Stanford GSB: Stanford Business February 2001

Stanford Business

February 2001, Volume 69, Number 2

The New Face of Philanthropy

Earned wealth has brought Catherine Muther the chance to experiment with new forms of philanthropy that she hopes will speed up opportunity creation for women and girls.

by JANET ZICH

Catherine Muther is a philanthropist with attitude. Articulate, outspoken, and passionate in her commitment to opportunity for women and girls, Muther, MBA '78, is a pioneer in venture philanthropy, a method of giving that Muther likes to call "philanthropy with attitude." In the seven years since Muther, 52, left her position as senior marketing officer at Cisco Systems, she has poured $10 million of her personal wealth into the nonprofit Three Guineas Fund (3GF), a foundation she created to expand access to education and the economy for women.

For me to create another institution, to apply my creativity and intelligence and everything I've learned in business to a different sector, seems to me to be logically consistent with who I am.''

Venture philanthropy uses the tools of venture capitalism to address social ills. Venture philanthropists invest; they don't simply give. They expect to see results from their investments—long-term results. Essentially, venture philanthropists look at the organizations they assist the way venture capitalists look at new ventures.

The pride of 3GF's new ventures is the Women's Technology Cluster in San Francisco. The first incubator built around women entrepreneurs, the three-year-old WTC currently houses, nurtures, and inspires 10 high-tech startups. As the cluster gains prominence, attracting requests from around the world to duplicate it, Muther has been recognized as an expert on the new philanthropy.

She has been featured in the Wall Street Journal and other national publications; last fall she was on the cover of Inc. Muther was a panelist at the 1999 White House Conference on Philanthropy. At her left sat another Stanford venture philanthropist-Kevin Fong, MBA '82, cofounder of Silicon Valley Social Ventures. At her right was the former first lady and now senator, Hillary Rodham Clinton.

The invitation gave Muther an "auspicious opportunity" to talk about the Women's Technology Center, she recalls. It also provided the opening she needed to invite the first lady to see the WTC for herself. Clinton took Muther up on the offer last March. She sat down with 11 CEO/founders at the office building that the cluster shares in part with 3GF, where she engaged the young entrepreneurs in a roundtable discussion.

In her newspaper column, Clinton called the technology center "a remarkable example of how the blessings and opportunities of the Internet Age can be extended to increasing numbers of Americans." Praising the cluster to the San Francisco Examiner, she said: "As more and more women are finding opportunities in the New Economy, they are finding some problems of the old economy as well, namely that the capital available is not sufficiently diverse to be available to women entrepreneurs with good ideas. We need to build that new girls' network to compete with the old boys' network."

Muther (like Clinton) came of age at a critical time, when the rules were changing for women although no one knew quite how. In 1976, when Muther entered Stanford Business School, she had never even worked in a business. "And I wasn't the only woman like me at Stanford," she says. "There were river runners, quilters, art history majors, scientists, and mathematicians."

A graduate of Sarah Lawrence College with a major in anthropology, Muther earned a master's degree at Cambridge. Her reasons for following it with an MBA were simple: "I realized that I liked managing and was good at it. And I wanted a career."

To everyone's surprise but hers, Muther's study of anthropology served her well in marketing. "When I first came to Stanford," Muther recalls, "people said, 'What is anthropology? Is it about apes? And Cambridge? What is that about?' Second year, when I went for my interview at Bridge [Communications], the CEO said, 'Omigod, don't ever tell anyone you're an anthropologist!' For years after that I never put anthropology down on my resume," Muther says, laughing. "It's only now that I tell people."

If Muther came to business school in a roundabout manner, her life since has had no fewer twists and turns. "I read recently that very few women who have been successful in industry have gone about it in a linear way.

I think that's especially true of women in my generation," says Muther, who is the mother of two. "When I graduated in 1978, there was no career path in place for us."

Because there was no pattern to either guide or restrict them, Muther believes she and other women of her generation have been especially creative in engineering their careers. "For me to leave the corporate environment and create another institution, to apply my creativity and intelligence and everything I've learned in business to a different sector, seems to me to be logically consistent with who I am," she says. "I don't know why other people aren't doing this, but they're missing some of the fun."

