Are Product Donations Actually Philanthropic?

If you work in the social impact world, chances are you’ve heard of TechSoup: a platform supporting non-profits and charities by providing access to discounted and donated software. To date, TechSoup has helped the Canadian non-profits save over $362 CAD million in technology investments.

As a non-profit, TechSoup itself benefits from the free or discounted services provided by tech companies. One of these is Box, a cloud storage and content management service. By leveraging Box’s free accounts for charities and non-profits, TechSoup has driven up its earned income, and has even raised $500K USD to fund projects such as the ICT4NGO: a tool helping non-profits in their digital transformation.  

Box and other cloud-based companies like Google and Salesforce donate accounts for thousands of non-profits around the world. The practice has become so pervasive, it’s reshaping philanthropy. 

We continue our series on how tech companies are shaping a new philanthropic market and spotlight the players changing the game. This week, we highlight the opportunities and problems with the trending practice of viewing free accounts as ‘giving back.’ 

Are Product Donations Making Tangible Impact?

‘Freemiums’ became popular with the software industry in the 1980s, with Microsoft leading the way. While it may not be as easily measured as cash donations, these types of product donations should not be discounted; Box has estimated that it gives back $3 million USD annually, and a portion of that is through product offerings. 

Alongside TechSoup, the International Rescue Committee (IRC), a global NGO for humanitarian aid is another of Box’s beneficiaries. With a network of 13,000 staff, 10,000 volunteers, and 1,000 partner organizations, IRC must be able to rapidly respond to global crises as they happen. Before this partnership, IRC had an almost unusable intranet, with staff losing valuable time trying to find basic information, including identifying on-the-ground partners.

With Box, IRC’s intranet now provides its staff with instant access to required information when they arrive at a new location. As a result of Box’s free product offering, the IRC has increased its efficiency for social impact.

Another example of freemiums supporting non-profits comes from HootSuite: a Vancouver-based social media platform. HootSuite offers a 50% discount on paid services for non-profits, as well as social media coaches.

One of these non-profits is the The Leukemia & Lymphoma Society of Canada. Patricia Gilmore, Director of Marketing Operations at the The Leukemia & Lymphoma Society of Canada, was quoted as saying about HootSuite: “As a non-profit, we aren’t able to have dedicated social media managers. The Hootsuite platform […] lets us leverage our regional leads to engage in social on our organization’s behalf.”

These services help non-profits and charities stay competitive — especially important in a market that requires organizations to stay ahead of the curve with marketing and fundraising tactics. But before we celebrate freemiums as a new philanthropic model, it’s important to remember that some tech companies offer charities and non-profits discounts as opposed to free service accounts, meaning those without the disposable funds — let alone the digital capacity to accept cloud-based offerings — can end up excluded.

In Canada, tech is becoming an increasingly larger portion of our annual GDP. It’s inevitable that this should be the industry advancing philanthropy. However, when tech-fuelled free accounts start deepening divides as opposed to bridging them, we must question who exactly is creating these giving models in the first place.

Giving Back: Then & Now.

The major industrial philanthropists of the early 20th century included oil tycoon John D. Rockefeller, and steel industry giant, Andrew Carnegie. By the early 2010s, both the oil and automotive industries started to decline, with tech steadily climbing.

Today’s industry leaders include the likes of Jeff Bezos and Bill Gates. In Canada, Shopify founder Tobias Lütke has a net worth of $3.2 billion. These new tech philanthropists are much younger than their philanthropic predecessors, who didn’t start sharing their wealth until later in life. 

Traditional foundations have made massive contributions throughout history, but their model of awarding grants means that their beneficiaries rely on them indefinitely. Rather than wait for proposals, tech philanthropists are ‘actively seek places to put their money’ while prioritizing speed and impact. This new generation of philanthropists are determined to see transformations happen in their own lifetimes.

Striving for this type of social impact on major scales could be exactly what we need as we face the last decade to achieve the UN Sustainable Development Goals. Simultaneously, striving for large-scale transformation can drive efforts away from the needs of smaller, grassroots initiatives — the exact organizations who may find little use for freemiums, let alone software discounts. 

There’s no denying it: tech is already becoming the driving force of today’s philanthropy, with the youthful demographics of today’s millionaires and their growing contribution to the global GDP. 

We must be conscious of where community initiatives may lose out in the continuous push for major transformations on shorter and shorter timelines. However — freemiums and product donations are proving themselves to be a big philanthropic trend, and that is here to stay.

Stay tuned for the next article in this series, where we dive into another trend significantly contributing to Canada’s tech sector driving a new philanthropic landscape.

Tell us this made you smarter | Contact us | Report error