CYBER-RICH PHILANTHROPISTS December 30, 1997 NewsHour Transcript

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Some of America's wealthiest individuals now live in the Seattle area. Many of them belong to a new generation of givers that's transforming philanthropy. Rod Minottt of KCTS in Seattle reports.

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A RealAudio version of this segment is available. NEWSHOUR LINKS: An Online Forum on philanthropy in America. Browse the NewsHour's coverage of welfare. OUTSIDE LINKS: The Independent Sector Center for the Study of Philanthropy Internet Non-Profit Center The National Charities Information Bureau Soros Foundations Network

ROD MINOTT: Jeff Reifman knows more about making software than lattes in Seattle, a city famous for both. Twenty-seven-year-old Reifman is a program manager at Microsoft. Financial success at the giant computer software company recently allowed him to open his own coffee house--Habitat Espresso. 100 percent of the net profits, after expenses, go to charity, including services that support children and victims of AIDS.

JEFF REIFMAN, Philanthropist: What we're trying to do is create a place in the community where younger people can come in, buy coffee, and know that their money is going to a good cause.

ROD MINOTT: Since joining Microsoft six and a half years ago, Reifman has seen the value of his Microsoft stock grow tenfold, and he's already decided to start giving back.

JEFF REIFMAN: I don't take any money from this business. In fact, this business is very expensive for me. So we are marketing it very hard and aggressively, like we would any small business, but only to maximize our profits for the charities.

Millionaires in Seattle up 86 percent.

ROD MINOTT: Reifman is one of the many so-called "cyber rich" in Seattle, who are coming up with creative ways to give away their wealth. The number of millionaire households in the Seattle area has jumped 86 percent since 1993, according to Payment Systems, Incorporated, a Florida-based research group that tracks the affluent. Much of that new wealth has resulted from a bullish stock market and booming economy in general. Microsoft has also been a key force in creating the newly rich. The company has produced between three thousand to five thousand millionaires since its founding in 1975 by Paul Allen and Bill Gates.

TOUR GUIDE: And coming up just ahead of us and to the left is the home of Bill Gates, CEO and co-founder of Microsoft, richest man in the world.

ROD MINOTT: A boat excursion offers tourists a glimpse of Gates's 46,000 square foot mansion, still under construction.

TOUR GUIDE: The house has been assessed at just over $50 million. This makes its annual property tax just about $600,000 per year. And just like normal property tax that you and I pay, this money is returned back into the community.

ROD MINOTT: Gates's wealth is estimated at almost $40 billion. He now heads the Forbes list of the 400 richest Americans. Microsoft co-founder Paul Allen ranks third on the Forbes' list, with a personal fortune valued at $17 billion. Allen's philanthropy is well known locally. His five foundations have given away $150 million to support forest preservation, hospitals, universities, and the arts. A music buff, Allen recently donated $60 million to the city of Seattle for a rock'n roll museum.

Philanthropy as a "growth industry".

SCOTT OKI, Philanthropist: These are the blankets. I mean, they are fairly unique.

ROD MINOTT: Scott Oki is another millionaire who retired from Microsoft. Four years ago he and his wife started a company that manufactures baby blankets. All profits are given to Seattle area children's charities.

SCOTT OKI: It really kind of started as kind of a tax shelter, and then has grown to be something where we are trying to affect other people to essentially create business engines for giving, you know, rather than--rather than just, you know, forming foundations and giving money away.

ROD MINOTT: Oki believes this kind of philanthropy is a growth industry.

SCOTT OKI: You know, the cyber rich, if you will, they're young. They're very young. If you look at the average age at Microsoft, I think it's still under 30. So you have a lot of people of means now that, you know, that eventually will get themselves connected in a much stronger fashion to giving that money away.

ROD MINOTT: Trish Millines is also new to philanthropy. A former program manager at Microsoft, she retired from the company in 1996. Millines used some of her wealth to start the Technology Access Foundation, which provides free computer classes to low-income minority kids.

TRISH MILLINES, Philanthropist: And I think that the kids today are not getting that kind of technical exposure, and if they're going to succeed, then they need to at least have a good level of computer literacy, and there needs to be enough of those kids in corporate America to create a critical mass so that they don't feel isolated, so then they can move up the ladder, or as far as they want to go, and be successful.

ROD MINOTT: Millines donated $150,000 to fund the first year of the program. She's relying on other private grants to continue it Millines grew up poor and says she believes in sharing.

TRISH MILLINES: I decided to do this now because I have enough money to do it. I mean, it didn't make any sense to stay at Microsoft and continue to amass wealth. In fact, a good friend of mine actually said to me, well, if you find a place that you like at Microsoft, you may as well stay there because the longer you stay, the more money you make. And that just didn't work because there's too many problems out here right now.

