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City in Flux: The Impact of San Francisco's Tech Industry on Local Communities and the Non-Profit Organizations that Serve Them

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Senior Fellow Susannah Shattuck (France 2013), wrote "City in Flux: The Impact of San Francisco's Tech Industry on Local Communities and the Non-Profit Organizations that Serve Them" as part of the 2015 Humanity in Action Philanthropy and Social Enterprise Fellowship

 

“San Francisco has always been a city in flux (1).”

This was the response I got when I asked an employee at a mid-sized San Francisco tech company whether he thought often about the impact that his company had on its neighborhood. He shrugged off responsibility by pointing at the past. It’s true—throughout its history, San Francisco has been a boomtown. Or rather, a boom/bust-town.

In the mid-1800s, the city—which started out the century more like a small village—played host to scores of fortune-seeking prospectors during the California Gold Rush. Over the course of four years, from 1848 to 1852, San Francisco’s population grew from several hundred to 36,000 (2). The landscape of the city changed dramatically over the course of just a few years, and nobody thought much about the displaced population of California—native settlements and Spanish enclaves were giving way to great centers of civilized industry, or so the contemporary accounts said.

Fast forward to the 1960s, when suddenly San Francisco had another boom on its hands—but this time, the newcomers were less welcome. The 1968 “Summer of Love” brought scores of young people to the city. The older generation who had called San Francisco home for decades was not thrilled about these new neighbors. All kinds of people seeking refuge from a society that didn’t accept them came streaming over the Bay Bridge and across the Golden Gate. The summer of love came and went, but San Francisco’s position as safe harbor for counterculture remained. The city became ground zero for a culture war that played out on a larger scale across the entire country. The battle came to a head ten years later, when in 1978 Dan White shot dead Supervisor Harvey Milk, poster child for the San Francisco’s acceptance of America’s rejects.

This history does point to a larger trend of population growth and tension in the city. But it’s hard to ignore the numbers that accompany today’s boom: real estate website Zillow.com estimates that in order to afford the median rental price, a city resident would need to earn at least $79.60 per hour (3). Evictions are taking place at rates higher than they’ve been in over a decade (4). Not everybody can afford to live in the new San Francisco, made profitable—and unequally wealthy—by tech success over the last decade.

And yet, in the minds of many of the tech workers I spoke with, the industry that has wrought forceful change on San Francisco also holds so much potential to fix the problems that plague this city. It’s funny—banks, consulting firms, and Fortune 500 multinationals don’t usually delude themselves that they are going to turn The System on its head, but the technology industry is dead set on “changing the world”—and the industry’s leaders truly believe that they’re already doing just that.

For example, Marc Andreessen, a venture capitalist and philanthropist who has made his name investing in companies like Twitter and Airbnb, tweeted earlier this year: “Thanks to Airbnb, now anyone with a home or apartment can offer a room for rent. Hence, income inequality reduced.” The sharing economy, a new business model that has been vaulted into the spotlight thanks to companies like Airbnb and Uber, is just one of the tech industry’s solutions to society’s problems. Companies like Tesla purport to solve some of our most pressing issues—fossil fuel dependency, for one—by eliminating inefficiencies in our current infrastructure. A more efficient world is a better world—or so Silicon Valley says.

The tech industry’s future-oriented mindset, coupled with a young, relatively liberal employee base has the potential to make it a unique force in the traditional pantheon of economic power. But is the industry actually acting as the kind of change agent that it likes to imagine itself as? To find out, I looked at the ways that San Francisco-based tech companies are engaging in non-profit and philanthropic efforts to improve their local communities. Here’s what I learned.

 

 •     •     • 

 

Out of the five San Francisco tech companies that I talked to, four were based in the Mid-Market neighborhood. This isn’t coincidence; the neighborhood has been on the front lines of the tech takeover since 2011, when San Francisco Mayor Ed Lee offered a tax-break to companies and entrepreneurs who would set up shop on the six-block stretch of Market Street. Mayor Lee and his constituents hoped that the tax-break would bring in new capital that would serve to revitalize the decaying neighborhood, and on the surface, his plan worked. Twitter moved in one year later, bringing with it a collection of smaller companies, condo developments, and coffee shops. The change has been rapid. Today, Mid-Market is a very different place from what it was like four months ago, let alone four years ago.

One of the first companies to take advantage of the Mid-Market tax break, after Twitter, was Zendesk. Zendesk’s CEO, Mikkel Svane, had lived in a tiny apartment not far from the allotted tax-break land while he was bootstrapping the company, and when he and his small team finally had achieved enough success—enough investment—to fill out their own office space, he knew that he wanted to stay in the neighborhood.

