At a Westin Hotel banquet table a few weeks ago in downtown Seattle, Portland millionaire JoAnn Wiser leans over her steak dinner and recalls getting>"/>
At a Westin Hotel banquet table a few weeks ago in downtown Seattle, Portland millionaire JoAnn Wiser leans over her steak dinner and recalls getting steamed at Charles Schwab, the brokerage titan. She had read an article about how he had used his influence with President George W. Bush to win support for the idea of eliminating taxes on corporate dividends. I have investments with Charles Schwab, and I totally disagree with that! Wiser exclaims in her effusive manner.
With inherited wealth from her father, a family farmer who struck it big in year-round agriculture in Southern California, Wiser figured out that she could save $17,000 a year on the dividend scheme. Big deal, she thought. It wouldnt stimulate the economy at all, because I buy what I want already, right?
Anyway, it doesnt make sense to her that, in the middle of a serious budget crisis, the federal government would talk about easing the tax burden of people who arent even working for their money, at least not the money that comes from dividends. If anything, she says, we should be raising taxes on dividends.
A lone voice in the conservative, self-interested wilderness of the rich? Not entirely. On this Friday evening, Wiser is surrounded by wealthy folks who think similarly. The occasion is the annual meeting of a Boston-based group called Responsible Wealth, whose 700 members belong in the top 5 percent of wealth nationally and whose mission is to close the economic divide that it says has created a second Gilded Age. After a round of applause for the waitstaff and an MCs mention of how the Westin was picked because its a union hotel, Bill Gates Sr. delivers a keynote address on the subject about which he has been stumping across the country: his opposition to repealing the estate tax. Over the following weekend, the crowd will go on to attend workshops with titles like Freeze the Tax Cuts and Corporate Accountability.
Conference organizers chose Seattle as this years venue because they see a lot of potential members here, and no wonder. Thanks in large part to Gates more famous son, the city has been a prime beneficiary of the tremendous economic boom that has caused the number of millionaires nationally to quintuple since 1985, to 5 million millionaires. Local economists have guessed there are around 10,000 millionaires in the Seattle area, though nobody has an exact number. The current economy has obviously slowed this trend, but the level of private wealth in this country still approximates what is was in 1998, when the boom was raging, according to Paul Schervish, a Boston College sociologist who is perhaps the nations pre-eminent researcher on wealth. Whats more, a number of these newly minted millionaires running around Seattle have been spending their time trying to figure out how, to put it simply, to be good. Some, like those in Responsible Wealth, are challenging the conventional notion of what their political line should be. Others have carved a new identity around giving away money, making Seattle one hub of a movement that has been dubbed New Philanthropy. Schervish calls these new philanthropists hyperagents or initiating entrepreneurs. Unmoved by the prospect of simply writing a check, they are people who take a hands-on approach with their giving and sometimes use it to establish whole new directions or causes.
As the concept of class war once again rears its head, with liberals saying Bushites are waging war on the poor and conservatives saying liberals are demonizing the rich, this current crop of do-gooders is mixing it all up. To some extent, they rail against the rich and powerful while being the rich and powerful. It is an irony not lost on them.
They are, in fact, a self-conscious lot. Its hard to imagine the Gilded Ages robber barons in the middle of an earnest conference on how to use their wealth responsibly. As the age of affluence meets the New Age, doing good is not just a value, it is a means toward self-actualization.
Gates Joins the Rabble-Rousers
Responsible Wealth grew out of a broader group in Boston working on the economic divide called United for Fair Economy. In the mid-90s, that groups co-founder, Chuck Collins, was holding what he calls economic literacy workshops on the growing disparity between the rich and the poor when he noticed an odd phenomenon. We had people coming to us afterwards saying, Im a retired CEO of a division of Kodak, or, Im in the top 5 percent of income, anddont tell anyoneI support your view.
Thats interesting, thought Collins, a descendant of the Oscar Mayer family who gave away a $300,000 trust fund 17 years ago when he was 26. What would it be like to organize some of these individuals to speak out?
