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Google to donate up to $175 million over next 3 years

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Google (NASDAQ: GOOG) has announced details of its philanthropic plan (Google.org) to combat climate change, poverty, and what the company called "emerging threats." In a press release, Google said that "Today's announcement includes more than $25 million in new grants and investments to initial partners. The resources come from a commitment by Google's founders to devote approximately 1 percent of the company's equity plus 1 percent of annual profits to philanthropy, as well as employee time."

While Google's founders should certainly be commended for their commitment to issues of social justice and making the world a better place, the donations do raise interesting questions about the purpose and goals of public companies.

Remember, Google's top executives are, in effect, using the capital of the company's shareholders to execute their own philanthropic aims. The "1% of equity and 1% of profits" doctrine certainly runs counter to Milton Friedman's assertion that the social responsibility of a corporation is to increase its profits.

As an investor, I'd rather see companies focus on generating profits, and then letting the shareholders -- the rightful owners of the company's income and equity -- decide what to do with it.

But as long as Google's stock is a strong performer, no one's likely to complain. Plus, you'll make very few friends arguing that corporate philanthropy at public companies is inappropriate.

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Last updated: July 05, 2009: 12:18 PM

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