To Svane, moving into the neighborhood went hand in hand with making a commitment to give back to the community. To this day, Zendesk has one of the most comprehensive corporate social responsibility programs that I have seen at a San Francisco tech company. Volunteering in the community is mandatory for all Zendesk employees—in fact, one of the first things that a new hire does at Zendesk is spend an afternoon volunteering at St. Anthony’s, a local non-profit that provides services and resources for Mid-Market’s homeless population (5).

In addition to volunteering, Zendesk’s employees participate in regular educational programs and events that are designed to get them out and about in the neighborhood, to learn more about their neighbors. One of these programs is something that Zendesk’s CSR department playfully referred to as “Lunch in the ‘Loin.” (‘Loin being short for Tenderloin, a neighborhood that partially encompasses the Mid-Market area.) Every week, the company takes out ten of its employees to a local lunch spot instead of giving them standard catered fare in the company cafeteria. The goal of this program is two-fold: combat the negative perception (and fact, for some companies’ employees) that tech workers do not contribute any of their income back to community businesses because their lives are completely provided for at work, and introduce employees to their neighbors.

Zendesk also has a foundation—the Zendesk Neighbors Foundation—that gives out small grants to local, Mid-Market non-profits. In the growing landscape of tech philanthropy, however, most organizations pale in comparison to the work being done by the Salesforce Foundation. Since its founding, the Salesforce Foundation has given over $96 million in grants to non-profit organizations (6).In addition to giving out money, the foundation likes to find non-profit organizations for which it can serve as a “strategic partner or business ally (7).”

Just as Zendesk hopes to offer the community more than simple volunteers in its employees—by educating them about the issues that the neighborhood is facing—the Salesforce Foundation hopes to serve as a real partner to non-profits in the fight against community issues. This is a theme of the community initiatives and corporate social responsibility programs at the tech companies I researched. Whether driven by a recognition of the deep-seated social challenges that cannot be patched with money or, more cynically, a desire to make an impact that will not draw directly from company coffers, this desire to develop relationships with the social organizations and the communities they support is widespread.

Companies are not the only players participating in the Bay Area philanthropy scene. Philanthropic investment in San Francisco is also pouring in from tech leaders like Salesforce’s CEO Marc Benioff, Facebook’s Mark Zuckerberg, and investor Ron Conway. The trio has given over a quarter of a billion dollars to the city’s hospitals, and Benioff has given $10 million towards improving the city’s middle schools (8). At the same time, the Mid-Market tax breaks alone have already cost the city an estimated $33.7 million (9). The balance sheet of the tech industry’s financial impact on San Francisco is not so straightforward.

Non-profit partnership and philanthropy are not the only ways in which the tech industry participates in community making in San Francisco. Political involvement is a third big way in which the industry is involved in shaping the city.

In the most recent city election, a controversial ballot measure revealed that the tech industry’s political interests run deep. This election cycle, the San Francisco Tenants’ Union, among other proponents, pushed for the adoption of Proposition F, which would limit short-term unit rentals offered through Airbnb and other services to 75 days out of the year. Prop F’s supporters hailed the legislation as a way to curtail the number of units that were being converted into pseudo-hotels, or full-time short-term rental units—worsening the housing crisis, according to the SFTU. In response, Airbnb ran an $8 million campaign to combat Prop F and at the same time launched a passive aggressive ad campaign notifying the city of the $12 million in hotel taxes that the company had to pay to the city last year (10). The ads, which snidely offer suggestions to the city as to how they might spend that money on public services, point towards a deep-seated antipathy towards the public sector. The “we can do it better” attitude that tech philanthropists have been criticized for taking is prevalent in tech companies’ push for public policies that facilitate their operation independent of government oversight, restriction, or taxation.

As Alessandra Stanley recently wrote for The New York Times, “There is… a libertarian streak in parts of Silicon Valley that allows some to believe they can spend their tax dollars better than the government ever will (11).” This “libertarian streak” is apparent not only in the ways that tech philanthropists dictate the spending of their money but also in the political campaigns against taxation and regulation that companies like Airbnb and Uber engage in regularly. Mayor Lee’s opponents argue that he has handed over the keys to the city to tech industry leadership. Would the city be better off if publicly elected officials were in charge of the distribution of tech money towards civic projects and funds? Or does data-driven Silicon Valley really know best?