Since he helped form Responsible Wealth in 1997, it has attracted a range of people, from the superwealthy like multibillionaires George Soros and Ted Turner to the run-of-the-mill affluent. It doesnt take as much as you might think to break into the top 5 percentjust $164,000 a year in income or $650,000 in assets. A lawyer with a house in Mount Baker could easily qualify. In fact, Mount Baker resident and local Responsible Wealth organizer Lois Canright has little cash to spare; her paper wealth comes in the form of a New Jersey farm she inherited that turned into a gold mine when suburban sprawl sent real-estate values through the roof.
The group has chugged along promoting the meat-and-potatoes issues of economic justice: tax reform that asks the rich to step up to the plate, corporate responsibility that includes livable wages and an end to excessive executive compensation, and exposure of the influence of money on politics.
In 2000, adopting the organizations practice of filing shareholder resolutions to embarrass corporations and generate debate, local organizer Canright filed one with Microsoft requesting a report on its political contributions. The resolution failed, which was expected.
What wasnt expected was that the father of Microsofts chieftain would find common cause with these rabble-rousers. Collins likes to recall that when he got a message saying that Bill Gates had contacted the office wanting to help in the campaign for preserving the estate tax, he thought it was a joke. He soon found it really was Bill GatesSenior. And that jaw-dropping name, combined with the 78-year-old Gates willingness to work the advocacy circuit at a breakneck pace, has of late given a lot more visibility to Responsible Wealth and momentum to its campaign on the estate tax. (In 2001, Congress passed an odd bill that reduces the tax to zero by 2010 but reinstates it the following year in its original form, making its future still very much an open question. Last month as the nation prepared for war, senators slipped an amendment into the yet-to-be-approved federal budget that would accelerate the temporary repeal by one year, which would make it effective in 2009.)
First, Gates brought some of his power-player friends to the table, like Paul Newman and Warren Buffet, to speak out in favor of the estate tax. Then he co- authored a book with Collins, released a few months ago, called Wealth and Our Commonwealth: Why America Should Tax Accumulated Fortunes. He downplays his role, saying Collins did most of the work, but his co-author insists Gates is being gracious. They sent drafts back and forth to each other by e-mail, and Gates wrote at least one chapter himself, according to Collins. After the book came out, Gates and Collins hit the road for a book tour of a most unusual sort: Rather than concentrating on bookstores, they spoke everywhere from Rotary Clubs to universities to churches. One appearance in Seattle had Gates at the New Hope Missionary Baptist Church in the Central Area, whose pastor, Robert Jeffrey, is a fiery agitator for African American causes. Gates followed a gospel choir to the stage. In the concurrent publicity, Gates lent his name to a pro-tax editorial in the lefty magazine The Nation.
Whats it Worth to be an American?
If all of this seems like a turn in direction for a man who has followed mostly traditional career and civic pathspracticing law as a partner at Preston Gates & Ellis, serving as a University of Washington Regent and a national board member of the United Wayhe betrays no hint of it. Asked if he is comfortable in this new circle of activists, he replies flatly: Im comfortable being identified with people who agree with me.
The towering, bespectacled Gates is a no-bullshit kind of guy. You can imagine him as the tough law professor played by John Houseman in The Paper Chase. With the manner of someone who doesnt need to be liked, he tersely says what he thinks and smiles when he feels like it, which isnt necessarily that often. Are you about done? Because Im about done, he says 45 minutes or so into an interview. The setting is the Eastlake offices of the Bill and Melinda Gates Foundation, a place of gorgeous hardwoods and geometric designs that Gates presides over as co-chair, concentrating his efforts on local giving.
But he is warm and downright inspiring at a talk for law students at the University of Washington. There Gates addresses a fascinating theme of his book on the estate tax, one that takes it from an esoteric subject to one central to the philosophy behind the founding of this country. While the tax in 2001 was an astoundingly steep 55 percent for the portions of estates worth more than $3 million (the new law reduces the top rate to 45 percent by 2009), Gates and Collins argue that it arises out of a very American opposition to European-style aristocracies. If wealth is transferred unobstructed from one generation to the next, it stays in the hands of select families.
