Cutting-Edge Philanthropy: 21st Century Ways IT Is Giving Back8:00 AM EST Tue. Dec. 18, 2012
The holidays are the time of year when philanthropic organizations of all kinds -- from local food banks and winter coat drives to global efforts to reduce hunger -- can count on the spirit of giving to kick in. Many of us feel inspired to open our wallets to help those less fortunate and support charitable causes as we celebrate the season. In fact, Americans are a pretty generous lot overall, giving about $218 billion last year to charities, according to the "Giving USA: The Annual Report on Philanthropy."
But what do the big IT companies -- and IT CEOs and entrepreneurs -- do to give back? Are they using their wealth to help others or are they just squirreling it away? Is the industry filled with Santas or Scrooges?
As it turns out, a lot of tech companies make philanthropy a big part of what they do. They donate their technology, their employees donate time and expertise, and they give cash donations to a variety of causes in the U.S. and abroad, including efforts to address educational, health care and environmental problems. And some tech leaders have made a name for themselves in the world of philanthropy, most notably Microsoft's Bill Gates.
In 2010, Gates and his wife, Melinda, together with renowned investor Warren Buffett, established the Giving Pledge to encourage the wealthiest Americans to commit to giving the majority of their wealth to philanthropic causes. The 93 billionaire families who have signed the pledge include Facebook CEO Mark Zuckerberg and Salesforce.com CEO Marc Benioff; even Oracle CEO Larry Ellison joined, perhaps to the surprise of some.
Glasspockets.org, a website created by the Foundation Center, a New York-based organization that tracks philanthropy, profiled the pledge signers and mapped out the sources of their wealth. Twenty-four percent are from the technology services and software sector. Banking and investment was the top industry represented, at 29 percent.
"If this was done 50 years ago, you would have seen most of the wealth coming from industrial manufacturing, energy and mining," said Bradford Smith, president of the Foundation Center. "That's a tremendous shift -- the source of wealth that's coming into philanthropy is coming out of technology and finance."
But true to their innovative nature, IT entrepreneurs and companies aren't content with old styles of philanthropy. Throughout the tech sector, you'll find disdain for "checkbook philanthropy," and a penchant for innovative giving that tries to address social issues over the long term.
"In general companies are no longer writing checks and sponsoring a function. Instead, they are thinking about how to best invest in the community," said Jackie Norris, executive director of the Points of Light Corporate Institute, which provides resources and consulting services to companies on community services initiatives. "Tech companies have been on the cutting edge for quite some time."
NEXT: Shunning Old Models
At IBM, corporate philanthropy focuses on the idea that companies should move beyond "spare change to real change," said Stanley Litow, IBM vice president of corporate citizenship and corporate affairs and president of IBM's Foundation. The idea was advanced by Rosabeth Moss Kanter of the Harvard Business School, who wrote in 1999 of the need for companies to do more than throw money at social problems and instead take nontraditional approaches that lead to sustainable change in communities.
"A company should think about what it has that it could contribute that is more valuable than its excess cash," Litow said. "For IBM, that's our innovation, our technology and our talent."
For example, IBM created its World Community Grid, which pools surplus processing power from individual computers into a massive computing system that is used for scientific research such as studies on malaria or clean water. The company also established a program called Reading Companion, which uses IBM voice-recognition technology to help children and adults learn to read. Last year, it helped teach 212,000 children, Litow said.
Both projects are examples of devoting resources to finding long-term solutions to large-scale problems, Litow said. "Investing in this isn't checkbook philanthropy."
IBM also has programs to get its employees involved in philanthropic efforts, which Litow said helps IBM build their skills and retain top talent. The Corporate Service Corps, for example, sends teams of top leaders in the company to countries around the world to address social and economic problems. One team came up with a management structure behind a program to provide free health care to poor women and children in a province in Nigeria. The IBM Smarter Cities Challenge teams IBM employees to work on urban problems such as services for disadvantaged youth in North Carolina and a transportation strategy in Nairobi. Last year, IBM employees donated 3.2 million hours worldwide.
