From the issue dated April 24, 1998

Corporate Largesse: Philanthropy or Self-Interest? Colleges praise Microsoft for giving away millions in software, but critics see a shrewd effort to quash the competition By LISA GUERNSEY Microsoft is ladling out generous helpings of software these days, and colleges throughout the country are lining up for their share. Since July 1995, the company has donated nearly $70-million in software to educational institutions, most A SPECIAL REPORT: Microsoft's reach in higher education Introduction Microsoft Marketing Brings New Business and New Skeptics Corporate Largesse: Philanthropy or Self-Interest? Microsoft's Campus Brain Trust: $10,000 a Year for Providing 'Input' Microsoft Pays $200 for Mentioning Its Tools Funds and Freedom Make Microsoft Nirvana for Some Researchers Colleges Wonder if Microsoft Is Their Next Competitor Microsoft Headquarters Evokes Ambience of Campus, but 'It's Just an Office Park' What you said: Is Microsoft's growing role on college campuses helping or hurting higher education? Does Microsoft have too much influence in academe? Read the responses we received in Colloquy. of them colleges and universities. That doesn't include $33-million worth of software licenses that the company has granted to 742 colleges as part of its marketing programs. "This is everything you could ask for," says Jim Fowler, technology-services director at Charles County Community College, describing the software that the Maryland institution received from Microsoft last month. The donation included licenses of Microsoft Office and copies of the Windows NT server. Nearly everyone involved raves about the giveaways. Bellevue Community College, in Microsoft's home state, Washington, has received $1-million in grants from the company over the past few years, and administrators are brimming with gratitude. Professors at many universities say they couldn't continue their research or teach their students without the software grants. Administrators of college associations say they have saved thousands of dollars because they haven't had to purchase word-processing and spreadsheet programs. But to Microsoft's many detractors, the company's philanthropy looks more insidious than generous. Giving away software, they argue, merely seals the monopoly that they say Microsoft already has. To the most extreme critics, even cash donations seem sinister. "Can any of Microsoft's competitors hope to even get in the door when Microsoft has more money than God to shower on the universities?" asks Mitch Stone, founder of the "Boycott Microsoft" site on the World-Wide Web. The donations do benefit Microsoft. Who wouldn't be tempted to purchase Microsoft products after a diet of free ones for several years? And considering that the company's products are designed to work best when they are used together, the incentive is to buy more. Still, officials of Microsoft's donor programs say their mission is simply to give, notwithstanding the indirect marketing benefits of their donations. "Our job is not to create market share," says Christopher E. Jones, who handles Microsoft's gifts to higher-education institutions. "It is to do things that help communities." Microsoft calculates that the value of software donated to educational institutions in the past two fiscal years is $50.6-million, more than 20 times the $2.4-million the company has given in cash. And by June, when the current fiscal year ends, it will have given away at least an additional $20- million worth of software to colleges, universities, and a few schools, company officials say. The software gifts have reached such groups as the United Negro College Fund, which received $16.7-million in Microsoft software in 1996 to distribute to its 42 member colleges. The Foundation for Independent Higher Education received $3.1- million in software from Microsoft, which asked that the gift be distributed to the foundation's 28 member colleges in North Carolina, where the high-tech Research Triangle region includes a large number of Microsoft employees. In some cases, officials of the college groups say, the software and accompanying technical support are actually more valuable to them than straight cash. And Microsoft officials say the gifts meet the company's goal of broadening access to technology. "We don't just want to throw money at them," says Barbara Dingfield, director of the community-affairs division. Of course, Microsoft is not the only computer company giving away its products to colleges. Oracle, the world's second- largest software company, is offering $50-million in software and discounts to hundreds of community colleges over the next few years. Intel, the world's largest chip maker, last year donated $67.2-million in hardware and software to research universities and plans to give away $17.8-million more before 2000. Apple once was the leader in giving products to colleges, handing over millions of dollars worth of software and computers in the late 1980s, but it has suspended its college-philanthropy programs while it reorganizes itself. In fact, giving away products is becoming more and more popular with corporations in general. "It makes your giving look larger than what it costs you to give," says Jerome L. Himmelstein, author of Looking Good & Doing Good: Corporate Philanthropy and Corporate Power (Indiana University Press, 1997) and a sociology professor at Amherst College. In the case of Microsoft, that's quite true. The company calculates the value of its software donations by tallying up their retail values. Educational institutions, however, almost never buy Microsoft software at those prices; they take advantage of the company's 50- to 60-per-cent academic-pricing discounts. Using retail figures, incidentally, got Microsoft in trouble with I.B.M. last year. When Corporate Giving Watch, a publication of the Rockville, Md.-based, non-profit Taft Group, listed Microsoft as 1996's top donor, I.B.M. -- which had calculated its gifts of equipment at wholesale values -- cried foul. When the numbers were recounted, I.B.M. came out on top. Since then, the Conference Board, a New York-based organization that tracks corporate giving, has asked companies to report gifts of equipment using both retail values and "tax values" -- how much the products cost to produce. Just because a company is giving away products, rather than cash, doesn't mean it's any less philanthropic-minded, say those who follow trends in corporate giving. "Strategic giving," as experts call it, has become the norm. "There is no such thing as pure corporate philanthropy," says Elizabeth T. Boris, director of the Center on Nonprofits and Philanthropy at the Urban Institute, in Washington. Microsoft does have a department responsible for giving without strings attached -- in 1997, it gave away a total of more than $60-million in software and cash to all kinds of organizations, from colleges to soup kitchens. In publicizing those gifts, however, Microsoft also mentions the grants made by its marketing divisions, to the point at which it can be difficult to know where one set of donation programs ends and the other begins. Pamphlets and Web pages about Microsoft's giving programs, for instance, highlight the company's large "instructional grant program," which is run by one of its marketing departments. The program is designed to provide software to professors, who then are expected to share their curricula on a Web site called the "Academic Cooperative." The site is run through Idaho State University's computer system and has an ".edu" address -- but it is supported by Microsoft. The company's current drive to give away software also comes in the midst of its aggressive efforts to woo colleges into buying big packages of its products. "The juxtaposition is bound to have an impact," says Mr. Himmelstein, of Amherst. Although Microsoft isn't putting overt pressure on the colleges with the donations, he says, "people might feel obligated" to sign the contracts after they've received so many gifts. But even if that were a concern, most colleges aren't likely to turn down Microsoft's philanthropy. Take Charles County Community College, which will receive $270,000 in cash and at least that much in software donations from Microsoft over the next 28 months. From a pool of hundreds of applicants, Charles County was one of 13 institutions selected by Microsoft and the American Association of Community Colleges to develop curricula in information technology. With the money and the software, Mr. Fowler, the technology- services director, is developing new academic programs. At least one of them will train students to become Microsoft- certified systems engineers, who will be hot property in La Plata, Md., where the college is located. Naval facilities provide most of the local jobs, and the Department of Defense has just switched to Microsoft's Windows NT servers. "People are already beating down a path to our door" to hear about the programs, Mr. Fowler says. At a job fair this month, he set up a Microsoft-training booth to tell people about the new programs. For four hours, students swarmed around it, he says. The McDonald's booth next-door, he notes, stood nearly empty. Microsoft's heaping portions of software may not be "totally altruistic," Mr. Fowler says. "But despite the moaning and groaning, the company does make good products. This is a win- win situation for all of us." http://chronicle.com Section: Information Technology Page: A28