money is an easy matter and in any man’s power. But to decide to whom to give it, and how large, and when, and for what purpose and how, is neither in every man’s power nor an easy matter.”

In fact, the professional discipline of philanthropy within the institution we now know as a foundation-fondazione here in Italia-is still in its adolescence, and typical of that age, in something of what one can only call a growth spurt. Just 50 years ago, the U.S. had fewer than 2,000 foundations on its rolls. Today, more than 50,000 foundations are registered, with assets ranging from the hundreds of thousands of dollars to the largest of them all, the Gates Foundation with $23 billion. Here in Italy, even with a different socio-economic environment, you seem to be experiencing a similar trajectory, with somewhere in the range of 2,500 foundations, half of which have been formed in the last decade alone.

The early part of the century brought into being the first generation of large scale U.S. foundations, including Carnegie, Rockefeller and Ford, each of which developed a distinctive mission, shaped by their founders.

Today, the steel, coal mining, automotive, and railroad industries that spawned these great industrialist’s fortunes have undergone tremendous change: neither Andrew Carnegie nor Henry Ford would recognize in today’s world the mining and manufacturing processes that they invented-but they might recognize the Foundations they built, each still dedicated to a vision of social betterment which they articulated, inspired in large part by the societal shift to new paradigms of science and engineering governed by rationalist thought.

Fast forward to the closing decade of the 20th century. Rationalist thought continues to prevail, colored in interesting ways by the incredible technological advancements of recent decades. Many of today’s philanthropists-particularly those who have made their fortunes in high technology– use the parlance of engineering, especially electrical engineering, to articulate the principles informing their philosophy of giving. These include principles of:

Leverage.
Scale.
Multiplier effect.
Measurable outcomes.
Innovation.

When I describe the Skoll Community Fund, you will see how profoundly these ideas have influenced our development.

Scaling certainly seems to be a force at work in the foundation world of the U.S. By 1996, the numbers of U.S foundations had expanded to more than 46,000 and today estimates exceed 50,000. Collective assets held by U.S. foundations are in the range of $300 billion, with grant making at roughly 5 percent of that total-or some $15 billion.

And the U.S. locus for foundations, tracking the emergence of the so-called “new economy” based on high technology has shifted from the East Coast and midWest-from Rockefeller’s New York, Carnegie’s Pittsburgh, and Ford’s Detroit-to the West Coast, to Seattle, home of the Gates Foundation, and Silicon Valley, home of the Skoll Community Fund-as well as the David and Lucile Packard Foundation, the William and Flora Hewlett Foundation, and the newly forming Gordon and Betty Moore Foundation.

The story of the Skoll Community Fund, of course, is the story I know best.

Like all good stories, it has a protagonist: Jeff Skoll, first employee and first President of eBay. Jeff is a remarkable man: curious, thoughtful, open and disciplined. Educated as an electrical engineer, he is also the quintessential entrepreneur: before the age of 22, he had founded his own computer consulting company, Skoll Engineering, in his native Canada, and later he managed the distribution channels for Knight Ridder Information, growing the division the corporation’s most profitable business.

In 1994 , Jeff began working on his MBA at Stanford University, located in Palo Alto in the Silicon Valley-the epicenter of technological innovation and venture investing. During this time, he found time to lend his skills to different community projects, including mentoring and preparing low-income students in East Palo Alto for entry into college and university, and as editor of The Reporter, the business school’s weekly newspaper for which he also wrote a regular column-Northern Exposure-.

In many of those columns, Jeff demonstrates a lively interest in philanthropy, and particularly in the subtle distinction between philanthropy and charity-

In one article, he wrestles with the complex emotions we all have felt as we encounter beggars on the streets, and works through a cogent rationale for resisting the impulse to hand over a dollar or two. Sometimes, he wrote, it can be kind to be cruel.

Now the story gets interesting. Just as Jeff was winding up his MBA at Stanford, his friend Pierre Omidyar came to ask Jeff to join him in creating a new venture-an on-line auction company. Jeff laughs today as he recounts telling Pierre he thought this the “stupidest idea” he’d ever heard of-but, true to his entrepreneurial spirit, Jeff indeed decided to join his friend, becoming the fledgling eBay’s first employee and first President. It was Jeff who then developed the business model and plan the company still follows today-a plan that produced real revenues from the outset. In fact, in striking contrast to most technology companies founded in this booming period of time in Silicon Valley, eBay raised plenty of venture capital-but never touched it; thanks to Jeff’s extraordinary strategic planning, it never needed to.

