Venture Philanthropy

Venture philanthropy grew out of the results-oriented philanthropy of those corporate leaders who became wealthy through technology, especially those from Silicon Valley, and wanted to see their charitable efforts actually effect social change.

This article from the Stanford Social Innovation Review is a nice case study of one such company’s efforts.

An excerpt.

“Before the dust settled from the 7.0 magnitude earthquake that hit Haiti in January, the search was on for accurate information. Which buildings were still standing? Where should responders look for trapped victims? How could displaced family members hope to find each other in all the chaos?

“While humanitarian agencies airlifted crews and supplies to the devastated island, engineers launched programming marathons. Within days, Google released a new online gadget to assist on-the-ground efforts. Embedded on high-traffic Web sites, including the U.S. Department of State home page, Google’s Person Finder allowed anyone to submit information or search an online database for details about the missing. Other Google tools were harnessed to help. Google Map Maker helped aid workers in Haiti’s capital, Port-au-Prince, navigate ruined streets. The company created a new Google Crisis Response Web page for Haiti to steer the public toward charitable giving opportunities, seeding the pot with a more than $1 million donation of its own.

“Google was not the only technology company that rallied to help Haiti. But by marshaling the brains, tools, and cash at its disposal, the Internet giant was demonstrating its special brand of corporate philanthropy. Google isn’t just interested in helping out the world; it aims to “engineer” for social benefit. “We want people to look at what we’re doing and say, ‘Wow, only Google could have done something like that,’” says Jacquelline Fuller, advocacy director for Google.org (or DotOrg), the company’s philanthropic initiative.

“When Google went public in 2004, founders Larry Page and Sergey Brin promised to unleash a Google-sized approach to doing good. In their letter to potential investors, they pledged “to contribute significant resources to the [Google] foundation, including employee time and approximately 1 percent of Google’s equity and profits in some form.”

“Giving away 1 percent of profits put the company “in line with the national average for corporate charitable donations,” says Lewis Solomon, a professor at George Washington University Law School and author of Tech Billionaires: Reshaping Philanthropy in a Quest for a Better World. Another 1 percent from equity brought the size of DotOrg to about $1 billion in 2005, with the potential to grow with the stock price—healthy seed funding for a philanthropy. As a final component of the strategy, the company committed an undefined amount of employee time to help solve global challenges.

“Google’s three-part approach is similar to the integrated philanthropy model developed a decade ago by Internet software company Salesforce.com Inc. Salesforce.com Foundation applies a 1/1/1 formula to social change, with 1 percent of staff time, 1 percent of equity, and 1 percent of profits going to advance the mission of qualified nonprofits.”