Google Inc. is financing its promise to make the world a better place with an initial commitment of nearly $1 billion to a philanthropic arm devoted to causes that mesh with the online search engine leader’s crusade.
The altruistic effort, formally announced late Tuesday under the umbrella of Google.org, follows through on a pledge that the Mountain View, Calif.-based company made last year as it prepared its ballyhooed initial public offering of stock.
At the time, Google co-founders Larry Page and Sergey Brin vowed to create a company “that does good things for the world even if we forgo short-term gains.” Toward that end, the pair said they would earmark 1 percent of Google’s stock and future profit for a charitable foundation.
But Brin and Page have since decided their company’s ambition extended beyond the limitations of a traditional foundation, prompting them to pool all the company’s philanthropy under Google.org.
“We hope someday this institution may eclipse Google itself in terms of overall world impact by ambitiously applying innovation and significant resources to the largest of the world’s problems,” Brin wrote in the company’s most recent annual report, echoing sentiments that Page first spelled out last year.
With more than a year of rapid financial growth behind it, Google has finalized the formula for calculating how much money will be devoted to philanthropy during the next 20 years.
To start, the company is endowing the Google Foundation with $90 million and budgeting another $175 million to invest outside the foundation, said Sheryl Sandberg, Google’s vice president of global online sales and operations. Google is investing outside the foundation because it plans to put some money into “socially progressive” companies striving to turn a profit.
“It’s not a lot of money in the face of all the world’s problems, so we want to make sure to get the most out of it,” Sandberg said.
Google is pegging its total philanthropic commitment to the value of 3 million company shares — slightly more than 1 percent of the stock outstanding at the time of its IPO 14 months ago.
After Google’s shares fell $4.55 Tuesday to close at $306.10 on the Nasdaq Stock Market, the initial commitment stood at $918 million. Google also will divert 1 percent of its annual profit to philanthropy. During its first four quarters as a public company, Google earned $968 million — translating into another $9.7 million for Google.org.
Google expects the value of its commitment to fluctuate with its stock. That means the company will funnel even more money into Google.org if the stock continues to rise like it has since the IPO, with the shares more than tripling in value. On the flip side, a declining stock will lower Google’s philanthropic commitment.
Even with the $1 billion commitment, Google.org will be dwarfed by other philanthropic efforts. Twenty foundations nationwide had more than $2 billion in assets through 2003, according to the latest statistic available from the Foundation Center, a group that tracks philanthropy. The list was topped by The Bill & Melinda Gates Foundation, which had $26.8 billion in assets. Microsoft Corp. Chairman Bill Gates, the world’s wealthiest man, bankrolled that foundation.
Google’s success has turned Page and Brin, both 32, into technology moguls, too. They each have amassed an estimated fortune of $11 billion.
The Google Foundation already has started to give away some of its money. Several million dollars will be donated to the Acumen Fund, a nonprofit venture that also has received money from the Rockefeller Foundation and the Cisco Systems Foundation. The Google Foundation also is backing separate projects working to protect the water supply in rural Africa and to promote business startups in Ghana.