 

 •     •     • 

 

From her small office on the fourth floor of the building that the St. Anthony’s Foundation occupies on Golden Gate Avenue, Dolores Gould manages a sizable army of volunteers. As Manager of Corporate Relations at one of the largest social services agencies in San Francisco’s Tenderloin neighborhood, Gould holds the keys that connect tech companies like Zendesk with some of the most vulnerable members of the community. I spoke with her about her experiences managing relationships with tech companies looking to volunteer with her organization.

“Tech workers can be entitled, yes,” she muses, “But they are young and open-minded. They make for interesting partners (12).”

Over the last five years, Gould has seen firsthand the changes that the burgeoning tech industry has wrought—not only on the neighborhood but also on St. Anthony’s. “We used to get five companies in here a month, if that. Now, we get five companies in here a week.” She estimates that about half of the companies she works with are in the tech industry.

Beyond the increase in volume of corporate partnerships, the influx of the tech industry into the Mid-Market area in particular has also brought about a shift in the political climate that Gould has recently begun to notice. She first felt this shift in mid-August of this year, when a video of a group of San Francisco policemen forcefully restraining a disabled homeless man went viral on Twitter. Leaders at the tech companies with which she works—places like Twitter, Square, and Salesforce—began calling her up asking her about the situation.

“As a result, I am organizing a cinema night about the criminalization of the poor,” she says. “This is a sea change moment, when these companies who have the ear of they mayor and the police department are genuinely interested in learning more about and building relationships with the community.” In stark contrast with the political involvement that companies are taking to fight off government regulation, Gould believes that the kind of individual (rather than corporate) political involvement that tech leaders have access to could prove effective for securing more funding and resources for the work that organizations like hers are doing. It is early yet, but Gould is excited to see where the relationships that she’s built with San Francisco’s tech companies might take her community’s issues—all the way to City Hall, she hopes.

Gould isn’t the only community organizer looking to leverage the political clout of the tech industry in the fight against inequality, homelessness, and unaffordability in San Francisco. sf.citi (San Francisco Citizens Initiative for Technology and Innovation) is a politically-focused non-profit organization that enlists tech companies to join as “members” and support various local initiatives.

sf.citi has faced criticism for its deep roots in the Silicon Valley elite. In 2012, the San Francisco Bay Guardian ran a scathing article on tech investor and sf.citi board member Ron Conway, insisting that “sf.citi—and Conway’s agenda—offers nothing for San Franciscans who are not middle class or above (13).” The organization has taken the side of the tech industry in public political debate in the past—most prominently in 2014, when the San Francisco Board of Supervisors heard an environmental appeal against the shuttle programs that bring tech workers from their homes in San Francisco to their companies’ headquarters in Silicon Valley. Tech shuttles had come under serious fire from community organizers as a powerful cause of displacement in the city—rent prices around shuttle stops in the city soared, as tech workers moved in and sought convenience at nearly any price (14). During the appeal process, sf.citi came out publicly in favor of the bus programs, urging its members and followers in a statement to “tell the Board of Supervisors in person that you want them reject this lawsuit and let the pilot program go forward (13).”

One of sf.citi’s flagship programs is called “Circle the Schools,” in which member companies “adopt” a San Francisco public school and organize activities like book drives and digital literacy workshops. If we take the most cynical view, even programs like this one seem to cater to the tech industry’s needs—improving San Francisco’s dismal public school system will give companies a fresh pool of applicants that they can use to check the diversity box. In the case of education, however, everybody benefits from a better school system. What are we to make of organizations like sf.citi that clearly have a deep stake in corporate interests but also have the resources to address real community needs?

As Dolores Gould says, “If we don’t engage with these people, nothing will happen.” The case of sf.citi shows us that there are challenges baked into the model of community engagement that allows corporate interests to set the course. St. Anthony’s and the myriad other organizations that are forging real relationships with tech companies in the Mid-Market neighborhood, however, show us that it’s possible, through a combination of education and hands-on engagement, to build a model of corporate social responsibility that might just work.

But if evaluating the true success—or failure—of organizations and partnerships like these is the real goal, then we need to talk with a third party: the community itself.

Leon (name changed to protect a minor's privacy) is a tenth grader at John O’Connell High School in the Mission District of San Francisco. Seventy-eight percent of students at John O’Connell High School receive free or reduced lunch; Fifty-eight percent of students identify as Hispanic or Latino (16).

[Disclosure: Susannah joined Prezi in May 2013.]

One foggy afternoon in late May, Leon and a handful of his classmates make a visit to the office of Prezi, a small tech company based in downtown San Francisco. They have come to the office to learn how to use Prezi, a presentation software, and create their final presentations for the year with the help of Prezi’s employees. During the session, some of Leon’s classmates struggle to log into the netbooks that the San Francisco Public School Department has loaned them for the day—the username and password provided to them by the department doesn’t seem to work. Others look blankly at their screens, not sure where—or why—to begin with the new software.

