07 February 2006
by David Teather
The Google mantra of "don't be evil" has come under tough scrutiny lately. The internet search engine has faced criticism for censoring its site in China and become entangled in a Bush administration request for information on what its users are looking for. The world, it appears, is a little more complex than perhaps Google's young founders would like.
Still, the company has come through on at least one of the good-natured promises it made when it announced plans to go public 18 months ago. The firm's fourth-quarter results last week included a $90m (£51.3m) donation to the Google Foundation, the first gift to its new charitable organisation. The company's co-founders, Sergey Brin and Larry Page, have spoken optimistically about the foundation's possible impact, saying it might someday "eclipse Google itself". They plan to eventually give $1bn or more.
The Google guys are not alone. As little as five years ago, during the peak of the internet boom, newly minted tech millionaires were criticised as stingy. Now the enormous wealth that has been created by Silicon Valley and the information age appears to be breeding a new wave of philanthropists, who are in some ways very different from the industrialists of the past. Crucially, they tend to have made their money far more quickly and some are giving large sums away at a younger age.
In recent weeks, Pierre Omidyar, the Las Vegas-transplanted Frenchman who came up with the idea of eBay, announced his latest $100m (£57m) gift to Tufts University in Massachusetts to be used for micro-loans in the developing world. Then there was the news from last month's Davos economic conference that Bill Gates, the immensely wealthy Microsoft co-founder who has become the most prolific giver on the planet, had pledged $900m to help fight tuberculosis.
Together they are trying to tackle some of the world's more intractable problems: poverty, disease, the environment and poor standards of education.
Stacy Palmer, editor of the Chronicle of Philanthropy, says charitable giving is going through a period of "great change", with some of today's largest foundations emerging in the past few years to challenge a status quo that has been in place for many decades.
In BusinessWeek's most recent annual ranking of the most generous philanthropists, seven of the top 30 made their money in technology. The list, which considers the donations and pledges made by individuals in the past five years, was topped by Intel co-founder Gordon Moore, followed by Mr Gates in second place and Michael Dell, founder of Dell Computer, at ninth. Jeff Skoll, the founding president of eBay is 15th; Mr Omidyar is 19th; Microsoft co-founder Paul Allen is 25th and Larry Ellison, head of Oracle, is 27th. Outside the top 30, PeopleSoft founder David Duffield is 35th and Netscape co-founder James Barksdale is 48th.
"Many people are picking up on this wave of younger donors," says Paul Schervish at the Centre of Wealth and Philanthropy at Boston College. "There is a large group of people with many years of charitable giving ahead of them. There is something quantitatively different emerging out of this: unlike the industrialists of the past, there aren't just five or six but maybe 20 who are a step above the rest and there will be another 20 or so soon.
"But there is also something qualitatively different," he adds. In many cases, the new donors are applying the same kinds of business models to philanthropy that they used to build their wealth: "They are new and energetic. They are trying to act in a lead capacity. They are surpassing governments. It's all part of their entrepreneurial sensibility. They find an area where there is more need than supply, they work out how to fill the gap, they muster the resources and they participate in the rate-of-return. They are not just throwing money away. They are monitoring and checking."
There is little in the way of political ideology, he adds. "They are very concerned about poverty but are aware that the golden goose is economic growth."
Ms Palmer agrees. "Some of the technology people felt frustrated by the old way of doing things, that maybe they weren't achieving enough," she says. "Before, people might have just made a donation to Harvard. But with the Pierre Omidyar gift to Tufts, he is really dictating how they run their business. These people want to be very directly involved in where their money is going. They really are more engaged, they don't want to just sit back and write a cheque."
One of the first gifts from the Google Foundation was to the sponsor of a contest in Ghana where winners get start-up financing. Another $5m has gone to the Acumen Fund, a New York group that encourages entrepreneurs in developing countries to create businesses focused on areas such as health and housing. It also gave $2m to the One Laptop per Child programme at the Massachusetts Institute of Technology, which is looking to develop a $100 computer for poorer countries.
The Gates Foundation has assets of around $31.5bn. The next largest, the Ford Foundation, has assets of $11bn. Ten years ago, it was Ford, built on the back of the once proud automotive industry, that was the biggest charitable foundation in the United States. The shift reflects wider changes within American big business. The two charitable foundations created by the founders of Hewlett-Packard, among the earliest to be built by the technology industry, have about $12bn in assets between them. The Gordon and Betty Moore Foundation is worth around $5bn. Google might be worrying Mr Gates in the business world but it still has some way to go before it can rival his charitable work.
Drawing trend lines is, as ever, an imprecise science. Mr Moore, at 76, is older than many others on the BusinessWeek list. On the other hand, Mr Gates is only 51, Mr Dell is 41, Mr Skoll is 40, Mr Omidyar is 38 and the Google founders are both just 32. David Filo, 39-year-old co-founder of Yahoo, and the co-founder of Netscape, Jim Clark, 61, are also big donors.
It would be wrong to suggest that the tech generation is entirely different from those that have gone before. The steel magnate Andrew Carnegie, who funded over 2,500 libraries, also began giving money at a young age, starting in his 30s and distributing over $350m before his death in 1919. The Rockefeller family also shared the Gates passion for world health issues.
Also, the habit of giving money away is not always clearcut. Mr Gates has been criticised for making his money by bludgeoning his competition in the software market. There is also potential for mistakes when well-intentioned but inexperienced philanthropists begin to exert influence in areas they might not know much about.
Still, Mr Schervish of the Centre of Wealth and Philanthropy is optimistic about their ability to make an impact. "These are people with great expectations," he says. "They believe they are good for the world, they have confidence in achieving their aims and they have the intellectual and the material capacity to achieve them."