$25 Million Begins Google's Charity
Friday, January 18, 2008
Google yesterday laid out its plan for philanthropy and announced $25 million in grants aimed at addressing climate change as well as poverty and health issues in developing countries.
The initial grants begin to fulfill a pledge made four years ago by Google's founders to devote about 1 percent of the company's equity and annual profit to humanitarian causes. Google.org, the philanthropic arm formed in 2006, expects to give away as much as $175 million over the next few years.
"We haven't done anything yet. We're not announcing we're at the finish line, we're at the starting gun," said Larry Brilliant, a physician who took the helm of Google.org a year and a half ago. He said he received tens of thousands of ideas for initiatives and took dozens of research trips to Africa and Asia over the past year to narrow the company's philanthropic focus.
Brilliant said Google.org has decided to spend money in five areas: preventing of disease and disasters, holding governments accountable for providing public services, increasing funding for small- and medium-size businesses, finding renewable sources of energy that are less expensive than coal; and developing more-advanced hybrid vehicles.
Because of Google's size and financial success -- its 2006 profit exceeded $3 billion -- its plan for giving has been widely anticipated by the nonprofit world. Compared with the philanthropic budgets of other top corporations, Google's initial investments appear fairly modest. The Bill & Melinda Gates Foundation, for example, has $70 billion at its disposal. But corporate giving experts said Google may be able to make its money go further by using its expertise in collecting information and connecting ideas and people via the Internet.
"By applying technologies they know to the problems in the world, they play to the strengths of their employees and global operations," said Lisa Philp, managing director and head of philanthropic services for the private banking arm of J.P. Morgan. "They're trying to bring to philanthropy the same kind of creativity they bring to their business model."
In one project, Google.org hopes to improve early warning systems for a variety of threats, such as infectious diseases and severe drought. It has granted $5 million to Innovative Support to Emergencies, Diseases and Disasters (InSTEDD), a nonprofit group that uses software and other technology to fill gaps in the flow of communication between governments, relief organizations and the scientific community.
The foundation is also giving $4.7 million to TechnoServe, a group that helps small businesses get off the ground in rural and developing areas, to provide more loans to business owners in Ghana and Tanzania who do not qualify for micro-loans or private-equity money.
In addition to grants to nonprofit organizations, Google.org is investing in commercial ventures. For example, it made a $10 million investment in eSolar, a Pasadena, Calif., company that uses solar heat to replace fuel in power plants.
"It's becoming more popular for the for-profit world to fund other for-profits," said Christine M. Petrovits, assistant professor of accounting at New York University's Stern School of Business.
Google's investments in new technologies could also help spur new business ideas, Petrovits said. While that could be perceived as innovative, critics may view it as more self-serving than altruistic.
"But Google was also criticized when it first came out with its core business because no one thought it would make money," she said. "Maybe they're just more forward-thinking."