Internet companies get online with charity
High-flying eBay Inc. funds youth center in San Jose, typifying newcivic mindedness.
SAN JOSE, CALIF. — When it comes to the stock market, most Latino youths from San Jose's low-income barrios are without portfolios.
Yet some now have reason to cheer one of Wall Street's hottest products, the Internet stocks that have in many cases leaped by double-digit or higher percentages since last fall.
Teens of the Farm Drive neighborhood, racked by drugs and gangs, will soon benefit from a pledge by eBay Inc. of San Jose to help fund a community center for at-risk youths.
It's one of the nation's first and largest acts of civic charity from the exploding field of online commerce. The technology industry, one of the greatest sources of new American wealth, is showing an increased sense of civic mindedness. Last week, for example, Microsoft chairman Bill Gates donated $3.34 billion to health and education causes worldwide - believed to be the largest charitable gift ever. But so far, little of that has been evident in the young and fast-growing field of the Internet.
But there are glimmers of change, the most pronounced coming from eBay, a popular Internet site where people buy and sell everything from Pez dispensers to antique dolls.
When eBay decided to raise capital last year by asking the public to invest in its stock, it decided to return the favor and invest in the community.
"We recognized that our community has been such a strong part of building eBay that we wanted the community to benefit as well" from the stock offering, says Jeffrey Skoll. He and co-founder Pierre Omidyar set up a foundation with some 96,000 shares of stock as seed capital.
Worth nearly $2 million when the company went public last September, the foundation's endowment is now valued at just over $20 million, thanks to eBay's soaring stock value.
The eBay fund is managed by the Community Foundation of Silicon Valley, which is one of the main sources of philanthropic spending from the technology industry. Community Foundation executive director Peter Hero says he knows of no other comparable investment in civic affairs from the Internet industry. "But we certainly hope this serves as a precedent," he adds.
Seeds of charity
While the scale of eBay's giving may be unique, the concept is not. For instance, Netcentives of San Francisco, which uses frequent-flier miles as a lure for Internet shopping, has pledged a slice of its business worth about $100,000 to a new entity called the Entrepreneurs' Foundation.
Begun by Silicon Valley venture-capital investor Gib Myers, the Menlo Park, Calif., foundation asks newly funded start-ups to commit stock options to the foundation as they raise capital.
The theory is that such a commitment is relatively painless for a young, expanding firm, but could be worth several times the initial amount when the company goes public or is bought by another company. The foundation has raised more than $2 million so far, though Netcentives is the only Internet participant.
And Netcentives has other plans, too. This April, in honor of Earth Day, the company will donate one frequent-flier mile for every dollar online visitors commit to the World Wildlife Fund.
Beyond that, Netcentives is developing a program that would enable visitors to sites such as barnesandnoble.com and Yahoo to donate any miles earned through a purchase to a charity, with Netcentives matching the miles for each donation.
"I think e-giving or e-charity has the potential of being as huge as e-commerce," says Eric Tilenius, chairman and co-founder of Netcentives Inc.
Indeed, a number of charities already have online sites where donations can be made. But it's tapping the resources and customer base of the Internet industry itself that has the largest potential, say many in the industry.
Too busy to give?
The demographics of the Internet industry may have something to do with its low state of civic involvement to date. It's a brand new field with no philanthropic tradition or experience to build on. Also, it's being powered, for the most part, by young people who are running very fast to stay alive in a business that is changing, literally, overnight.
"The intensity of the Web is such that you have to give it 100 percent of your energy," says Netcentives co-founder Tilenius.
Skoll of eBay has begun evangelizing the idea of community investment among others in the Internet field. "Most of these people are working 20 hours a day, and they just haven't thought about it," says Skoll. "They need someone whispering in their ear."
In addition to eBay's pledge of $15,000 to the Farm Drive organization, it also will fund the University Research Expeditions Program, a University of California organization that sends grade-school teachers and students on research expeditions.
UREP was receiving funds from the National Science Foundation, but those dried up last year. What eBay is doing is "fantastically important," says executive director Jean Colvin. "They're making the difference between having a program and not having a program."
Palo Alto teacher Lynn Hori has applied to take students to Ecuador this year to study water quality and deliver Spanish-language books to a school in the village of Capirona. "It's great," says Ms. Hori. "The kids come back and actually help us teach."