EBay grew, of course-facilitating hundreds, then thousands, and ultimately millions of on-line transactions and creating in the process the most remarkable virtual community, and communities, that the world has ever seen. Ebay truly effected a paradigm shift.

As eBay’s growth accelerated, and as its community and networks of communities grew and flourished, Jeff looked around at other young companies experiencing similar success-this was the late 90′s remember, and things hadn’t started to change, or “correct” yet-and wondered why so few had built into their corporate culture and strategic plans any consideration for their communities.

Jeff had a different vision for eBay, and in 1998 he did something that can only be called visionary: after gaining the support of the eBay board and its venture backers, he created the eBay Foundation with 107,250 shares of pre-IPO stock. To facilitate this unique venture, he turned to Peter Hero, President of the well-respected Community Foundation Silicon Valley-who welcomed Jeff’s innovative thinking and accommodated this unusual request by setting up a donor-advised fund to receive the transfer of stock that, of course, could not be traded. A few months later, when eBay went public, the $1 million fund’s value rocketed to $50 million; to date, the eBay Foundation has awarded more than $2.5M in grants.

More importantly, the idea of contributing pre-IPO stock to create a foundation spawned dozens of other young companies to follow suit. One venture capitalist, Gib Meyers of the Mayfield Fund-one of Silicon Valley’s benchmark venture capital firms– was so taken with the idea that he created the Entrepreneurs Foundation to leverage Jeff’s model. Today, more than 200 young companies have contributed pre-IPO stock to the Entrepreneurs’ Fund, and dozens of others have created their own foundations, often with the assistance of a Community Foundation such as ours.

With eBay’s establishment as a publicly traded company , Jeff became a very wealthy man-one of the youngest men ever to be listed on the Forbes 100. It was time for Jeff to set out on his own personal philanthropic quest.

Like many individual philanthropists, Jeff got started by making several large contributions-establishing with multi-million dollar gifts endowed programs at both his alma maters-the University of Toronto and Stanford University, and responding to an interesting request from the founder of an unusual non-profit organization called Peoplink with a gift of $350,000.

Peoplink appealed to Jeff because of its innovative application of technology to meet the market needs of artisans in developing countries. Peoplink works with artisan cooperatives, providing them access to the Internet via tools-digital cameras and laptops-along with unique technology: an expansive interactive on-line catalogue. Peoplink thus expands exponentially opportunities for artisans to market and sell their products. This is technology that gives developing nation artisans what Jeff has called a virtual town square of global dimension; here is a trading forum that truly can go to scale.

I tell you about Jeff not solely because he is my boss, the force behind eBay’s culture and its success, founder of the Skoll Community Fund, and a great visionary entrepreneur, but because in many ways he epitomizes the new economy philanthropist.

Like others of his generation of entrepreneurs in the new economy-individuals who have built companies and created value through knowledge rather than through control of natural resources and manufacturing, individuals trained and proficient in the principles of electrical engineering-Jeff thinks about the world, its people, and its challenges in some pretty interesting ways.

Remember Archimedes, who boasted that with his lever and a place to stand he could move the world? Well, many new economy philanthropists see Archimedes’ point: philanthropic capital is, to their minds, a superb tool, perhaps even the ultimate tool, with which to leverage social, economic, and even political change. And leverage has a hallmark of Jeff’s thinking all along.

By 1999, with creation of the eBay Foundation under his belt, Jeff was ready to start his own foundation. Again, he turned to Peter Hero and Community Foundation Silicon Valley, establishing the Skoll Community Fund with an initial gift of 100,000 shares of eBay stock as supporting foundation. This decision aligned well with Jeff’s appreciation for CFSV’s well-developed infrastructure for investment, grant making, and -most important-knowledge of the Silicon Valley community and its needs. The decision, in short, was again consistent with the principle of leverage.

The design of a supporting foundation is straightforward. The sponsor organization, as a tax-exempt entity, enables its supporting organizations also to gain tax-exempt status under section 501c3 of the U.S internal revenue code. The supporting organization-in our case, the Skoll Community Fund– becomes an independent non-profit organization; however, Community Foundation Silicon Valley, as our legal sponsor, is obliged to maintain fiduciary control over our affairs, primarily by appointing a majority of our Board directors. Together, Jeff and Peter Hero agreed on a Board of five, 3 from CFSV, one of whom was Peter, and 2 from Skoll, including Jeff. A simple set of bylaws, using a CFSV template, was created, a fee schedule based on invested assets was negotiated, and the Skoll Community Fund was official.

