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Silicon Valley’s ‘prosperity paradox’ explains rampant poverty



Anna Haynes, a homeless
encampment occupant, collects her belongings as authorities break
down massive homeless encampment known as “The Jungle” in San
Jose, California.

Beck
Diefenbach/Reuters


Silicon Valley is a land of extremes.

At one end are California’s wealthy and super-wealthy — the
76,000
millionaires and billionaires
who call Santa Clara and San
Mateo counties home. At the other end are the thousands of people
who struggle to feed their families and pay their bills each
month. Nearly 30%
of Silicon Valley’s residents
rely on public or private
assistance.

Wealth inequality gaps of that size exist elsewhere, but in
America’s epicenter of innovation, the gaps demand extra
attention. And if Silicon Valley manages to close those gaps,
perhaps less-unequal areas could do the same.

“The wealth is palpable,” philanthropy adviser Alexa Cortes
Culwell tells Business Insider. “You come home and every neighbor
has a Tesla parked on the street, with a cord running out to it.
It’s a weird, surreal place to live right now.”

According to a
new report
Culwell published with social sector expert
Heather McLeod Grant, local nonprofit organizations seldom see
any of that wealth come their way, despite the huge impact it
would have on reducing poverty.

Culwell and Grant describe a profound empathy gap between Silicon
Valley’s highest earners and the nonprofits in their area. The
co-authors dub this the “prosperity paradox.” Basically, neither
side has any idea what the other is thinking or feeling — and in
the case of Silicon Valley’s wealthiest, that the other side
exists at all.


santa clara homes
Homes along Clearview
Drive in Santa Clara County that are priced between $594,000 and
$899,000, according to real estate database
Zillow.

Norbert von der
Groeben/Reuters


“The social and economic stratas send people down different
routes, different highways, different grocery stores,” Culwell
says. Very few of the 100 high-net-worth individuals she and
Grant spoke with said they knew what kind of organizations
were in the poorer parts of San Jose and San Carlos.

“Nothing in their lives takes them to those areas,” Culwell
says. If people gave at all, it was to brand-name organizations
whose missions were much larger in scope than the two counties
included in the report.

In other words, according to all the data that was collected,
Culwell and Grant say the stereotype of Silicon Valley elites as
greedy hoarders turned out to be mostly false. A lot of people
expressed a desire to give more of their portfolio to local
groups; they just didn’t know where to begin.

It’s not just the wealthy

Nonprofits shared some of the responsibility in creating the
paradox. Only a small portion of the 140 local nonprofit leaders
interviewed for the report used language that Culwell and Grant
thought would resonate with Silicon Valley-types.

“Donors typically come from the private sector, and they think
about companies in financial narratives,” Culwell says. They use
the language of numbers, of revenue growth year over year.
“Nonprofits speak a more social and moral language.” They talk
about how important the work is they’re doing, and how happy it
makes people.

That gap can create awkward encounters if a donor wants to help
out.

“If a donor asks you how many people you serve and how much it
costs per person, you can’t stop and go look that up,” Culwell
says. “In their world, that would never happen.”


food bank volunteers
Food bank workers pass
along bags of food.

Getty
Images/Andrew Burton


How to bridge the divide

For both sides to work together effectively, each has to
recognize the challenges of the other. That’s the empathy gap the
researchers identified: There’s currently a disconnect between
what donors need to know before donating, and what nonprofits
have focused so much of their energy on.

Culwell and Grant are optimistic the gap can be bridged.

At the bottom of their report, they list several steps each side
can take to reduce overall poverty in Silicon Valley. Nonprofits
could brush up on their numbers and set clear goals for how far
the donations will go, while potential donors could join a giving
circle to educate themselves about the nonprofit world or give
money to finance back-end costs if they aren’t interested in
supporting a cause directly.

Culwell says success in Silicon Valley would be a great omen for
the rest of the country, especially since innovation is baked in
to the region.

“The prosperity paradox in Silicon Valley gives us this
opportunity to use all the ingenuity of the Valley to create the
bridge to this divide,” she says. “We talked to 300 stakeholders,
and afterward we felt like if we could just get them to keep
talking, extraordinary things could happen.”


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