In many ways, the nation’s second-largest city embodies the challenges and potential of the United States in this century. The Los Angeles metropolitan area is a diverse cultural mecca with a vibrant economy and growing ties to East Asia. With a population that’s roughly 45 percent Latino and 33 percent foreign-born, it reflects what some advocates are calling the “new American majority.” But L.A. also faces dire challenges. To name only a few: a monumental housing shortage and a teeming homeless population, a lackluster public education system, and poverty levels keeping millions on the brink.

Steve and Connie Ballmer stepped onto L.A.’s sun-drenched scene in 2014 when the former Microsoft CEO finalized his purchase of the L.A. Clippers. Since then, Angelenos tend to associate the Ballmer name with basketball. But those of us following philanthropy know that the couple—who rank among the richest people on the planet with a current net worth of just over $50 billion—aren’t just Clippers fans. They’re one of the most interesting stories in philanthropic giving right now.

Part of that has to do with just how much money they have to give. Since the Ballmer Group burst onto L.A.’s philanthropic scene in 2016, over $110 million has gone out across the region. That puts the Ballmer Group in the same league as some of the largest L.A.-area philanthropies, with only a few like the California Endowment and the Annenberg Foundation giving more. And we’ve just learned that the Ballmers are in the process of re-upping some of their initial commitments, bringing the grand total up to $130 million. The last few years have seen the Ballmers emerge as some of L.A.’s most important funders, largely under the radar.

No Silver Bullets

The Ballmers’ place-based giving tends to follow a clear pattern—Steve and Connie like local, place-based funding in cities where they have personal connections. That started in their home state of Washington and expanded first to L.A. when Steve bought the Clippers, and then to Detroit where Steve grew up.

Both nationally and locally, the Ballmers conduct their giving around the lens of children and families. “In Los Angeles County,” Connie told us, “we have focused on urgent needs that affect the kids and families we care about most—issues such as expanding supports for school-age kids, transforming the juvenile justice system, and ensuring that young adults have access to great job opportunities. We’ve been lucky to be building on the unique strengths of L.A.—excellent public sector leaders, great philanthropic partnerships, and incredible work being done in communities.”

Connie and Steve see helping kids as part and parcel with tackling intergenerational poverty and boosting the economic chances of low-income families. As Connie noted in a recent post, policy advocacy and “civic activism” are very much on the table in addition to grants for service providers. “These aren’t single-issue issues,” said Nina Revoyr, who leads the Ballmer Group’s Los Angeles giving. “[The Ballmers] understand that the factors and circumstances that have led individuals and families to deep poverty are complex, and that the ways to address them need to be complex.”

Revoyr is a lifelong student of Los Angeles’ complexities. Her work with the Ballmers goes back to early 2016, when she took the couple on a drive around South L.A. in her then-role as an executive of the Children’s Institute, Inc. “Steve kept asking challenging big-picture questions. They denoted a mind that thought differently than anyone I’d encountered before,” she said. Steve and Connie must have been likewise impressed, because later that year they tapped Revoyr to head up their new L.A. operation. In addition to longstanding roles in nonprofits and education, Revoyr has also penned six well-regarded novels set in Los Angeles—rather unusual for a philanthropic professional.

With Revoyr on board, the next task was to hone a strategy. Out of a downtown L.A. office space shared at the time with the Weingart Foundation, the Ballmer Group settled on a threefold approach. First, Ballmer money would go toward scaling the best local nonprofits working on poverty and mobility. Second, the giving would be place-based, concentrated in areas with the greatest need. And third, the Ballmers would partner with local government—in the traditional sense of piloting experimental projects as well as in a more thorough Bloombergian mode, backing bids to make government work better.

The Ballmers have supported around 65 local organizations during their first three years in Los Angeles. They’ve favored places like South and East L.A., areas with deep need but a strong existing network of nonprofits and advocacy organizations. Going forward, the plan is to move into areas with less ingrained capacity—locales like the San Gabriel Valley, Antelope Valley, and Long Beach. But that can be a harder prospect. It’s more difficult in those places to find grantees “aligned with what we look for—proven impact or real promise of impact, an outcomes orientation, and a track record of really effective work around policy change,” Revoyr said.

“Complicated Grantmaking”

We’ve written before about the Ballmers’ penchant for general support. That certainly applies to Los Angeles, where the Ballmer Group has given significant sums to boost the capacity of established nonprofits. While the Ballmer Group does not yet publish a full list of its grantees—Revoyr says such a feature is in the works—a few representative organizations include Friends of the Children, City Year, the Boys and Girls Club of Metro LA, the Anti-Recidivism Coalition, and Home for Good, via United Way. The Ballmers also support community-led initiatives like Promesa Boyle Heights, SLATE-Z, Community Coalition, and Inner City Struggle.