Phase I of the foundation’s planning was underway.

By aligning the Skoll Community Fund with CFSV, Jeff was able to commence grant making fairly quickly-lacking the time to embark on an elaborate process of planning, Jeff and the senior staff person from CFSV assigned to work with him, simply adapted the eBay Foundation’s mission-to provide tools, hope and direction to those seeking new skills– established broad program grant making areas, pulled together some guidelines, and disseminated the information to the Community Foundation’s network of Bay Area non-profit organizations. Because Jeff had done so much of the thinking, and all of the preparation and persuasion to get eBay’s management, employees and investors on board with the rationale for the eBay Foundation, it made good sense to leverage that investment of time and energy.

Grant making began in early 2000 in 8 broad program areas: Children, families, and communities; health, education, and science; the environment; and technology.

Meanwhile, Jeff continued to make contributions-usually between 100,000 and 200,000 shares of eBay, with one-third to be sold at the time of the gift and the remaining two-thirds over a succeeding 11 month period– to build the new foundation. By mid-2000, the Fund had grown to $50 million, with an annual grant making budget of $2.5 M-clearly, the size of the Fund and its grant making budget, and most important, the opportunity inherent in a new foundation, warranted dedicated staff. It was time to build the professional Skoll team.

In December, 2000, I accepted the invitation to serve as the Skoll Community Fund’s first executive director, recognizing in this venture what you acknowledge today as the incredible opportunity that lies before you.

The chance to help shape a new foundation is surely one of the greatest privileges I can imagine, but I was under no illusions that it would be easy or comfortable work-just as developing and building the non-profit organization I had led for 17 years was intense, challenging-and exhilarating– work, just as building eBay had been indescribably demanding, fascinating,–and exhilarating– work for Jeff.

Phase II of the Skoll Community Fund’s strategic plan began when I came on board in February of this year.

John Gardner, who led the Carnegie Corporation from 1955 to 1965, and subsequently served as Secretary of Health, Education and Welfare in the Johnson administration’s Great Society, has said that a foundation’s most precious asset is its sense of direction-and I see much of my role, working together with Jeff, as setting the course for that direction.

My first task, then, was to understand what directions were inherent in the grants that had already made, and to put that information together with what I was discovering about Jeff’s philosophy, the community’s needs, trends in philanthropy and society at large, and the role and work of other foundations.

In early March, at our Board meeting, I presented an analysis of our work to date-grant making showed critical mass in the general area of education-although clearly it was education with a twist: innovative new learning paradigms, often in the form of programs targeting low-income students who were not succeeding within the traditional schooling model, as well as programs that deployed technology in some exciting and adventurous ways.

Armed with this data, I was then able to analyze community needs-needs that clustered, as they do in most communities, around low-income sectors of the community. In California, and the Silicon Valley, a complex of particularly critical needs aggregates around the continued transition, primarily for women and immigrant populations, from welfare to viable employment, and encompasses child care, education, housing, and access to medical and health care.

Most importantly, I spent time in intense exploratory and probing conversation with Jeff. Rapidly, I came to understand that the linchpin of his philosophy was the idea of empowerment. Helping people help themselves is the way Kellogg describes its work; providing tools, hope and direction to those seeking new skills was the way the eBay Foundation articulated its mission; and teaching men to fish is the proverbial version we all know well. Not hand-outs, but extended hands, or what I like to think of as hand-ups.

Our challenge, then, became to put the pieces together into a unique mission of our own: Jeff’s philosophy, the learning of the Fund’s year of Phase I development and grant-making, community needs-locally and globally.

Our themes were empowerment, community, and impact. Our task was to craft our mission.

Jeff’s process called for identifying the building blocks, the principles on which the mission would be based. These principles-words, phrases, highly distilled ideas which were not arranged in any particular framework– included:

Empowerment:
Unlocking potential in those who have the most potential
Leverage, or the basic concept of the multiplier effect-
Wide or universal application and the notion of scale
Support for organizations, not individuals
Tangible results
Track record
Community orientation or benefit
Innovation
Working back and forth over the best part of two weeks-exchanging e-mails and in meetings-we pounded out version after version– and finally came up with one that we both felt worked:

Our mission is to empower those with the greatest potential to make lasting contributions to their communities and the world. We accomplish this by supporting innovative organizations with a proven track record and empowering them to produce significant benefits on a local, national, or global scale.

