Self-Serving Generosity

(originally published on my aged personal blog)

Looks like my favourite corporation is at it again. Microsoft have announced a gift of "$1.4 million dollars worth" of Microsoft software to the Barnardos childcare charity. Like their widely promoted TechSoup program - which allows charitable organisations and other non-profits to acquire MS software for a mere "administration fee", it's great to see Microsoft's great beneficence to the poor under resourced voluntary sector...

Sounds great! Let's give them a well deserved pat on the back, right? Hmm - not so sure. I have two problems with MS's "charity":

  1. they're effectively shackling those organisations with tools that, realistically, will be used to produce documents in proprietary formats that can only be reliably (and even then not so much) read and edited by proprietary MS software. They are in effect, committing those organisations to being 100% dependent on Microsoft technology henceforth. So too, those keen volunteers who want to work at home as well - they'll have to buy copies for their home computers, won't they? And the huge stream of documents these people produce and send out into the ether will create a requirement for all of those with whom they communicate to have MS software too. And what about the price of upgrades? Will they also be gifted by Microsoft? Maybe, maybe not... If MS Office adhered to open standards like ODF to the point where interoperability was possible (currently, it's not) - these organisations could be equally well served with perpetually free open source software OpenOffice/LibreOffice. Microsoft's generosity initiates/perpetuates a vicious circle that benefits no one but Microsoft.
  2. through organisations like Techsoup and presumably this stunt, MS are no doubt claiming "charitable donations" of software which gives them a tax write-off in the US... (unlike in NZ where corporations don't, in my understanding, get tax breaks for charitable contributions, they can and do in the US, see, for example: http://www.irs.gov/publications/p542/ar02.html#d0e1413)

One big question: how is the value of that software "donated" determined? Is it based on the recommended retail price for the software?

Another question: is it possible that, thanks to TechSoup being a US-based organisation, that these "donations" were officially received in the US, and therefore qualify for US tax benefits?

Please, is anyone able to provide any credible answers to these compelling questions?

The way I see it, Microsoft have a 90%+ profit margin on the retail price of their monopoly software, namely their operating system and office package. If they're getting, say, a 20% tax deduction, they're actually not just saving money, based on my calculations they're making something like 10% profit on their donations!

If that's true, to me that's disingenuous, and smells a lot like compounded market distortions. For them to be gifting NZ$1,400,000 (actual cost to Microsoft of perhaps as little as $140,000) in software when they might, at least in the US, actually be profiting to the tune of $140,000 in return for their "donation", seems a little bit less than generous to me. For those who don't know Microsoft, it might seem generous... Maybe I'm old fashioned, but when I was growing up, I understood that being generous meant that the generous party was somehow making a sacrifice, going without...

What really really gets to me is the idea that the market place sees them as a beneficent corporation for gifting these tiny sums (relative to their revenue in NZ) when in fact:

  • they're charging monopoly rents for their software in general, and
  • even when, on the face of it, they're being generous, it seems quite possible that they're actually profiting on that as well!

All credit to them: they're nothing if not very very cunning at playing the system.

I'd love to shine some sunlight on these practices. Anyone know where to find an ambitious accountant who's interested in making a name for him/herself (and isn't worried about not getting multinational corporate business in future)?

And, let's remember, the Microsoft Corporation will only be doing this if they believe it will make them more money than not doing it.

And a worthwhile question (thanks Don): why doesn't Barnardos just ask Microsoft for the money instead? Then they could invest it in MS software if they thought that was the best way to use the money... I'd love to see that: they could either go out and pay retail for the MS software... or they could use OpenOffice (paying the same amount for support as they would for MS Office) and use the $1,400,000 to help children directly.

I'm sure it'd all be the same to Microsoft, right? Heh heh. Yeah, right.

Update 19 September 2009

It looks like some other people are concerned enough about MS's motives for donating software to schools and libraries to comment on it in the press.

Update 21 October 2009

Interesting, it looks like Microsoft, my friends at the NZFVWO, and TechSoup have all teamed up for a mutual back patting publicity opportunity: http://www.youtube.com/watch?v=yOxF7-36RXc

I got wind of this via the latest TechSoup NZ monthly newsletter. Sycophantic to the extreme. Blech.

Update 15 July 2015

Heh, looks like the NZFVWO website (linked in the 19 Sept 2009 update) is no more... you'll find yourself looking at some blather about fitness - looks like domain squatting to me.