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Google Does Good

Written on
January 17th 2008
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by Wall Street Journal  |
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google_recruiting_small.jpgIn one of the most widely watched efforts in corporate philanthropy in years, Google Inc. said it will dole out nearly $30 million in new grants and investments to nonprofits and a private business that are taking on do-good projects such as tapping solar power, preventing plagues and improving public services for the poor.

Google’s push into philanthropy is being watched closely because of its size and its effort to erase the usual boundaries between the for-profit and nonprofit worlds.

Valued around $2 billion, the assets currently set aside for the company’s philanthropic arm, Google.org, make it larger than any other in-house corporate foundation in the U.S., according to the Foundation Center, a nonprofit research firm. (Private foundations set up by tycoons such Microsoft Corp.’s Bill Gates have more assets.)

Just as important, the Mountain View, Calif., Internet company is marshalling both company and foundation resources around the initiatives, which it hopes will provide more impact in tackling some of the world’s biggest problems. Philanthropy experts consider Google to be among the leading edge of donors who are experimenting with this hybrid for-profit/nonprofit model. Others include eBay Inc. founder Pierre Omidyar’s Omidyar Network, which both invests in businesses and makes grants to nonprofits.

Google says it isn’t looking to make money on its philanthropic efforts. But, as a division of the for-profit company rather than a nonprofit offshoot, Google.org has freedom to invest in and operate businesses, lobby for political causes and issue certain types of grants that a traditional corporate foundation would not. Its announcement Thursday includes a $10 million investment in closely held eSolar Inc., which is working on utility-scale solar power. Google.org also expects to invest directly in businesses in places such as Africa to spur job creation. “We can start new industries,” says Executive Director Larry Brilliant. “I hope we will.”

Google.org unveiled the first set of major five- to eight-year initiatives it will pursue. The initiatives include efforts to create systems for helping predict and prevent disease pandemics, to empower the poor with information about their public services and to spur job creation by facilitating investment in developing-world small- and midsized businesses.

They join previously announced initiatives to accelerate the commercialization of plug-in cars and make renewable energy cheaper than coal. Google will work with partners in each area, although it plans to directly invest money in businesses and operate some of the projects itself.

The money Google.org has awarded to date remains modest, and its progress so far has been slow compared with its parent company’s breakneck growth in staff and business reach. Some philanthropy experts warn Google that successful businesspeople with high hopes for solving the world’s problems have underestimated those problems’ complexity and fallen short before.

But, coming nearly four years after Google first announced it was devoting 1% of its equity, 1% of profits annually and an unspecified amount of employee time to Google.org, the announcement will give much-awaited shape and focus to its activities.

Selected from among over 800 suggestions, the final initiatives show Google’s special interest in projects where it can bring its engineering and information-management prowess to bear. Google staff, many of whom enjoy freedom to spend 20% of their time on independent projects, are expected to contribute significantly to Google.org efforts. The winning initiatives also exhibit Google’s characteristic penchant for audacious moves to reshape markets—from advertising to developing-world small-business financing—others are often more timid in approaching.

Google.org’s big ambitions suggest that it could potentially transform the business mix of Google itself—leading the company to become a player in sectors such as energy and finance.

“They’re business and technology people saying we want to find business and technology solutions to problems,” says Mark Kramer, Managing Director of FSG Social Impact Advisors, a nonprofit philanthropy and corporate social-responsibility consulting and research group. “That hasn’t been done much before.”

The roots of the effort trace back to Google’s April 2004 regulatory filing for an initial public offering. In it, company co-founders Sergey Brin and Larry Page announced plans for a corporate foundation with the goal that “someday this institution may eclipse Google itself in terms of overall world impact by ambitiously applying innovation and significant resources to the largest of the world’s problems.”

To get started, the company created a nonprofit corporate foundation with about $90 million in funding. It announced plans to focus on issues related to energy and the environment and global poverty.

After discovering in 2005 that its foundation couldn’t easily donate to the One Laptop Per Child project, a nonprofit initiative to sell low-cost laptops to developing countries, Google began pursuing the hybrid approach with the for-profit structure. Laws prevent corporate foundations from making gifts that might financially benefit their businesses, and the laptop project aimed at increasing Internet access arguably could boost Google’s online advertising revenue.

In February 2006, Google hired as Google.org’s executive director Dr. Brilliant, a colorful former physician who helped direct efforts to eradicate smallpox from India in the 1970s, and after the Sept. 11 attacks, served as a bioterrorism consultant to the U.S.’s Centers for Disease Control.

With Dr. Brilliant’s arrival, Google.org added global health as a third focus area. He and colleagues sought advice from leaders in the philanthropy field and Google staff and made small “learning grants” to nonprofits. But by spring 2007, Dr. Brilliant and his team realized they needed to focus on a limited set of initiatives in the environment, poverty and global health areas.

In June, they kicked off an internal competition to select the top initiatives. As part of the competition presentations, internal teams had to outline how the initiatives were pro-poor, how they would measure success, how they would take advantage of Google’s resources and what their potential impact was.



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