"Money from a corporation or private foundation is never going to be enough to solve a problem," said Litow, who previously served as deputy chancellor of the New York City Public Schools. "What people really need is the best talent, skills and innovation to be able to think in a serious way about a sustainable, long-term approach to a problem."
Kathleen McCarthy, founding director of the Center on Philanthropy and Civil Society (CPCS) -- part of the Graduate Center of The City University of New York -- said philanthropy in the IT sector runs from the "more plain vanilla" older foundations like the William and Flora Hewlett Foundation that focus on giving money to leading educational and cultural institutions to Google's cutting-edge efforts to help educate girls in developing countries. Gates also has taken public-private partnerships to a new level in philanthropy, she said.
"You have this whole kaleidoscope of activities that are all over the map," McCarthy said. Innovation is something you'd expect from IT leaders, she added.
"Because they reach into folks' homes in ways earlier businesses didn't, you'd expect them to come up with something that's different and calibrated to the 21st century," she said.
Wendy Hawkins, executive director of the Intel Foundation, said philanthropy in the IT industry typically eschews the traditional model of corporate giving in which a company simply throws a check at a nonprofit program. Instead, Intel finds partners that fit with its philosophy and develops programs with them, she said.
"We do almost all our philanthropy with public-private partnerships involving government and educational institutions as well as nonprofits," she said. "The high-tech industry in general is involved in a lot of innovative philanthropic practices."
NEXT: Priority On Education
Intel's total charitable contributions will total $110 million this year, including $45 million from its foundation, Hawkins said. Like the rest of the technology industry, Intel applies much of its innovative approach to philanthropy for educational efforts, particularly in science, technology, engineering and math, or STEM. When the Intel Foundation formed in 1988, its educational focus was making sure there was a workforce it could hire from, Hawkins said. Today that mission has expanded far beyond the U.S. and higher education in engineering.
"Now it's K-12 and global and focuses on not only an educated workforce for Intel but the entire high-tech ecosystem and an educated populace that can understand and use the technology we make, and can hold down the jobs that will allow people to afford technology and ensure people have the education that will allow them to live lives so all of us can thrive," Hawkins said.
One of Intel's educational programs is Intel Teach, which instructs K-12 teachers how to use technology effectively in their classrooms. Since its inception in 2000, the program has trained more than 13 million teachers around the world.
According to the 2012 Giving in Numbers report, an analysis of 2011 corporate giving by 214 top companies showed that 40 percent of the IT industry's giving goes to education, levels K-12 and higher.
"That's over 10 percent higher than what's typical [across all industries]," said Margaret Coady, director of the Committee Encouraging Corporate Philanthropy (CECP), which conducts the survey that feeds the report.
"The tech companies are really thinking holistically about, 'What do we have to give?' " she said. "We want to make cash grants, but we could also provide some training on cutting-edge technologies and not just donate products for the classrooms but teaching teachers how to use them. ... They're equipping classrooms to teach kids to have the skills for the 21st century."
What she likes about the Intel Teach program, Coady said, is that it takes a comprehensive approach. "It's about professional development, curriculum, policies and equipment in the classrooms and saying, 'How can we be more complete partners in the drive to prepare kids for the future?' "
Microsoft also takes a holistic approach to educational philanthropy, Coady said, citing the company's relatively new YouthSpark program. According to a Microsoft spokesperson, the software giant is committing the majority of its corporate cash giving to support nonprofits that serve youth by providing them with technology and business training to help them pursue additional education, obtain employment or start a new business or social venture.
YouthSpark aims to bridge the global "opportunity divide" -- the gap between young people who are prospering and those who lack the skills, education and experience to be successful. The program includes a student technology competition and a micro-giving portal, where youths can post projects and donors can provide seed funding.