Muther learned the fun of philanthropy from a master. She took that job she had applied for at Bridge Communications and stayed on after the company was acquired by 3Com. Later, she moved to smallish, not-yet-public Cisco Systems, where John Morgridge, MBA '57, was president.

The company was located in East Palo Alto then, and Morgridge had "adopted" the elementary school across the street. The volunteer work done by Morgridge and his band of Cisco employees created a culture of giving that infused the company, Muther says. Morgridge was noticeably enthusiastic about working at the school and about contributing to other of his various interests. "A joyous philanthropist," Muther calls him.

She remembers one occasion when Morgridge and his wife had just returned from a trip to their alma mater, the University of Wisconsin, where the couple had set up a series of fellowships. "He came bounding into my office. 'Oh, Cate,' he said, 'you have to do this, this is so much fun!'

"He was a role model for me," Muther says. "He took this clear kind of pleasure in participating in philanthropy. He told me to be sure to give money away 'when you're alive and you can enjoy it.' Because of his influence, I started a philanthropic pattern while I was still at Cisco." During the Cisco years Muther realized she was becoming a wealthy woman because of her stock options. "As I started to acquire wealth, I began to think about its significance at this point in my life," she says.

In 1994, at the age of 46, Muther retired from Cisco. The main reason she left, she says, is that her wealth made it possible. "I had acquired independent means. It's such a rare opportunity." In 1995, she founded the Three Guineas Fund, a 501(c)3 organization, endowing it with $2 million in Cisco stock.

"Cate was one of the first in the valley to set up a foundation," says Morgridge. "I think she realized something that most people don't. And that is, you don't have to have a huge amount of money to be an active philanthropist. Cate got started as soon as she left Cisco, and she started pretty small."

"The process of creating the foundation demanded that I think strategically about what I wanted to do," Muther says. "It gave me the opportunity to craft the mission of the foundation, which is to create access to opportunity for women and girls in education and the economy. I keep myself quite disciplined about that purpose."

"She's always had a burning passion about women's issues," Morgridge says. "That's where the majority of her energy has gone. I think it's given her focus."

"Another thing she's done that's unusual is that she's actually project-managed instead of just writing checks." Three Guineas has become her profession, Morgridge says, adding, "I think it's become her life."

Three Guineas is perhaps the perfect name for the foundation. Muther came across Virginia Woolf's 1938 book Three Guineas when she was at Cambridge. The book takes the form of three letters, each a reply to the request for a guinea: one to prevent war and preserve intellectual liberty, one to educate women, and one to promote their employment. Woolf exacts a price for her donations. She insists that each fundraiser hear her out on how the money can best be used. Woolf writes in conclusion: "The three guineas, you will observe, though given to three different treasurers are all given to the same cause, for the causes are the same and inseparable."

Says Muther: "This is a social justice issue. Three Guineas says that if women improve their standing in society, it's not only good for women but good for the society at large. But for women to improve their standing in society, they have to be well educated and have access to earn a living. Those ideas inform what we're doing at 3GF."

Since the foundation was created, it has granted funds to an array of programs, all in some way or another related to women's access to the economy.

For example, among the projects 3GF has helped support is Girlhealth.org, a project that trains young women in Web skills as they build an online, interactive version of their earlier work, a print book about young women's health. Another is Sweet Things, a training program for middle-school girls on New York's Lower East Side, which began by teaching hands-on baking skills. A third is the Women of Silicon Valley Project, a study of the role of women in the valley. Three Guineas is also a sponsor of Springboard 2000 and 2001 in its Bay Area forum. Springboard is a national initiative that facilitates investment in women-led businesses by introducing women entrepreneurs and their companies to corporate, angel, and venture investors.

We're trying to educate entrepreneurs in what it means to be leaders in the business community. And part of being a leader in business is to give back to your community.''