I asked Leon whether he thought learning Prezi would be useful to him in other classes. He shrugged. “Nope. I don’t like getting up and talking in front of people.”

That afternoon, Leon and his classmates also heard from a number of Prezi employees about different types of jobs in the tech industry. Some students looked incredulous when they heard from Prezi’s social media manager—“You mean you get to go on Facebook all day? That’s a real job?”

On the one hand, events like the one that Prezi hosted at its office for John O’Connell High School—a Circle the Schools partner—are excellent opportunities for students to learn more about the industry that is rapidly growing around them, and to learn about career opportunities about which they may have never otherwise known. That afternoon in May, however, it was abundantly clear that San Francisco’s public school students need things like working computers alongside career counseling and specialized software training.

 

 •     •     • 

 

The political challenges—and opportunities—that San Francisco faces when it comes to balancing corporate interests and community needs are not unique. Cities across the United States are facing challenges of gentrification, displacement, and corporate takeover at the same time that they are experiencing stratospheric growth in wealth and development. Detroit is today on the cusp of a similar balancing act, as the city works to bring in new investment and industry. Incoming developers run the risk of alienating Detroit’s current population if they do not find ways to navigate the wealth gap and create spaces for the entire community.

In some ways, San Francisco can and should serve as a warning to smaller cities that are looking to grow their economies. The city has done much to bring in investment, encourage development, and there are tangible results that Mayor Lee’s administration can point to as indicators of success: for example, San Francisco’s unemployment rate has dropped from 10.1% in January 2010 to 3.6% today (17). But the speed at which the city has experienced economic growth, and the uneven rate at which different groups are reaping the benefits of that growth, has crippled San Francisco at the same time that the city is booming. The tech industry has used the local government as a stepping stone rather than a gatekeeper, resulting in a profound lack of accountability for the current “livability crisis.” The tech industry believes and asserts that it has the keys to solve the city’s issues, and yet those solutions are yet to be seen in action.

In other ways, however, San Francisco is uniquely poised to solve some of the universal challenges of urban development—issues like lack of affordable housing, wage disparity, and displacement of old communities. If people with power in the current political and economic system—that is, tech company leaders and workers—continue to forge genuine, two-way relationships with their non-tech neighbors, they may be able to use that power to instigate real change. If the San Francisco government begins taking greater responsibility for managing the resources that the tech industry has brought into the city—and tech philanthropists and companies are willing to loosen their controlling grip on some of their funds—the city may be able to swing back in a direction of inclusivity.

Dolores Gould, at least, believes that if any place can solve the issues of the modern boomtown, San Francisco is it. “San Francisco doesn’t want to be a city of just the wealthy. That’s not how San Franciscans see themselves (12).”

 

Epilogue

One of the most surprising and challenging things that I encountered during my research was the consistent reluctance from tech workers to speak on the record—not anonymously—about their companies and, more specifically, their community programs. I consistently ran into the same answer when I began asking questions about CSR: “Oh, I can’t speak on the record about this.”

It’s true that many of these companies have faced criticism in the past for their negative impact on the city. It’s also true that CSR, in general, is often cited as a corporate gimmick or ploy for getting good press. But I don’t think that the tech industry’s overwhelming response to these facts—silence—is a productive way to move forward if building relationships is the real aim of any of these community outreach programs.

Real relationships are built on a foundation of trust—and if these companies want their neighbors to trust them, they need to start talking about the work that they can do together.

 

 •     •     • 

About the Author

Susannah Shattuck currently lives in San Francisco and works for Prezi, a Hungarian-based startup that creates presentation software. She graduated in 2013 from Yale University, where she studied history and fine art. Susannah spent her academic career studying the power of art and culture to transform both individuals and society, and she is currently interested in the role of technology and entrepreneurship in shaping and mis-shaping communities. San Francisco is a particularly interesting place to study these issues, and Susannah enjoys spending her time trying to learn more about the complex web of relationships that the tech industry has wrought on this city and its inhabitants. Susannah is a Humanity in Action Senior Fellow (France 2013).

 

Creative Commons photo (2011) by Chris Jones

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13. Kassler WJ, Tomoyasu N, Conway PH. “Beyond a Traditional Payer – CMS’s Role in Improving Population Health.” N Engl J Med 2015; 372:109-111. Jan 2015. http://www.nejm.org/doi/full/10.1056/NEJMp1406838

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