Network Philanthropy

EBay was still a quirky little online network, and philanthropy a strange concept for the executives who ran it. Omidyar and his wife Pam, a college crush, shared a suburban apartment. Skoll lived in a group house while he paid off business school loans. (When he finally bought his own place, a big place, he lived in the guest apartment over the garage.) As for the company, it was profitable, but not so rich that it could divert cash to charity.

Omidyar, though, had created EBay as a tool to empower small buyers and sellers, and Skoll, the site's first full-time employee, shared his democratic values. They didn't talk about customers; they talked about "the community." Shutting the community out of EBay's upcoming IPO--a practical necessity--seemed ungrateful. So they decided that EBay would endow a charitable foundation with pre-IPO stock and share its wealth that way.

Omidyar and Skoll offered Hero $1 million worth. But nobody had ever endowed a foundation with pre-IPO stock, and none of the other nonprofit partners they had approached wanted to experiment. Foundations did things a certain way, it seemed, and it was hard to persuade them to change. "We were told no so many times, I lost track," recalls Brad Handler, then EBay's lawyer.

Hero wavered, but finally agreed to the pair's only condition: Hold the stock for at least 12 months. When Community Foundation Silicon Valley sold the shares a year later, they were worth more than $40 million.

Suddenly, the idea seemed a lot less odd.

Since EBay went public in 1998, Omidyar, now worth about $8 billion, and Skoll, worth about $5 billion, have become two of the nation's leading philanthropists. And they have done so in ways that seem likely to shape their generation's philanthropic legacy--first poking at the firewall between the nonprofit and business worlds, then punching through and building a network of investments that cross back and forth.