Most notably, 3GF partnered with the David and Lucile Packard, BankAmerica, W. K. Kellogg, and San Francisco foundations, as well as with the City and County of San Francisco, in founding the Women's Technology Cluster, the first high-tech incubator for companies at least partially owned by women entrepreneurs. Three Guineas has put up roughly a half-million dollars so far to fund the cluster.

Four startups have grown strong enough to leave the nest, and currently there are 10 companies housed in an airy, high-ceilinged, four-story building in San Francisco's rapidly gentrifying, old warehouse district known as Dogpatch. There, young women CEOs are given access to ideas, expertise, and financing. Cluster participants are also introduced to the culture of philanthropy. Each WTC member is required to commit 2 percent of the value of her company to the Three Guineas Fund. In so doing she makes a commitment to the women and girls who follow her.

"What we're trying to do here is nurture companies and develop the next generation of philanthropists," Muther says. "We're trying to educate entrepreneurs in what it means to be leaders in the business community. And part of being a leader in business is to give back to your community."

Since Muther left Cisco, philanthropy has become a growth industry in the valley. "What we're doing is really a reflection of how we learned to do business," she says. "I think that every generation of wealth creators comes out of a particular business and institutional milieu. The industrial wealth creators had certain experiences and certain ways of practicing their business that influenced their philanthropy. We see that reflected today in the foundations they created.

"Theirs was an era of command-and-control management. If you look at some of the established philanthropic organizations, they're very much about hierarchical relationships. I think that a lot of what you see in philanthropy now is a reflection of how New Economy business people have learned to go about getting things done."

For example, she says, partnering is key to the new philanthropy. "Partnering is a fundamental way people get things done in the New Economy. It's critical to success," she says. "People learn how to partner and how to manage partnerships. You see it throughout venture philanthropy. You see it at 3GF-we're constantly looking for partner institutions to work with. This did not happen when Rockefeller was building his oil monopoly."

Teamwork is another element of the new philanthropy. "It's not command and control any more," Muther says. "It's not hierarchical. It's about teams. If you're not successful at working in a team, you're not going to be successful in business.

"I think the new philanthropy is about change," she adds. "What we're doing is not about preserving and maintaining. When someone comes to me and says, 'Let's invest in keeping this the way it is,' I'm not interested. Here at 3GF, we ask ourselves if there is something we can do to influence change. We see a systemic problem related to women's access to capital, and so the focus of the foundation is on providing access."

And then there's attitude. When Muther talked about venture philanthropy at the White House conference, she introduced her idea of "philanthropy with attitude." New Economy philanthropists bring more than just a set of different skills to the philanthropic sector, Muther observes; they also bring a set of attitudes that may be abrasive to those not accustomed to them.

"They're always in a hurry," Muther says. "Their sense of urgency sometimes looks like impatience." The new philanthropists insist on accountability. Their demand for results may look like a need for control, she notes. "And there's also a sense of confidence," Muther says. "You see this in younger people who have been successful and have acquired wealth. They know they've been good at something, and they feel confident. That kind of self-confidence can look like arrogance." She pauses, then continues, laughing. "And sometimes it is arrogance!"

Venture philanthropy is in many ways as entrepreneurial as the organizations it invests in, and Muther intends to keep 3GF entrepreneurial and probably not much larger than it is now. While she doesn't see the foundation growing, she doesn't completely rule it out. Meanwhile, she keeps coming up with new ideas. For example, Muther has been asked so many times how to set up an incubator like the Women's Technology Center that she's thinking of creating a kind of manual, or blueprint, for replicating it. And then there's 3GF's new operating project, the Young Women's Technology Cluster. Juniors and seniors in the San Francisco Unified School District will be housed in the same building as the WTC, where they can observe and mingle with the entrepreneurs. They also will receive advanced technical training along with mentoring.

To Muther, philanthropy is a natural step in the career path she created for herself and the wealth she acquired during that career. "I think about wealth as a continuum," she says. "One earns it and spends it and loses it and wastes it and manages it. Philanthropy—giving is one dimension of all the aspects of wealth. It's all part of a continuum of experience and knowledge."

For more information about the Three Guineas Fund visit their Web site at www.3gf.org.