18 Jan 2008 09:18
Even in philanthropy, Google follows its own rules.
With its funding of renewable energy and early-warning systems for drought and infectious diseases, Google.org is innovating in and disrupting the world of corporate philanthropy just like Google did by turning online ads into big business, pushing desktop data into the internet cloud, and jumping into the mobile and wireless spectrum industries.
But when it comes to philanthropy, rivals probably won't complain when Google steps on their toes.
Google.org on Thursday announced that it would spend more than $25m (£13m) in new grants and investments for projects such as predicting and preventing infectious disease outbreaks, like Sars; monitoring climate changes in ecosystems in Africa and the Amazon; helping governments in under-served countries improve their public services; and funding small businesses in developing regions.
That is part of $175m the company's board pledged in 2005 to spend over three years. When Google went public in 2004, executives pledged to donate one percent of the company's equity and one percent of profits to philanthropy. The company's market capitalisation was nearly $190bn.
Last November, Google said it would spend hundreds of millions of dollars to fund companies developing clean-energy technology and accelerate the adoption of plug-in hybrid electric vehicles. The direct investments are aimed at finding a way to make renewable energy cheaper than coal and thus reduce greenhouse emissions that threaten the future of the planet.
Google is at the forefront of a new trend in social entrepreneurship that turns the notion of philanthropy on its head. For starters, Google.org is for-profit and pays taxes, although it has a not-for-profit unit, Google Foundation. Google.org also is funding start-ups, as well as providing grants and aid to not-for-profit organisations.
"We're trying to bring the concept of Silicon Valley, with our angel investors, private equity and bankers" to developing countries, said Dr Larry Brilliant, director of Google.org.
These social investments may go further than traditional philanthropy, by helping to solve the underlying problems of which charity efforts only solve the symptoms, experts said.
"What Google and other organisations have begun to do is to redefine what constitutes philanthropy," said Susan Raymond, senior managing director for research and chief analyst at onPhilanthropy, the thinktank for the philanthropy and not-for-profit consulting firm Changing Our World.
Instead of just giving a man a fish, or even teaching him to fish, a social entrepreneur would invest in his fishing-net business.
"The cash gift to the soup kitchen does not expect to solve hunger," Raymond said. "My personal opinion is that market innovation like that has much stronger legs to carry the weight of social problems than the legs of charity."
Even the executive director of Paul Newman's Committee Encouraging Corporate Philanthropy (CECP), Charles Moore, has been impressed with Google.org's actions.
"I respect companies' innovation in addressing how they invest in their communities in all ways," Moore said. "I think what they're doing is quite extraordinary and unique."
How does Google.org compare in spending with other corporate foundations?
The financial scope of Google's commitment, an average about $60m a year, is about twice the median of giving for large companies that report figures to CECP, according to Moore. He said the information was reported to the group confidentially, so rankings could not be disclosed.
Google's areas of focus are also different from typical corporate foundations, Moore said. For instance, many corporations give to…
…health and human services but not many concentrate on prevention.
As far as Google.org working to improve the flow of information for governments' public-service efforts and lobbying public officials for changes, Moore added: "You won't see many companies stepping up and dealing with governments like that."
Google.org carefully chose the initiatives it is funding based on the types of information and engineers it could offer, as well as global reach, Brilliant said. "We took a look at the biggest problems in the world and... then looked at Google and said: 'What do we have to offer?'," he said. Those problems "fit who we are at this moment in time".
A survey of leading Silicon Valley companies found varying focuses when it comes to philanthropy.
Through its corporate responsibility and citizenship initiatives, Microsoft donated nearly $70m in cash and more than $330m in software to not-for-profit organisations globally in 2007. Many of the projects involve digital literacy, youth programmes and community technology centres in developing countries.
Cisco contributed nearly $117m in cash and in-kind contributions during 2007. The company plans to spend $15m over five years on mitigating global warming by integrating network technologies into city infrastructures.
Intel spends more than $100m a year, mostly on supporting education projects, including efforts like teacher training and building computer clubhouses around the world, said Brenda Musilli, president of the Intel Foundation.
HP also focuses on education, with some funding targeted at economic development and the environment. In 2006, HP spent $45.6m in cash and equipment towards community investment and has donated more than $1bn in 20 years.
Salesforce.com has given more than $10m in grants, mostly focusing on youth and technology programmes, since 2000, including $3.5m globally in 2006.
Online auction company eBay has given more than $8m to not-for-profit organisations through the eBay Foundation since it was created in 1998, including micro-enterprise development grants aimed at providing access to credit and markets, technical training, economic literacy and asset development.
But what about Bill Gates and his renowned largesse?
The Bill & Melinda Gates Foundation tops the list of US foundations in terms of total giving (more than $2.8bn in 2007 alone), according to the Foundation Center. But it's not really fair to compare the Microsoft founder's private philanthropy with that of a corporate foundation whose activities are linked with the corporation, experts said.
"I think the comparison of Google with the Gates Foundation is not particularly useful," especially since charitable giving by corporations is limited by law to 10 percent of their taxable income, said CECP's Moore.
Under the social-entrepreneur framework, one could argue that there is a greater incentive to generate results and provide a rate of return than with traditional charities.
"We're not trying to accomplish the giving away of money, but find a solution to a problem, and, if that takes a buck, it takes a buck," said Raymond of onPhilanthropy. "It's not ungenerous because it only took a buck to solve the problem."
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