Google's Charity and Investments in Worthy Causes

While much of the financial world is focused on Google's financial results for Q4, I picked up this interesting quote from the conference call transcript (can be found at the SeekingAlpha).

"As we discussed on our last call during the 4th quarter, we contribute $90 million to the Google Foundation. This was a non-recourse, non-refundable donation and was recorded as an expense in Q4. We do not expect to make further donations to the foundation for the foreseeable future. We do however expect to make equity and other investments in for-profit enterprises that aim to alleviate poverty, improve the environment and achieve other socially or economically progressive objectives. We expect these investments to be made primarily in cash and to be valued at approximately $175 million over the next 3 years."

2 comments:

1. I think it is wonderful that companies such as Google contribute some of their profits to worthy causes.
2. I am certain that, having already established the Google Foundation, Messrs. Page and Brin will follow in the footsteps of Bill Gates who, through his personal foundation, has made a meaningful impact on world health. It is wonderful to see such successful business people giving tzedaka, charity, to those less fortunate.

A few serious questions:

1. In the call George Reyes, CFO, said "We do not expect to make further donations to the foundation for the foreseeable future." Why are they stopping the donations to the Google Foundation? Is it impacting cash flow too much? Was this donation an earnings management mechanism?
2. It is certainly worthy to "invest" in "socially and economically progressive" objectives. I was wondering if this was in-line with the normal course of business? Is it a separate line of business?
3. If someone has access to the prospectus from Google's secondary which raised $4Bn, was this investment objective in the use of proceeds?

And a few other questions:

1. I always assumed that Google's investment in search and Google News aimed to "improve the environment." With the reduction in need for newspapers, there are a lot of trees breathing a sigh of relief.
2. I have been trying to think through what "for profit enterprises that alleviate poverty" means. Hiring lower income workers and not Phd is certainly one way to alleviate poverty. Cheap food production is another but it is hard to see how that would have the margins of Google's current search and ad business (quick -- short the stock).
3. Oh and "economically progressive objectives:" I was not sure if that was a call for raising taxes or tax breaks for clean energy (oh…I forgot, that was environmental improvement).