Posted: 10/12/2005 7:37:54 AM EDT
By SAUL HANSELL
Google gave the first details yesterday of how it would carry out its commitment to devote a share of its lucrative public stock offering to charity and social causes. It said it had donated $90 million to a new charitable foundation it started and would give another $175 million to nonprofit groups and what it considers socially useful businesses over the next two to three years.
Sheryl Sandberg, a Google vice president for sales who is also coordinating the foundation and related programs, said the company would focus its charitable efforts in two areas: global poverty, and energy and the environment. She said the two priorities were selected by Google's founders, Larry Page and Sergey Brin.
Peter Hero, president of the Community Foundation Silicon Valley, which manages charitable funds and endowments, said the amount of money Google has given its foundation and its planned future spending made it one of the largest donors among technology companies.
Intel, for example, said it donated $72 million in cash and $17 million in equipment last year worldwide. Microsoft said it donated $47 million in cash and $363 million in software to nonprofit organizations. Google's most direct rival, Yahoo, said it makes modest cash contributions and focuses its charitable efforts on providing publicity to groups ranging from the Red Cross to the Partnership for a Drug-Free America.
"The size of Google's commitment and the two areas they have identified set them apart from other Silicon Valley companies," said Mr. Hero, whose organization has assisted companies like eBay and Juniper Networks in managing their corporate philanthropy.
"Most companies here focus on education, science, youth programs, social safety net and the arts," Mr. Hero said. "The environment is much further down, for some reason, and I can't think of a single organization that has adopted a big, hairy, audacious goal like global poverty."
Google is just beginning to make grants with these funds. It has given $5 million to the Acumen Fund, a New York group that encourages entrepreneurs in developing countries to create businesses that can assist in providing health care, housing and other needs of the poor.
And it gave $2 million to the One Laptop Per Child program started by Nicholas Negroponte, co-founder of the Media Lab at the Massachusetts Institute of Technology, which seeks to develop a $100 computer to give to children in the developing world.
Google also gives free advertisements - worth $20 million so far this year - to organizations it feels worthy, in areas like human rights, environmental causes and poverty. These moves represent the first actions by the rapidly growing and highly profitable search company to make good on the promise its founders, Mr. Page and Mr. Brin, made in the unusual letter to prospective shareholders that was part of its initial stock offering in August 2004.
"We aspire to make Google an institution that makes the world a better place," the founders wrote in the prospectus. They promised to create a Google Foundation and give it about 1 percent of the company's equity and 1 percent of its profits "in some form."
After the offering, Google had 277 million shares. The company says it rounds up the 1 percent figure to an even three million shares, which were worth $918 million yesterday. But the company has decided not to donate all of those shares to the Google Foundation.
In Google's annual report, filed in April, Mr. Brin and Mr. Page said they had decided to put the money into a broader range of initiatives including investments in "socially progressive corporations" and "influencing public policy."
As a result, the company has said it will not explicitly donate shares to the foundation. Rather, over the next 20 years, it will give or invest money equivalent to the market value of three million shares - a sum that doubtless will fluctuate with the stock price. The overall effort, supplemented by the share of profits, will be known as Google.org. The outlays announced yesterday were the first installment.
Mr. Hero of the Silicon Valley foundation said he had some skepticism about Google's plan to divert some of its planned donations from traditional charities to profit-making businesses with socially useful goals.
He said that many business leaders feel that traditional charitable organizations are inefficient and ineffective, a view he disputed.
"I know nonprofits that run much better than businesses with equally outstanding leaders," he said. "There are businesses that go bankrupt all the time."
i think we need to reclassify arf.kom!
My screen printing operation is socially useful.
We print all sorts of political statements on shirts.
I wonder if they'll buy it.
Oh...wait... they're all conservative politics. Sorry... no soup for me.
$918 million... hard to believe that a website can be worth that much money.
No, 3 million shares is worth $918 million. Google had 277 million shares, making it worth $84 Billion