9 principles. 2 sentences. To set a course of direction, short of being skilled in the art of dead reckoning, one needs a compass-our mission is our compass.

Simultaneously, we worked on our vision. The mission drives toward the vision, which paints the picture of the future we imagine for ourselves, future generations, and the planet:

Here’s what we came up with:

Our vision is to live in a world of peace and prosperity, where all people enjoy and employ the full range of their talents and abilities.

By the spring, we were able to submit the work to our Board for discussion and approval. Like the thoughtful and committed men and women they are, they asked hard and probing questions:

What did we mean by “those with the greatest potential”?

The answer-those who but for want of encouragement or resources had the ability and desire to make contributions to their communities. It was an important question. It was one we needed to know how to answer.

How would we identify such folks? Actually, our work was to identify organizations who targeted such populations. We recognized from the outset, and the mission also makes the distinction clear, that we are not on the front lines-our charge is to seek out and support the best of those who are-and to help them become even more effective. It’s an important clarification.

And what about contributions to their communities? Shouldn’t we add the word “positive”? We added the world “positive.”

With this work behind us, we could turn our attention to honing our program areas for funding.

Remember Aristotle’s sequence? Strategy comes into play as one wrestles with those questions: to whom to give it, and how large, and when, and for what purpose, and how-

Back to the table we went, and we found a smorgasbord that no longer made sense; by this time, we could also be honest about challenges beyond our scope, and work some of our colleague foundations were doing better, with more expertise and more funding-the Packard Foundation’s work, for example, on conservation and the environment, or the Moore Foundation’s interest in medical research.

Our 8 initial areas became 4: Learning and education, with an emphasis on new paradigms that address the needs of disadvantaged populations-we see learning and education as the quintessential empowerment strategy; Philanthropy, with an emphasis on expanding philanthropy in the Silicon Valley and building understanding between the philanthropic and non-profit sectors-we see a natural opportunity here to continue leveraging Jeff’s leadership and to inspire others to follow suit; Micro-enterprise, with our interest being expanding access to capital for low-income entrepreneurs here in the U.S. and in developing countries; and Technology-which we see as a vital tool for innovation in many arenas-including micro-enterprise and education, and for its exponential potential to enable communication, build trust, and forge community globally.

Much of the work of building a new foundation is pragmatic as well as visionary. One of the great advantages of a supporting foundation is access to the infrastructure of the Community Foundation or other entity with which one can align-fortunately for us, Community Foundation Silicon Valley provides many essential services-office space, accounting, investing, personnel administration, information technology, and so on-making it possible for us to focus on our vision, our strategy, and our own distinctive organizational identity and culture.

Most recently, we’ve been developing our Web site, which we envision as a force itself for community-building in the philanthropic and nonprofit sectors. This project has also provided the framework to develop our grant making procedures-we require an initial letter of intent, which we are making available on-line, and which invites organizations to address our principles in their initial approach; for example, we ask them to describe how their projects or programs empower constituents rather than simply asking for the traditional description of a target audience.

The site also will include profiles on each of our grantees, an interactive feature through which non-profits can send us their news, and highlights on the home page of the accomplishments of our Skoll grantee community.

In case I haven’t been clear on this point, I want to emphasize that at the Skoll Community Fund we take an entrepreneurial approach-we believe that the best way to learn what we’re about, and to discover great opportunities to change the world, we must do what we’re about.

So, over this formative time, when we’ve been creating our mission, vision, funding principles, grant guidelines, Web site-you name it!-we’ve also been reviewing proposals, meeting on-site with dozens of non-profit organizations, and generally carrying out the due diligence so important to the integrity of foundation grant making.

I’m proud to tell you that in our still young life, just a year and a half, we’ve made 83 grants to more than 70 organizations, investing more than $3.5 million in building more vibrant and healthy communities. Today, our assets are close to $100 million, our annual grant making at $5 million, and we project adding 5 new staff members by the end of this fiscal year.

Still ahead is the work of strategic philanthropy: putting in place those stakes in the ground that will enable us to measure our successes and failures. Here’s an example: One of the projects we’re most excited about is the Bay Area Center for the Arts and Technology that will be built in a marginalized low-income community in San Francisco. We’ve committed $850,000 to the project in its planning phases, and we expect to be a major capital campaign contributor as well. Our belief that well-conceived and delivered educational programs can truly transform lives matches up well with the beliefs and experience of social entrepreneur Bill Strickland, who heads the truly innovative nonprofit that is behind the venture.

