Doing philanthropy the Google way

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.

As far as Google.org working to improve the flow of information for governments' public service efforts and lobbying public officials for changes, "You won't see many companies stepping up and dealing with governments like that," Moore added.

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 "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 $70 million in cash and more than $330 million in software to nonprofits globally in 2007. Many of the projects involve digital literacy, youth programs, and community technology centers in developing countries.

Cisco Systems contributed nearly $117 million in cash and in-kind contributions during 2007. The company plans to spend $15 million over five years on mitigating global warming by integrating network technologies into city infrastructures.

Intel spends more than $100 million a year, mostly supporting education projects, including efforts like teacher training and building computer clubhouses around the world, said Brenda Musilli, president of the Intel Foundation.

Hewlett-Packard also focuses on education, with some funding targeted at economic development and the environment. In 2006, HP spent $45.6 million in cash and equipment toward community investment and has donated more than $1 billion in 20 years.

Salesforce.com has given more than $10 million in grants, mostly focusing on youth and tech programs, since 2000, including $3.5 million globally in 2006.

Online auction company eBay has given more than $8 million to nonprofit organizations through the eBay Foundation since it was created in 1998, including microenterprise 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 and Melinda Gates Foundation tops the list of U.S. foundations in terms of total giving (more than $2.8 billion in 2007 alone), according to The Foundation Center. But it's not really fair to compare the Microsoft founders' private philanthropy with that of a corporate foundation whose activities are linked with the corporation, experts say.

"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 Moore of CECP.

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."