Google is walking down this path:
The ambitious founders of Google…have set up a philanthropy, giving it seed money of about $1 billion and a mandate to tackle poverty, disease and global warming. But unlike most charities, this one will be for-profit, allowing it to fund start-up companies, form partnerships with venture capitalists and even lobby Congress. It will also pay taxes.
One of its maiden projects reflects the philanthropy’s nontraditional approach. According to people briefed on the program, the organization, called Google.org, plans to develop an ultra-fuel-efficient plug-in hybrid car engine that runs on ethanol, electricity and gasoline.
Here is the full story, and look for more of this model in the future. As wealth grows, and many large benevolent ventures do not need to fundraise, their will opt for more flexible organizational forms. Of course if these activities turn a profit, Google shareholders can take the profits home as dividends. So some of these activities will be normal corporate investments, dressed up as "for-profit charity" for public relations purposes. Here is Eric Posner on for-profit charities.
eBay has been doing this sort of thing for years. Look at it’s microplace and ruralartisan products. These are essentially for-profit charities.
George Will has a good article today setting out the facts about Wal-mart’s contribution to the poor. Wal-mart’s customers, primarily low-income, save $200 billion a year by shopping there. This is more money than any charity or government program provides to the poor. Of course that government largesse is provided at others’ expense and at the expense of the economy as a whole. And Wal-mart makes money. Lots of it. So Wal-mart is living proof of the most compassionate and effective mechanism possible for getting money to the “underprivileged” and helping them live better – capitalism.
Tom Kelly– It’s safe to say that if Larry Page and Sergei Brin want to do something,
it would easily pass a Google shareholder vote– because between the two of them,
Larry and Sergei control well over 50% of the votes. When Google went public,
they made it so the initial shares (owned by Larry, Sergei and other Google
employees) were class A shares with 10 votes each, but when a share got sold
it was converted into a class B share with 1 vote.
B is right. Gee, Google’s creating a business to make a car. What losers–they think they are going to be good at making a car. Uh huh.
The “for profit philanthropy” as described by N Y Times has, it appears, zero to do with the “for profit charity” that Eric Posner wrote about.
I’m glad google is trying an experiment. But “for-profit charity” probably won’t quite work, because of the competing claims on the bottom line.
I suggest an alternative:
An Employment Maximizing company. Set up like a normal company, to pay taxes on profits — but using all revenue to constantly hire new people.
With the managers in charge of the firm being incentivized by higher pay for hiring more workers (hire pay!).
“Poverty ends when everybody in the world has a job. People and jobs are countable. To reduce poverty, hire a poor person.”
The concept of doing business for social purpose has existed informally for centuries. A decade before this Google initiative an American by the name of Terry Hallman distributed a whitepaper advocating the total abandonment of the nonprofit model in favour of profit for purpose. It was written during his time as an honorary researcher for the Clinton re-election committee and a synopsis will be found on http://www.p-ced.com.
In 2004 a similar model was adopted in the UK as the Community Interest Company.
In the world at large it is often misunderstood, sometimes creating a hostile response and in one case, a politically inspired smear campaign which ironically is hosted anonymously by Google on their blogspot medium.
Google will not act against the defamation and have censored me from revealing the identity of the author.
Between 2000 and 2005 with Hallmans own funds being used to leverage US funding this model was applied to create a successful micro credit bank in Russia and it now forms the basis for Hallman’s latest work entitled “Micreconomic Development and Social Enterprise: A ‘Marshall PLan for Ukraine”.
To my knowledge, this is the only 21st century ‘Marshall Plan’ for which a plan actually exists. It proposes a radical reform of childcare at nil overall cost over 5 years.
Jeff Mowatt
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