ROD MINOTT: This new generation of givers is being closely watched by Michael Kinsley, senior editor of Slate, an on--line magazine owned by Microsoft. Slate publishes a quarterly report from the top 60 philanthropists in America.

Giving, with competitive zeal.

MICHAEL KINSLEY, Publisher, Slate Magazine: What we're hoping is that the kinds of people, who have made large sums of money and tend to be very competitive, will bring the same competitive zeal to giving it away, they have brought to accumulating it, and we hope that this Slate 60 list will have that effect on a lot of people, as the Forbes 400 List had an effect on people accumulating money.

ROD MINOTT: Kinsley says Seattle's young cyber rich are bringing a certain entrepreneurial spirit to their good causes.

MICHAEL KINSLEY: (a) Very competitive. They want their homeless shelter to be better than anybody else's, which is great. And (b) bringing the productivity standards of the business world to these good causes you read about people in the paper and hear people saying, I don't just want to give away money to some old guard thing; I want to make sure my money is really paying off.

Who really benefits?

ROD MINOTT: Despite their generosity, some of Seattle's new wealthy have been criticized for channeling donations in ways that primarily benefit themselves. An example, Paul Allen agreed to buy the Seattle Sea Hawks' pro football team, but it was on condition that the state finance 75 percent of the new $425 million stadium. The billionaire spent several million dollars of his own money to find a special election, one that resulted in passage of public financing for a stadium from which Allen stands to profit further.

MIKE RAMANO, Seattle Weekly: I do think that a lot of money, especially with people like Gates an Allen and some others, is relatively self-serving.

ROD MINOTT: Mike Ramano, a Seattle journalist who reports on Microsoft, is especially critical of how Bill Gates is spending some of his billions.

MIKE RAMANO: You know, Bill Gates gives $200 million plus--$200 million in software to the libraries across the country. I mean, that just increases the market share for Microsoft browsers and windows, and I don't--I hesitate at the idea of sort of a new philanthropy because I don't think that this is particularly generous. It's not truly given. I mean, $200 million is really important, and a real amount of money; however, it's a small fraction of the money that he made last year.

ROD MINOTT: The $200 million donation comes from the Bill Gates Library Foundation, which formed last summer. It will buy computers and software for public libraries across the country, granting them access to the Internet. The billionaire recently visited one such site in Washington, D.C..

BILL GATES, CEO, Microsoft: The majority of homes today in the United States with kids do have personal computers, but if you look in lower-income homes, it's a very small percentage, only 6 percent of homes within income less than $25,000, and so that's dividing our society, and it's moving away from our central belief of equal opportunity.

ROD MINOTT: Patty Stonesifer heads the Gates Library Foundation. She says the goal will be to wire 10,000 public libraries over the next five years, and she defends how Bill Gates and his wife, Melinda, are donating their wealth.

PATTY STONESIFER, Gates Foundation: Bill and Melinda Gates have said publicly that they are--it is their intent to give the majority of their wealth away in their lifetime. Bill is 42. Melinda is in her early 30's. The $200 million that they've devoted to the Gates Library Foundation is based on what we perceive as the need in the library community over the next few years. They've given an additional $300 million plus to the William H. Gates Foundation, which is focused on providing grants for education, scientific research, and public health, as well as access to technology. Those two foundations are just the beginning of their long-term plans and their long-term approach to philanthropy.

Don't forget the importance of volunteerism...

ROD MINOTT: Stonesifer says she's also personally concerned that too much attention has been given to the new generation of philanthropists.

PATTY STONESIFER: There are so many thousands of people that in their small way have been doing volunteerism and philanthropy, whether it's, you know, tithing to their church, or giving small amounts to the food bank at Christmas, and I worry that at some level some of this attention diminishes; that that is still the majority of giving. I mean, it's still a very critical piece of giving.

ROD MINOTT: Microsoft program manager and espresso cafe owner Jeff Reifman sympathizes with Stonesifer's view, but he also feels that new philanthropists, like himself, play an equally critical role. As an example, he points to profits from his coffee house that will be used to spawn similar businesses.

JEFF REIFMAN: What we're about is empowering everyone to come in and make a difference and take part in it, and that's why we have a 50 percent reinvestment in our future business so we can do more and more of these, so that there's more and more employment opportunities and more and more places where people can be involved and give.

ROD MINOTT: Reifman remains optimistic that entrepreneurial philanthropists in Seattle will inspire young millionaires elsewhere to do more than just write checks and seeking to make a difference.

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