Capacity building is often the goal even for grants made with a set purpose in mind. Take the Ballmer Group’s collaboration with the Weingart Foundation to give $15 million to the Martin Luther King, Jr. Community Hospital last year. Unlike billionaires’ typical high-dollar gifts to alma maters and prestigious hospitals, the commitment went to an institution primarily serving low-income people in South L.A. This was a sophisticated grant, subsidizing the costs of hiring physicians in a place where doctors are in short supply.

“This is complicated grantmaking to understand,” said Fred Ali, President and CEO of the Weingart Foundation. “Let’s face it: if you went to a lot of foundations and said we want to attack the physicians’ shortage, you’d get little traction. [The Ballmers] took the time to understand the problem. They’re willing to think.”

On education, the Ballmers’ L.A. strategy reflects a growing consensus that funders need to take on the problems young people face outside the classroom, seeking collective impact with community stakeholders. The Ballmer Group’s biggest education grantee in L.A. is the Partnership for Los Angeles Schools, a nonprofit the L.A. Unified School District regularly enlists to “transform” struggling schools, in part by connecting them with community nonprofits. The Partnership owes its existence to a $50 million pledge from Melanie and Richard Lundquist, who went on to give it another $35 million—a total sum rivaling Mark Zuckerberg’s infamous $100 million gift to Newark’s public schools. The Ballmers also aren’t averse to charter schools. “We believe quality charters are a significant lever of opportunity and change, and we support CMOs based in neighborhoods where we’re most concentrated,” Revoyr said.

Criminal justice is another nexus for the Ballmers in L.A. In addition to backing organizations like Anti-Recidivism Coalition and the Urban Peace Institute, the Ballmer Group has pursued public sector collaborations in this space. One of them is L.A. County’s Youth Diversion Program, which provides troubled youth with individualized services as an alternative to arrest. The Ballmer Group partnered with a local social justice stalwart, the Liberty Hill Foundation, to fund the program. As Liberty Hill’s President and CEO Shane Murphy Goldsmith put it, “With support from the Ballmer Group, Liberty Hill is engaged in systems change to bridge County government and community organizations to advance a shared vision for youth diversion and development.”

How $2.65 Million Could Save Billions

Changing systems in government is another thread running through the Ballmers’ funding. In a post from July 2019, Steve and Connie accurately note that “government is where the money is.” The annual sum of “philanthropy for human services and public society benefits” adds up to only six percent of the $1.3 trillion the U.S. government spends on things like health, housing, and nutrition—and that doesn’t even count education. “Government provides most of the money, but philanthropy can provide the stimulus for innovation and change,” the couple wrote.

Like many of his super-rich peers, Steve Ballmer is a frequent proponent of data-driven philanthropy. The self-identified numbers guy likes thinking about how  public spending works and where it isn’t working so well. Although it accounts for only a small fraction of the Ballmers’ giving, it’s telling that one of the initiatives Steve talks about the most is USAFacts, an adamantly nonpartisan platform that offers a clear and unbiased portrait of federal spending and national demographics.

USAFacts primarily deals with the federal budget, but an interest in efficient government also informs the Ballmers’ local giving. The clearest example in Los Angeles is another partnership with the county, this time in the field of mental health. To make a long story short, a California law (the Mental Health Services Act, or MHSA) taxes high earners to raise funds for community mental health services. Over $14 billion has been raised statewide since that time, with billions finding their way to California’s most populous county. But despite all that spending, any L.A. resident could tell you that people still fall through the cracks, a lot. The number of mentally ill individuals living on the streets attests to that brutal fact.

According to Dr. Jonathan Sherin, Director of the L.A. County Department of Mental Health, the “full-service partnership” mental health services the state funds in L.A. are “great in theory, but aren’t where they could be in terms of impact.” Why? Because current contracting procedure rewards service providers via metrics like number of people served or units of work completed. Although the programs are meant to offer wraparound services, what’s often lacking is attention to actual human outcomes and proper follow-up to ensure that patients don’t end up on the streets, in jail, or worse.

That’s where the Ballmer Group comes in. Conversations between Revoyr and Sherin led to a $2.65 million grant from the Ballmers to Third Sector Capital Partners, an advisory firm that’s been tasked with transforming the county’s contracting system. “We work with a hundred different contractors, procurement laws that are dizzying, and a culture that is dead-set against change of any kind,” Sherin said. “This $2.65 million investment could lead to billions in savings and better outcomes for the most vulnerable.” Following a lengthy two-year process, Sherin expects the new rules to be finalized in mid-2020.

