What obligations — if any — do foundations and new donors have to local communities in which they are based? And what role should they play in addressing rising income inequality? Many would argue that the issues donors care about — often a personal decision — should be the only determinant of a foundation’s grantmaking. But we believe that foundations have some obligation to the places where their donors have lived and built their companies, and that they should also help the least well off.

Today, U.S. philanthropy is in a second golden era, driven by increases in ultra-high-net-worth giving, particularly in wealthy communities where technology is booming. But is this recent giving boom helping address increasing disparities in wealth? And is it helping heal the communities in which this wealth has been created?

But here is the rub: the boom in Silicon Valley philanthropy has not made a dent on local poverty or inequality. If anything, it has mirrored divides. This is because the vast majority of giving by Silicon Valley’s wealthiest philanthropists goes to national and global causes, leaving less than 10 percent donated locally. And of that local giving, the majority goes to large institutions, such as hospitals, universities, and private schools (which tend to benefit the wealthiest), instead of to the community-based nonprofits providing critical human services to the region’s most disadvantaged groups.

So what is standing in the way of philanthropists and local nonprofits working together to address local systemic problems in Silicon Valley and elsewhere?

The widening gulf between the wealthy and working poor, between local nonprofits and philanthropists, and between new donors and institutional funders, is hardly unique to Silicon Valley; these forces are playing out across America. We believe nonprofits and philanthropists in all communities have an opportunity to overcome these extreme imbalances and find new solutions by working together. But new kinds of intermediaries are needed. Foundations are well-positioned to leverage their knowledge, relationships, and political capital to help lead the way.

Read the source full article about philanthropy in local communities.