January 17, 2008 5:45 PM PST
Doing philanthropy the Google way
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With its funding of renewable energy and early warning systems for drought and infectious diseases, Google.org is innovating 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 $25 million in new grants and investments for things like predicting and preventing infectious disease outbreaks like SARS to monitoring climate changes in ecosystems in Africa and the Amazon to helping governments in underserved countries improve their public services and funding small businesses in developing regions.
That is part of $175 million the company's board pledged in 2005 to spend over three years. When Google went public in 2004, executives pledged to donate 1 percent of the company's equity and 1 percent of profits to philanthropy. The company's market capitalization was nearly $190 billion.
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 nonprofit unit, Google Foundation. Google.org also is funding start-ups, as well as providing grants and aid to nonprofits.
"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 in helping to solve the underlying problems for which charity efforts only solve the symptoms, experts said.
"What Google and other organizations have begun to do is to redefine what constitutes philanthropy," said Susan Raymond, senior managing director for research and chief analyst at OnPhilanthropy, the think tank for the philanthropy and nonprofit 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, was 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 of about $60 million 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, he said.
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