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Google.org: Let the giving commence
Mission to fund "good works" and solve "big problems"

By Reuters

Published: Thursday 13 October 2005

Google has begun to make good on its commitment to plough a small fraction of the proceeds from its wildly successful stock offering into social projects.

Funding for "good works" will largely be derived from the donation of one per cent of the equity from last year's IPO, along with one per cent of its annual profits.

Google said on Tuesday it plans to organise its charitable work under the umbrella of a new organisation it calls Google.org. The mission is to focus on vast issues such as global poverty, energy and the environment.

Sheryl Sandberg, Google's vice president of operations and advertising, who is also in charge of overseeing Google.org, said: "These are big problems, so our focus is to provide sustainable and scalable solutions to these problems."

One percent of Google's stock represents about three million of the 300 million shares created by its IPO in August 2004.

The equity portion represents about $900m to $1bn in stock at current market prices, a company representative said. Over the past four quarters, Google has reported net profit of around $968m, resulting in a contribution of just under $10m for charitable works.

Sandberg said: "This can grow over time as potentially our stock or our profits increase."

As part of its efforts, Google is contributing cash representing about 300,000 of the three million share commitment to start the Google Foundation with an initial endowment of $93m. It will invest up to another $175m over the next three years, Sandberg said.

But Google wants to take a more broad-based approach to its charitable work than traditional philanthropy, which has a tendency to focus on not-for-profit activities and big-gift giving to universities or other high-profile institutions.

One of Google's first recipients, the Acumen Fund, will get $5m to fund big anti-poverty and health care works through targeted financing of entrepreneurial projects in the developing world.

A $400,000 grant will go to a Kenyan research project conducted by economists from Harvard University and the University of California, seeking the best way to improve rural water quality to prevent a leading cause of death in children.

Technoserve, a global development organisation founded in Ghana in 1968, aims to run a business plan competition for entrepreneurs across Ghana and use a $500,000 Google.org grant to support the winning projects, according to a Technoserve spokeswoman.

Google officials said Google.org is partly modelled on the Omidyar Network, a new model philanthropy funded by eBay founder Pierre Omidyar.

Frustrated by the limits of conventional not-for-profit philanthropy, Omidyar and his wife, Pam, have set up an investment group that tries to make businesses work as a tool for social good, a representative for the network said.

There are parallels with the charitable giving of Microsoft co-founder Bill Gates, the world's richest man. The Bill and Melinda Gates Foundation was begun 11 years ago with a first year endowment of $94m, an amount that has mushroomed - propelled by the stock market's tech boom - to $28.8bn.