In addition to the educational focus, the tech industry's philanthropy is often more international than other industries, Intel's Hawkins noted. According to the 2012 Giving in Numbers report, 23 percent of the total giving by the technology companies in the study was international. The energy industry had the highest percentage at 26 percent.
NEXT: Starting Young
At the individual level, giving in the IT industry also leans toward finding innovative approaches to educational and other causes, oftentimes beyond U.S. borders. IT entrepreneurs also bring a youth that philanthropy hasn't traditionally seen from corporate leaders.
Philanthropists from previous generations such as industrialist Andrew Carnegie turned to philanthropy after successful careers, noted the Foundation Center's Smith. In the tech industry, entrepreneurs such as Facebook's Zuckerberg are accumulating wealth at a young age but not waiting until their careers are over to give back.
"In the tech world, we're seeing people in their late 20s, 30s or early 40s saying, 'I transformed the way people network and use technology. What will I do next?' " Smith said. "A lot are turning to philanthropy."
Coady from the CEPC said the Giving Pledge has been "game-changing" in how people understand the concept of legacy.
"Legacy is something that has an association with what you leave behind after you're gone," she said. "Buffett and Gates are challenging some of the most financially fortunate people to consider this: What if we shifted the time horizon of legacy and thought about it as what we're leaving behind right this minute."
A lot of people in the tech sector have come into their wealth at a time when this concept is gaining traction, Coady said.
Salesforce.com's Benioff has been a leader in encouraging young entrepreneurs to bake philanthropic values into companies from the start, she said. When Benioff founded the cloud computing company, he made a commitment to a 1/1/1 model of corporate philanthropy by donating 1 percent of equity, 1 percent of profit in the form of product donations, and 1 percent of employee time to charity.
"Benioff has been a mentor to a lot of entrepreneurs in helping them wrap their heads around that idea -- when you start a company, you're also starting a relationship with society and you should think about that as much as anything else in your business plan," Coady said.
Over its 12 years, the Salesforce.com Foundation has donated about 360,000 hours of community service, provided its product for free or at steep discounts to more than 16,000 nonprofits and awarded $40 million in grants.
Barbara Kibbe, chief operating officer at the Salesforce.com Foundation, said the 1/1/1 model was easy in the company's early days since it had no employees, profit or equity, but has grown to be much more than 1 percent. Today the San Francisco-based company has more than 8,000 employees and makes nearly $3 billion in revenue.
Employees have the opportunity to donate six days of paid time off to a charity of their choice, and those who use all six days earn the opportunity to make a foundation-funded grant to their charity. "Volunteer time is important," Kibbe said. "It's part of the culture."
Salesforce.com gives 10 licenses for free to any legitimate nonprofit; if the organization needs more, the company sells the cloud service at a 74 percent discount.
Matching employee giving -- up to $5,000 per employee -- is a big part of Salesforce.com's cash grant program, Kibbe said. The company also provides grants to nonprofits that innovate on the Salesforce.com platform and share their work with other nonprofits. For example, the Family Services Agency of San Francisco created a case management system that is mobile and compliant with federal privacy health-care rules, she said.
Earlier this year, the Salesforce.com Foundation said that it will donate $10 million over the next five years to projects that improve the lives of children and families in a disadvantaged area of San Francisco.
Of course, not everyone in the industry has such a public reputation for being philanthropic. Apple, for instance, has long been criticized as a laggard when it comes to giving to charitable causes. However, a report earlier this year indicated that CEO Tim Cook has instituted a charitable matching program for employees and, in an internal meeting, talked up Apple's contributions to Stanford University hospitals and the (RED) fight against AIDS in Africa.
While Stephen Vogelpohol, CEO of SocialGood.TV, said he was encouraged by the report of Apple's philanthropic efforts, he added, "I think they have a long way to go." Apple did not respond to a request for comment.
And while Zuckerberg has donated $100 million to improve the public school system in Newark, N.J., one corporate social responsibility expert questioned his company's charitable efforts.
