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Google’s Innovative For-Profit Model

The for-profit philanthropy model finds its forbears in corporate charitable contributions, corporate social responsibility, and social enterprise. Despite its links to these phenomena, however, for-profit philanthropy is meaningfully distinct.

While Google has committed to dedicating 1% of its equity and profits to philanthropy, Google.org differs from the corporate contribution model in significant respects. Corporate contributions take corporate largesse out of the company’s coffers and place it with external charities, or at least a separately incorporated and managed nonprofit foundation. Google.org’s status as a division of Google keeps control over philanthropic funds, and the funds themselves, firmly within the confines of the business organization. Further, Google has integrated its philanthropic goals more fully into its business model than do corporate contributors.

Likewise, Google’s for-profit philanthropy strategy resonates with the idea of corporate social responsibility (CSR), but is not identical to it. The various CSR movements have proposed that corporations and their leaders be permitted or required to consider interests beyond those of shareholders in their everyday business decisions. Google.org aligns with this CSR paradigm by making social impact a key factor in its business choices. Its very existence integrates Google’s philanthropic vision within its corporate operations.

Still, Google.org differs from CSR in both scope and structure. CSR asks companies to be mindful of the impact their decisions will have on constituencies other than shareholders. At times, this rubric will motivate for-profits to minimize harm to those constituencies, perhaps even actively to help them. But, Google.org goes well beyond CSR’s aims of awareness and consideration. Funding a division to engage solely in philanthropic activities is a much more ambitious approach than merely adding social impact to the mix of factors considered whenever business leaders make decisions.

Social enterprises integrate philanthropy into their business models at a more basic level than companies that make corporate contributions or practice CSR. Social entrepreneurs pursue social and business goals together, viewing them as synergistic and mutually-reinforcing. Google.org’s for-profit philanthropy is certainly related to social enterprise, but again several aspects differentiate it. First are the related features of size and scope. Social enterprise companies are usually small and controlled by owners who have a personal commitment to their social goals. By comparison, Google.org is a division of a mammoth, publicly-owned company and Google.org’s scale, determined as a percentage of Google’s equity and profits, is infinite. Yet, in the general range of Google’s business, social goals do not have an equal place with building a financially successful company. Profit and business imperatives dominate Google’s overall decision-making too much to view the entire company as a social enterprise.

Standing alone, Google.org comes closer to fitting the social enterprise category. In the Google.org division, social mission is wholly mixed with business ethos. Yet, Google.org is actually too focused on social mission to match the social enterprise category precisely. Google.org views profit as a distant and unlikely possible consequence of its activities. Its leaders have emphasized, “‘[w]e’re not doing it for the profit. And if we didn’t get our capital back, so what? The emphasis is on social returns, not economic returns.’”2 This nonchalance lacks the passion for the coexistence of social mission and profit that drives social enterprise.

Although blending philanthropy and business has long been in fashion, the for-profit philanthropy model offers genuine innovation. It envisions a division within a for-profit company tasked solely with pursuing philanthropy. This division engages in major initiatives, but the core business remains primarily devoted to profit maximization. Google.org has pushed the for-profit philanthropy model forward and provided it with significant prominence. But why?

2. See Katie Hafner, Philanthropy Google’s Way: Not the Usual, N.Y. Times, Sept. 14, 2006, at A1 (quote from then-Google.org Executive Director, Dr. Larry Brilliant).