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October 2006
One of the big news stories in September was Google's decision to operate its philanthropic arm largely as a for-profit entity.
According to the Chronicle of Philanthropy, when the search engine company had its initial public offering two years ago, officials pledged 1 percent of the company's stock — worth roughly $1 billion — and 1 percent of its annual profits to support its philanthropic efforts, which are collectively known as Google.org, over the next 20 years. Since then, the company has put $90-million into a traditional foundation, which will operate as a nonprofit organization.
The remainder, however, will be funneled into a for-profit entity with a mandate to tackle poverty, disease and global warming.
This for-profit status will allow it to fund start-up companies with a social mission, form partnerships with venture capitalists and even lobby Congress. It will also pay taxes.
"This is a really bold move," Brad Googins, executive director of the Center for Corporate Citizenship at Boston College, told the Chronicle. Dr. Googins said that he sees Google's approach as an attempt to take capitalism's best traits and techniques and apply them to the fight against tough social ills.
"It's a very exciting experiment in designing a for-profit with social and environmental bottom lines that are more important than the financial bottom lines," said Dr. Googins. "Even though all of them are important, this sort of flips it a little bit on its head."
By choosing for-profit status, Google will have to pay taxes if company shares are sold at a profit or if corporate earnings are used to finance Google.org. Any resulting venture that shows a profit will also have to pay taxes.
One of Google.org's maiden projects calls for plans to develop an ultra-fuel-efficient plug-in hybrid car engine that runs on ethanol, electricity and gasoline. The organization is consulting with hybrid-engine scientists and automakers, and has arranged for the purchase of a small fleet of cars with plans to convert the engines so that their gas mileage exceeds 100 miles per gallon. The goal of the project is to reduce dependence on oil while alleviating the effects of global warming.
Dr. Larry Brilliant, a 61-year-old physician and public health expert, has been hired as Google.org's executive director. Brilliant has studied under a Hindu guru in a monastery at the foothills of the Himalayas and worked as a Silicon Valley entrepreneur.
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