Leave it to Google, the internet hot shot, to come up with a striking new way to conduct its philanthropic work.  The founders of Google, Larry Page and Sergey Brin, have started a new hybrid philanthropy and they gave it about $1 billion as seed money to help it carry out a wide-ranging mandate to tackle poverty, disease, and global warming.

However, this is like no other philantropic venture that we have seen and we like it so much we think we will copy it here at Philoptima.  The mandate itself is not particularly revolutionary even though it is attempting to confront some gargantuan problems.  The real innovation is the way it is structured. Google.org is referred to as a "double-breasted" hybrid organization because it is like a coin with two sides. It will operate two separate but coordinated entities.  One entity is a for-profit, tax paying organization, and the second is a nonprofit grantmaking charity funded at least partly by the earnings of the first entity.

Not only is it uniquely designed to perform effectively and efficiently, it was seeded with a really big startup endowment.  $1 billion pales in comparison to the Bill and Melinda Gates Foundation, but it is big enough money to keep it in the top handful of foundations in the United States.

By organizing as a hybrid, Google is required to pay taxes on earnings by the for-profit component.  Gifts to the nonprofit component, however, are tax exempt and deductible.  Functionally, the for-profit status will greatly increase the range and flexibility of the two entities working together. The for-profit side can create and sell products, sell stock, borrow funds, etc. just like any company.  It can hire lobbyists to pressure Congress while the normal private foundation cannot.  But the nonprofit component can retain and grow assets tax free and accumulate wealth subject to the requirement that it donate 5% each year to charities or as internal expenditures that qualify as tax exempt spending. 

Great idea, Larry and Sergey!  Something new under the sun, again.