Anti-estate-tax champions like Seattle Times publisher Frank Blethen (the Blethen family is majority owner of the paper) argue that inherited wealth preserves family businesses as well as family money. They say that to meet the steep tax, calculated according to estates assets as well as cash, heirs sometimes have to liquidate their parents businesses.
Gates and his allies, however, are unmoved. They counter that such liquidation is rare and, regardless, there is nothing sacrosanct about family businesses like the Blethens, whose worth is estimated at nearly a billion dollars.
Standing before UW law-school students, Gates relates that he feels large-scale inherited wealth to be simply undemocratic, though it exists in this country even with the estate tax on the books. We have done a very good job of creating a society that has political equality, he says. But we have utterly failed, in my judgment, at creating a society in which we have equal economic opportunity.
Youre not going to get to the point where everybody starts off exactly equal, he continues, but it seems to me, we should strive for that.
Yet his is essentially a patriotic message. The United States, he believes, has enabled people to become astonishingly rich through huge investments in the public realm through schools, libraries, scientific research, and the like. No doubt because of his son, he pointedly mentions the Internet as one of the governments creations. He calls it immoral for the wealthy not to recognize the contributions of society. And comparing such investments in wealth creation to those in a place like Ethiopia, he ends his talk by asking: The question is, what is it worth to be an American?
Except perhaps for the explicit patriotism, its a message similar to what lefty activists have been saying for years. So why does it somehow seem more remarkable, more moving when Gates says it? Is it, one cant help but wonder, because hes such a rich and powerful guy? And if so, isnt that just what he and his political allies are fighting?
Mike Lapham, co-director of Responsible Wealth, doesnt deny it. Right or wrong, in this country, when wealthy people speak, people tend to listen. Were aware were taking advantage of that.
They are also grabbing attention by playing off stereotypes about rich peoples politicsstereotypes that some argue are incorrect. While conventional wisdom holds that the rich lust after more and more tax cuts, state Republican Party leader Chris Vance asserts that they are often the folks who are least interested in their tax bill. People that rich dont need a tax cut, he says. The people who support tax cuts are those living paycheck to paycheck.
Paul Gigot, The Wall Street Journals editorial page editor, echoed the sentiment in a column a couple of years ago where he mocked what he called the plutocrat cavalry riding in on private Gulfstream jets to defend the estate tax.
Indeed, claims the Republican Partys Vance, the superwealthy are almost culturally inclined to be liberals. Removed from the concerns of day-to-day survival, they focus on abstract issues, like the environment, that liberals champion, according to Vance. The movement leftward by the rich, he believes, is the biggest change in American politics that no one has noticed.
Back at the Westin Hotel banquet, Gates draws attention to his wealth and deflects from it at the same time by riffing off a quote from J. Paul Getty. The oil billionaire is said to have once supplied three ways to become fabulously rich: One, get up early; two, work hard all day; three, find oil. Try this, Gates tells the crowd: One, get up early; two, work hard all day; three, have a stupendously successful son.
Geeks for Good
Theres a similar point that Andy Himes is trying to make when he says he doesnt feel responsible for becoming a millionaire. There are lots of people smarter than me or better looking than me, but they dont have money, says the former Web team manager for Microsoft, talking over a soy latte at a coffeehouse in the Interbay neighborhood
His story is at once familiar and unique. Like many of todays unexpected millionaires, he essentially won the lottery by virtue of where he happened to work. But he comes from a background that most of his ilk dont share. He grew up in the backwoods of Tennessee, the scion of a fire-breathing, evangelical, and deeply conservative family. His grandfather was John R. Rice, one of the founders of modern Christian fundamentalism who started the newspaper Sword of the Lord. At his funeral, the Rev. Jerry Falwell gave the featured address.
My granddaddy had six daughters, says Himes. They all grew up and married six preachers. Most of their children became preachers. Himes diverged.
