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Donations Dried Up With Tech Stocks

As Nasdaq declined, so too did the grand charitable ambitions of onetime billionaires.

October 13, 2002|David Streitfeld | Times Staff Writer

At the end of the last century, during that unimaginably distant time when Nasdaq was stair-stepping its way to the heavens, a new age of philanthropy was declared.

Driven by motives as varied as peer pressure, egotism and a sincere desire to help others, technology executives made great gifts to higher education. They established private foundations. They funded pet causes and devised charitable projects.

The remarkable thing wasn't just the amounts of money being committed, although they could be jaw-dropping. It was the scale of the ambitions.

"After the so-called failures of the Great Society programs in the 1960s, there was a wariness about trying to tackle big issues," said Steven Lawrence, research director for the Foundation Center. "In the 1990s, you finally had people willing to conceive of attacking intractable problems."

One new billionaire said he was setting up an online university that would offer a free "Ivy League quality" education to anyone. Another announced his goal of preventing damage to the water, air and land. A third said he was pledging $100 million to fulfill a vision of "children in Africa asleep in safe shelters, alert in their classrooms, with hope and joy in their eyes, replacing the pain and confusion."

Although many heroic ventures were announced and some even achieved, many have been shelved or quietly abandoned.

"The so-called New Renaissance of Giving was as real as Internet stocks," said Steve Kirsch, a Silicon Valley philanthropist who has seen the value of his foundation fall to $15 million from $70 million. "I don't think anyone's trying to pretend they're doing great things."

Michael Saylor's online university was one of the most-hyped philanthropic declarations of the boom, making headlines around the country in March 2000. The founder of MicroStrategy Inc., a Virginia software company, Saylor offered a remarkably detailed account of his plans. He had put up $100 million for his "cyber-Library of Congress," he said. He would be hiring curriculum experts, writers, editors, technicians. In the next few months, lectures by the world's "geniuses and leaders" would be taped. In the next few weeks, Saylor told the Washington Post, he would announce endorsements "from senators, Cabinet-level people, well-known educators."

It was all so believable. And why not? MicroStrategy was valued at $25 billion and Saylor owned half of it. The money had come very fast, most of it as MicroStrategy stock soared in the previous year. Saylor was well-known for being impatient. He would make it happen.

Since Saylor's splashy announcement, however, there has been silence. MicroStrategy has crashed, along with Saylor's personal wealth. The stock market value of the company is $94 million, less than the donation he said he made to his foundation.

At the end of 2000, tax records show, Saylor's private foundation was worth $15 million. It's unclear what, if any, toll the subsequent decline in the stock market has taken on that sum.

Saylor declined to be interviewed about his foundation or the university.

"It's not something he likes to talk about," said MicroStrategy spokesman Marc Brailov. "When he announced it, our stock was over $300 and the economy was going robustly. Now it's a much more challenging environment. His focus is on his business."

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Cutting-Edge Research

Nanovation Technologies Inc. also was keen on higher education, but made its contribution in a more traditional way.

In January 2000, the Massachusetts Institute of Technology announced that the Michigan company was donating $90 million to fund a "cutting-edge research facility" in photonic, microphotonic and nanophotonic devices. Photonic technologies enhance and speed up data transmission, offering a significant building block for super-fast Internet connections.

Only $4 million of the pledge was paid, an MIT spokesman said. Nanovation filed for bankruptcy protection a year ago.

Other foundations are no longer stressing the size of their asset base. Instead, they're emphasizing the quality of their projects.

Philip Berber founded online broker CyBerCorp, which was acquired by Charles Schwab Corp. for $488 million in March 2000. Shortly afterward, Berber and his wife, Donna, started A Glimmer of Hope, described on its Web site as "a global foundation that seeks to relieve some of the pain and suffering on the planet," particularly in rural Ethiopia. A news release on the site dated August 2000 says it was started with a pledge of $100 million from the Berbers.

It was an exceedingly generous gesture by a couple with an ambitious, even noble, idea. But its latest IRS tax return, from 2000, says that contributions to the foundation that year totaled not $100 million but $108,500.

"How we arrived at that number, I don't even remember," said Michael O'Keefe, the foundation's communications director. "The $100 million was a pledge. How much was paid in, I don't know. My paychecks clear, and that's all I can tell you with regard to finances."

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