But the tale doesn’t end there. The past six months have seen other California counties catch onto what the Ballmers started in L.A., and that in turn has attracted attention from the state itself. Remember MHSA? That law also created a statewide supervisory entity, the Mental Health Services Oversight & Accountability Commission (MHSOAC). “We’re recognizing the statewide nature of the [contracting] challenge,” said MHSOAC’s Executive Director Toby Ewing. “We want successful strategies to be scaled, and if that approach is working in L.A. we don’t want it limited to L.A.” MHSOAC has tapped part of its innovation budget to help other counties learn from L.A., with six counties on board to date.

The Limits of Technocratic Localism

It’s still too early to tell exactly how better mental health contracting will affect at-risk folks in L.A., or whether it’ll make any kind of dent in the city’s homelessness crisis. Nevertheless, the grant is an excellent example of how a relatively modest philanthropic commitment, well-targeted, may secure massive return on investment by eliminating public sector inefficiencies. And unlike with some other billionaire interventions in the public sector (think charter schools) it’s hard to imagine who’d oppose “outcomes-oriented” mental health contracting.

At the same time, as we often note, there are limits to how much this brand of data-driven systems change can accomplish. At best, it can undo knots that impede the flow of public resources along established channels. But what it can’t do as effectively is tackle the fundamental inequities and vulnerabilities that give rise to poverty in the first place. For that to happen, big philanthropy needs to find ways to empower marginalized groups in the political realm and build a new consensus that that’s the right thing to do.

Take the issue of low-wage jobs. Philanthropy is replete with commitments for workforce development, a favored tactic among corporate funders and anti-poverty billionaires like the Ballmers. But only a few major philanthropies support labor organizing, with living donors conspicuously absent from that list. Meanwhile, working-class Americans are more dependent than ever on low-paid, insecure jobs that far outnumber the “middle-skill” positions workforce funders like to talk about. According to the latest numbers from Brookings, a full 44 percent of U.S. workers aged 18 to 64 earn low hourly wages. That percentage is even higher in greater Los Angeles: 53.1 percent.

The fact that a majority of workers in a rich city like L.A. hold low-wage positions is a testament to the extreme wealth stratification of our day. It’s also a sad reminder that philanthropy hasn’t done much to change to how society’s capital is allocated, and who’s doing the allocation. L.A., after all, is a place with a great deal of civic pride, global cultural cachet, and lots of big fortunes sloshing around. If such a city can’t muster enough philanthropic will to make an appreciable dent in poverty, that doesn’t bode well for places without its advantages.

There’s also the question of whether place-based approaches are the best course in the first place. Community-led grantmaking necessitates a local focus, but at the same time we’ve often pointed out the vulnerability of place-based philanthropy to broader systemic forces.

Collaboration and Disruption

To their credit, the Ballmers haven’t parachuted into L.A. like they have all the answers. While the Ballmer Group is arguably one of the top anti-poverty funders operating in L.A. right now, it hasn’t sought publicity. It’s even been too quiet, according to some. The Ballmers have also been quite good about plugging into existing networks and trusting longtime L.A. players rather than reinventing the wheel—always a temptation with $50 billion on hand. “They’re putting a lot of work and effort into proactive collaboration and looking for ways to leverage their effort with others,” Weingart’s Ali said.

Encouragingly, the Ballmer Group has also made overtures toward putting disadvantaged communities in the driver’s seat. Its support for Promesa Boyle Heights, a collaborative of community organizers deeply situated in a single L.A. neighborhood, is a testament to that. Backing community organizers and partnering with organizations like Liberty Hill certainly puts the Ballmers in the same room as those looking for movement solutions to economic and racial injustice. But so far the Ballmers haven’t followed the James Irvine Foundation’s lead in directly backing the new labor movement.

However, according to Revoyr, the Ballmer Group is in the early stages of considering a move into housing philanthropy. Housing insecurity may be the most widespread problem low-income Californians face right now, and it’s clearly an upstream factor that can severely limit young peoples’ chances to get ahead. We’ve written about how CZI is channeling another gargantuan tech fortune to tackle the Golden State’s housing crisis. It wouldn’t hurt for another mega-fortune to enter that space.

It’s important to remember that the Ballmer Group is still new to Los Angeles. Despite the Ballmers’ reluctance to shake things up, the sheer resources they bring to the table have already reordered the local funding landscape. Even if the Ballmer Group steers a steady course, its forays into community organizing and public spending already have established local players talking. In the end, whether the Ballmers deliver on their anti-poverty goals depends in part on whether a collaborative approach can still generate enough disruption to shift a status quo that isn’t really working. And that’s a tricky path to walk.

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