"What are Facebook employees doing? How is Facebook, the platform, being used as a tool for good?" the expert said. "The question becomes: Are companies devoting the same energy and vigor to help solve social problems as they are about making money?"
Facebook could not be immediately reached for comment. The company recently added functionality on its Facebook Gifts feature that allows users to make charitable contributions to its nonprofit partners.
NEXT: Investing For A Social Return
Some IT entrepreneurs, however, are breaking new ground in charitable work. Pierre Omidyar, founder of eBay, and others like him have helped reshape traditional philanthropy, said Smith of the Foundation Center.
"We're seeing in their philanthropy an attempt to remake or advance the field of philanthropy to be not just about making grants but thinking more in a framework of social investment," Smith said.
In 2004, Omidyar and his wife founded the Omidyar Network, which describes itself as a philanthropic investment firm. The organization supports both for-profit companies and nonprofit organizations to further its mission of economic and social improvement. So far, the Omidyar Network has committed $545 million to various projects, including $248 million invested in for-profit companies and $297 million donated to nonprofits.
"Omidyar Network is structured to support the notion that philanthropy is more than a type of funding. In its truest sense, philanthropy is about improving the lives of others, independent of the mechanism," the organization states on its website.
Last year, the organization teamed with a venture capital firm to lead $13.75 million in financing to a Mexican provider of mobile telephony services to low-income populations in Mexico. "You're not going to fund a nonprofit to build a cell network. You need a cell phone company to extend a network," Smith said.
Another organization that takes a different approach to philanthropy is based in the heart of the technology industry, the Silicon Valley Social Venture Fund (SV2). Organization members -- called "partners" -- pool together their individual annual donations of $5,000 or more and award the funds to cutting-edge nonprofits in education, health, environmental sustainability and international development. Partners, who come from a variety of industries including technology, also provide their skills and expertise to help the nonprofits, said Holly Goodliffe, SV2 director of communications and training.
"It's a great way for individuals to bring their skills to the table," she said.
SV2 was founded by Laura Arrillaga‐Andreessen, wife of IT entrepreneur Marc Andreessen, in 1998. She wanted philanthropy to be "something you can engage in in a meaningful way earlier in your career and not wait until you're retired," Goodliffe said.
"When they first come to us, partners have great skills but don't know how that translates to the nonprofit world," Goodliffe said. "We specialize in being able to make those connections."
Smith said venture philanthropy, which takes a venture capital approach by pooling resources and aims for a social return on investment, is interesting but works for some issues better than others. Some issues such as violence against women and children can't be addressed by a market solution, he said.
Overall, one major influence the IT industry could have on philanthropy is decentralization, the CPCS' McCarthy said. Previous philanthropists such as Carnegie built tangible, centralized institutions such as universities and museums.
"In the 21st century, everything is so decentralized because of the democratizing effect of the IT industry," she said. "So that's where they have the potential to make the biggest impact -- thinking about how do you decentralize philanthropy."
While the broad range of philanthropic activity in the technology industry makes it hard to pin down, its sum total is so huge that it's taking philanthropy to a new level, McCarthy said. "In that respect, we may see the beginning of a new era of big philanthropy that will take it to a previously unimagined scale."
PUBLISHED DEC. 18, 2012
EDITOR'S NOTE: On May 1-2, 2013, in Anaheim, Calif., Business4Better will bring together 2,000 business executives from midsize companies who want to establish corporate philanthropic programs. CRN's parent company, UBM, also will offer free exhibitor space, signage and marketing services to 200 nonprofits who will be exhibiting at the show looking to create partnerships with midsize private sector companies. The goal of the conference is to bring together midsize businesses and nonprofits with a mission to create successful partnerships. If you are interested in creating a philanthropic program or are interested in the conference, please check it out at business4better.org or email UBM Channel Senior Vice President, Editorial Director Kelley Damore.