In the practice of strategic philanthropy, we would identify outcomes for our grant making in our own program area of Learning and Education. Consistent with our mission, we might try to increase college and university admission rates for a particular low-income community, or look to expand charter schools in impoverished city centers, or raise the ratio of teachers trained to develop and deliver curricula deploying the Internet. An investment such as the one we’re making in the Bay Area Center for the Arts and Technology, then, becomes tactical-helping us achieve the larger impact we’re after.

For now, however, we’re deeply engaged in the learning and doing process, investing in our own philanthropic education, knowing that this time will pay big dividends when we’re ready to identify the impacts that will transform lives and communities in truly profound ways.

I’d like to close by offering some reflections on learnings we’re capturing in media re at the Skoll Community Fund, hoping that our experience will be helpful-and possibly even provocative–for you as you ponder the challenges and opportunities ahead.

First, think in terms of assets rather than deficits. As Robert Putnam has demonstrated, Italy is blessed with an abundance of social capital. Consider the networks and civic structures that bring Italians together, and how to strengthen their potential to tackle and solve problems. 6 years ago, when I was in Reggio, I learned that the Italian minister of Education was meeting with leaders of the Reggio Emilia preschool system in order to explore how to adapt this system throughout the country, providing for all Italy’s youngest citizens a superb early educational experience-surely there are many such assets, waiting for you to challenge them to expand, to grow, to innovate.

Second, I would encourage you as you embark on this great opportunity, to experiment, to take risks, to build in to your planning process a period for discovery. Don’t be afraid to do what we did-identify a broad spectrum for grant making in order to learn what is most relevant and promising to the communities where you will focus.

A corollary here is that you dare to be bold. Don’t be afraid to re-write or re-invent traditional grant making areas. Before the Grameen Bank, there were no foundation program areas in micro-enterprise. Grameen wrote a new chapter in the economics of investing, of empowerment, of social change. And philanthropy learned a mighty lesson.

Third, I suggest strongly that you clarify your foundation’s values and principles before attempting to craft a mission and vision. Shared values are the core of any healthy community, and foundations of all institutions should take the time to be clear on what they hold to be most important and most enduring. Values are the foundation’s foundation, if you will-and this piece of your work offers a natural opportunity for inclusion. It’s simply not practical to get large groups of stakeholders to sit down and agree on the most important problems to tackle, or-heaven forbid– write a cogent and powerful mission, but more participation is definitely better for the process of getting out the ideas and beliefs that hold us together.

By all means, take advantage of the Internet here. Why not build a Web site where people from communities all over Italy can contribute, refine and agree upon their most deeply held values?

Fourth-forgive me here-remember that Rome wasn’t built in a day. The best foundations are still innovating, still designing new programs, undertaking new initiatives. The MacArthur Foundation’s signature program-it’s so called Genius Awards-came about when a board member pondered aloud at a Board meeting how great it would be to give creative folks a chance to focus, without worrying about where the money would come from, on what they did best. The Rockefeller Foundation created the Philanthropy Workshop in response to the many, many wealthy individuals who came knocking at their door to find out how to become philanthropists.

And finally, back to assets. Remember the quintessential strategy of successful venture capitalists-they bet on people.

Just a few days ago, Jeff and I met with John Gardner-one of the world’s greatest thinkers and writers on the subjects of leadership and community, a civic treasure in the U.S., advisor to 5 presidents, cabinet officer, former President of the Carnegie Corporation, and founder of some of the United States’ most important and influential non-profit organizations: Common Cause, the Independent Sector, and others.

And incidentally, meeting with people like John– great thinkers, leaders, community activists, grass roots organizers, social entrepreneurs-has been a vital part of our planning process, and clearly of yours as well if this meeting is an indication!

John posed to us our greatest and most important job, our core strategic challenge: to find the people. People with the bold ideas, men and women animated by what he described as “spirit burning brightly inside”-these are the social entrepreneurs whose work will make your foundations, and ours, fulfill its promise; these are also the people you will recruit to lead and build your foundations, to serve as what John has called “tough minded optimists,” the staff who will carry out either your operating programs or grant-making, honoring the very best organizations with the respect, encouragement, and support they need to do the very best work they can.

More years ago than I care to admit I studied Dante in the original Italian. With apologies to the great poet, I suggest that no matter how dark the wood, or how middle-aged we feel, we must never surrender our hope. We must husband, and seed, and grow hope wherever we can, knowing that the human spirit so abundantly in evidence in this great city truly has the potential to create the world we all know is possible.

 
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