Now a youthful-looking 52, with short salt-and-pepper hair, a gold earring, and a deep voice, Himes is of the generation that directly confronted the Vietnam War. He turned against it, and when he went off to the University of Wisconsin, became so influenced by left-wing circles that he dropped out to go back to the South as a full-time activist. In Alabama, he worked for the Selma Project, an organization that provided assistance to civil rights groups.
Eventually he moved to Seattle and got into the field of technical writing and editing. But he still was far from rich. In 1992, when he had $500 in the bank and a kid looking toward college, he decided to accept a job at Microsoft, a place he previously thought of as a big nasty company. He left six years later. It was the first time in my life I felt I had any resources, he says.
Harking back to his activist past, he wanted to use his newfound wealth for social change. He began by writing checks to organizations he admired, like the homeless advocacy organization Real Change. Soon, he turned toward a more systematic approach by starting a nonprofit called Project Alchemy. Located in an industrial marina near the southern tip of the Ballard Bridge, the organization provides highly discounted technological assistance to grassroots groups. Besides Real Change, some of his clients have included the immigrant-rights group Hate Free Zone, the North Idaho AIDS Coalition, and the Spanish-language Radio Cadena in Eastern Washington.
You could say he belongs to a phalanx of folks who sometimes call themselves geeks for good, rich techies who now ply their trade for altruistic reasons, though he shies away from the term. It sounds too narrow to him. Yet, indicative of the way new philanthropists think about what they do, he looks to his former job at Microsoft as a model for his new pursuit.
At Microsoft, my job was to make huge things happen with small resources, he says. Though it sounds strange to talk about small resources at one of the worlds richest companies, Himes says such was the case in his role of helping to start the Microsoft Developer Network, an international bevy of people who build products using Microsoft platforms like Windows. There were maybe 50 people on his Microsoft team, Himes says. And yet our job was to make millions of people successful. Part of his teams big-bang-for-the-buck solution was to create Microsofts first Web site to communicate with developers.
For how to translate this lesson into philanthropy, Himes looks to his former boss at Microsoft. I would argue that Bill Gates philosophy as a philanthropist is very similar to his philosophy as a capitalist. Hes spending a little bit of money to focus the worlds attention on key systemic problems. The $25.6 billion Gates has pumped into his foundation isnt exactly a little bit of money, but Himes says it is a drop in the bucket relative to the global health problems that are its central mission. Hes not just giving money to help sick people get well. Hes giving money to wipe out disease. Himes argues its the kind of transformative philanthropy that Andrew Carnegie practiced when he helped build libraries across America.
Helping the Bedroom NonProfits
In much the same way, Paul Brainerd, whom you might call one of the founding fathers of New Philanthropy, talks about striving for the biggest impact with the money he gives away. Thats why, says the 55-year-old, he largely avoided traditional boards and mainstream organizations after making about $120 million by merging his desktop publishing company, Aldus, with Adobe Systems in 1995. The symphony, the university, even the Sierra Clubthey were doing just fine without him, he felt. The small groups, often with two or three people working out of a bedroom, those were the ones that always appealed to me, he says. He gives grants to such groups through the Brainerd Foundation, which he founded in 1995 to focus on environmental causes.
Even more interesting is an organization he helped launch to draw his techno-rich peers into philanthropy. It seemed to me there was a vacuum of leadership, Brainerd says. An approachable boy-next-door kind of millionaire, the thin, bearded Brainerd is speaking at his foundation offices above the downtown Nordstrom Rack, a deliberately nonprestigious locale, one suspects, that also serves as a nucleus for his other organization, Social Venture Partners (SVP).
The organizations novel approach is to give not only money but time and expertise. Its 265 members, who donate at least $5,500 apiece, fan out to entities like Cleveland High School in the South End and the Youth Tutoring Program for public-housing kids (education is a main preoccupation for SVO). They do for these schools and nonprofits what they have always done in the business world, things like financial management, marketing, strategic planning, and, of course, technology assessment.
