Third Executive Leaves Silicon Valley Community Foundation in As Many Weeks

Another top executive at the Silicon Valley Community Foundation has left the building, the third such departure in three weeks.

Daiva Natochy was the VP in charge of recruitment and culture. Her departure follows that of CEO Emmett Carson, put on paid administrative leave last week, and of the chief fundraiser, who resigned over claims she bullied employees the week before that.

Stephen Diamond, Associate Professor of Law at Santa Clara University, specializes in corporate governance and labor issues. Even though the Foundation’s  board hired two outside law firms to investigate, Diamond says that’s no guarantee a major overhaul is coming next.

“These are signs of trouble, not signs of a solution. The fact that they had to hire two law firms, not one, signals that the initial decision to hire the first law firm, which appears to have been made by the now somewhat ousted CEO Emmett Carson, wasn’t good enough. They’ve also brought in a law firm that is known for being very tenacious in defending organizations that it’s hired to defend. That suggests to me that they actually fear more serious problems,” Diamond says.

Diamond goes so far as to suggest the office of California Attorney General Xavier Becerra step in to investigate. (Reached by KQED, Becerra’s office said that “to protect its integrity, we can’t comment on, even to confirm or deny, a potential or ongoing investigation.”)

“At a minimum, I think the board has to resign,” Diamond says.

But Joan Harrington at Santa Clara University’s Markkula Center for Applied Ethics counters “There was been no apparent misuse of donor funds or other financial malfeasance — which is the kind of situation that would interest the Attorney General.”

That echoes a statement interim CEO Greg Avis posted on the Foundation’s blog earlier this week:

There are no allegations of financial impropriety at SVCF. All allegations made by former employees and concerns expressed by current employees focus on workplace culture issues. These allegations are being taken very seriously, and the Board has hired outside counsel to investigate. While those issues are absolutely critical to address, and we are fully engaged in doing so, there is no concern about our financial integrity.

In the meantime, it’s not clear what the local impact will be as some donors pull their money out of the $13.5 billion foundation.

The foundation’s assets and annual giving make it one of the largest grantmakers in America (and, full disclosure, is a financial supporter of KQED), but critics note much of the money that comes out of the donor-advised funds it hosts heads out of the Silicon Valley to meet needs elsewhere. That is not typical of most community foundations.

“Of course, there are needs all over the world, and it’s perfectly appropriate for donors who are looking to impact those problems to want to see their money go in that direction, but not at the expense of dealing with problems in Silicon Valley,” Diamond says.

He adds the Foundation under Carson’s leadership was phenomenally successful wooing tech titans, in large part because of the tax breaks that come with parking large caches of appreciating stock with the non-profit. “Company owners want a tax break, and if that becomes the primary focus of the organization, then you get off track. You have to get a commitment out of the largest donors that they actually want to impact the problems of Silicon Valley, and then you have to put the leadership in place that will execute on that model. And I don’t think that’s what’s happened here.”

“Somebody forgot about the employees as stakeholders,” says Harrington. “It looks like they’ve lost their moral compass. This to me is an internal organizational failure, but it can be rectified.  It depends on the board, which is ultimately responsible.”