The idea has had tremendous appeal. Since it started in 1997, Social Venture Partners has spawned 20 copycat groups throughout the U.S. and a handful of others internationally. And yet, as executive director Paul Shoemaker acknowledges, the approach runs the risk of hubris, premised as it is on the assumption that wealthy folks have crucial contributions to make beyond their money. Indeed, Shoemaker says that not that long ago, some people with big mouths damaged the reputation of groups like his by going around talking about how they were going to save the nonprofit world.
Not every group has a place for guys who used to work at Microsoft, allows Alan Rabinowitz, a longtime local philanthropist and retired economist who is one of the nontechie members of SVP.
Some organizations, however, welcome such help eagerly. Greg Tuke, strategic advisor and former executive director of Powerful Schools, a nonprofit that supports four elementary schools in the Rainier Valley, says that he has hosted two dozen SVP volunteers over the last five years. Almost to a person, they have come with the philosophy of, Yes, I have some skills, but I want to learn from the organization, too. He has used them to tutor kids as well as to look at the big picture of how the organization works.
Fraser Black, SVPs lead volunteer at Powerful Schools and a former high-tech CFO who is the son of prominent Pioneer Square real-estate investor Alan Black, recalls that he talked to the group a lot about branding since surveys found that there was confusion among the public about exactly what Powerful Schools did. As a result, the group reworked its materials to have a consistent look and developed a public relations plan. Noting that succession is an important concept in business, Black says he and his SVP peers also helped bring on someone who could be mentored by Tuke and eventually take over as executive director when he stepped into a new role, as planned.
All worthy work, it would seem. So, for that matter, is the work done by Himes, who is also an SVP member but reserves the bulk of his hands-on activities for his nonprofit Project Alchemy. Tim Harris of Real Change says that before Himes came along, the homeless advocacy organization didnt have networked computers or even networked phones; e-mails came into one account and then had to be forwarded to staffers individual accounts. Himes changed all that, and he also introduced Real Change to a Web-based service geared toward social activism, called ActionStudio, that facilitates e-mail alerts and allows the initiating organization to track responses. The first time Real Change used it, to ask people to e-mail City Council members about cuts in human services funding, it was able to tell that 40 people responded. Before we had no way of knowing, Harris says.
Thinking about the details of what these philanthropists do, though, you might question whether it is as revolutionary as they sometimes make it out to be. Writing in Philanthropy magazine, author Martin Morse Wooster calls the roster of schools, tutoring programs, and early education organizations supported by Social Venture Partners strikingly conventional causes. The Seattle Displacement Coalitions John Fox adds that he wishes that groups like SVP nurtured more radical organizations like his, ones that in his words are fighting for structural change.
That, of course, is precisely the goal of Himes and his Project Alchemy, which does fund edgier groups. But does his work for Real Change, for example, truly qualify as transformative? Or has SVPs effort at Powerful Schools produced dramatic new directions or results? One would have to say no, not yet. SVPs Shoemaker concedes as much about his organization generally when he says that its work to date has largely been good, not great, which is the conclusion of a just-completed internal assessment. Shoemaker is now hoping to take the organization to the next level, in part by looking harder at what its beneficiaries truly need.
The benefactors, though, seem satisfied with what theyre getting from it. The payoffs for this generation of philanthropists are different. Uninterested in advertising their wealth, the new philanthropists are less interested in getting their names on buildings than in a kind of self-fulfillment they didnt get by making money.
What I think is that this is a huge opportunity, says Himes, explaining why his philanthropy is motivated by excitement rather than guilt. If you give out of a sense of guilt and obligation, then youre relieved when its over, he says. Now that he thinks of himself as a philanthropist, he doesnt want his giving to come to an end, even if he currently has to give away smaller amounts because of the stock market plunge. If you think about my ability to contributethats what makes me fully human.
Political do-gooders have a similar perspective. I realized this had given me an opportunity, echoes Responsible Wealth organizer Lois Canright, talking about the sudden wealth that came to her when she inherited her familys valuable real estate. I could pay myself to do this important economic justice work and not have to worry about whether people could pay me or not.
As with so much else in life, then, its actually easier to be good when youre rich. If only every millionaire saw it that way.