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Microsoft's Software Philanthropy: The Goodwill Ploy
bethanie writes "The New York Times has printed a story concerning Microsoft's plans to 'significantly increase its donation of software to the nation's nonprofit organizations, to a level that may approach $1 billion annually in the next three to four years. ...But the increase has also drawn objections from developers of 'open source' programs (programs for which the source code is freely distributed). Those critics say they believe Microsoft is using a giveaway strategy to undercut the so-called free software movement in the potentially promising nonprofit market.' What do you think? Is it true philanthropy or just another tactic to assimilate everyone into the MS collective?"
A good read is here
I'm not Seth.
Simpler answer from a business undergrad-
There are federal standards associated with tax writoffs of good donations to nonprofit firms that dictate that relatively small amounts, on a revenue basis, are tax deductible. Microsoft will be able to write off revenue from some, but not a very significant portion.
More importantly, I responded because dividends are NOT pre-tax, they are paid from after-tax retained earnings. This is a very basic accounting rule and is important in many financial issues, from capital structure to the potential elimination of US dividend taxation.
Read jack phelps dot net
Microsoft can't claim a tax deduction for the retail price of the software, only for the cost of providing the CD etc. to the nonprofits.
Since it all comes out of pre-tax income they don't get a return. They just get to say it is a legitimate business expense, so they don't have to pay tax on the money they actually spent administering the program.
Money or other gifts from an organization have to have a legitimate purose or they become taxable income as though they were actually profit (presumable this is to stop them giving gifts to share holders instead of paying tax on their profit before dispersing it).
The Billion dollar figure is just for public relations.
I work for a NPO. We already use Microsoft products - Windows 2000, Office 2000, and Exchange would be the major apps. Due to budgetary constraints, we've decided not to upgrade until the Windows/Office version after the Longhorn release in 2005 (whatever that release may be... ); we started setting aside money for that upgrade in 2001. Budget is the #1 thing on the minds of every executive/manager at an NPO.
FWIW, at an NPO, any $ used comes out of a donation from a charitable person, institution, or corporation, who probably envisioned their donated $ going toward the benefit of whatever community the NPO services; I doubt seriously that most people envision their dontations going straight to Bill Gates & Co. when they sign their names on the check, be it for AIDS research, building homes for the homeless, etc. If MS is willing to provide NPO's with or reduced cost software, the end benefit is that the NPO will have more funds available to help their constituencies.
Oddly enough, I was involved in a discussion of this very topic today!
My mother is an office manager for a "Safety Council"; my wife is an administrator in the American Red Cross. I also worked for a compnay the designed a SQL Server-based databank for the Red Cross.
Both organizations are tied tightly to Microsoft, in part because of the freebies, and in part because of corporate culture. They'd be silly to turn down millions in free software, especially hwne it is the same software they already use.
Do I take the free (as in beer) software that I know, or the free (as in leberty) software that I'll need to retool and retrain my staff for? Add in data conversion and other factors to see why the non-profits drink the Microsoft beer.
I'd rather the Red Cross take free software from Microsoft than have them lay off disaster personnel so they can retrain and retool for "free" software. People don't give a flip about Linux-vs.-Microsoft when their house is spread across three counties.
As for non-profits being "lucrative" -- no organization that relies on donations is lucrative; non-profit means limited budgets.
That's not to say that Microsoft doesn't recognize the benefits of "giving." Perhaps someone at Microsoft gets a warm fuzzy feeling from donating software, and I'm certain that their accountants like the associated tax write-off. But I'm sure it hasn't been lost on Microsoft that giving software to non-profits is both good advertising and good training.
Is Microsoft being Machiavellian? Yes. Does it matter? Probably not.
All about me
I know most people don't study or have a clue about business on /., so let me challenge your conspiracy theory with, "No, MS can not get a tax writeoff for a $1000 Windows Server License", simply because a tax writeoff has to do with cost, not potential revenue.
There is no longer anything that can be done with computers that is nontrivial and clearly legal. -- Paul Phillips
Let me tell how it really is -- I'm the Director of I.T. for an NYC-based non-profit, high-end, very prominent. Your comments about MS hurting me more are pretty offensive, and wofeully uninformed. By the way, I'm a UNIX guy, I've been an admin, an engineer, all the way since 0.99pl4 so you're preaching to the choir about open source. But reality is different.
In the non-profit world, budgets are so slim as to be non-existent. You're working on yesterday's technology (for the most part), you cobble together what you can. But there are certain things that all non-profits must have, the basic "office services" that we all take for granted. But these places don't have them, they have a bastardised collection of w98 and w95 and god forbid novell on dos desktops, all somehow strung together with a chain of ancient hubs, etc. You get the picture. We as IT guys in these places have very little resources, both in terms of people and time - oh and the previously mentioned money. We need MAXIMUM bang for the buck.
As a UNIX zealot I already know that with OSS/Linux/*NIX there's nothing better than a free lunch. But - I also have 75 people in the office who know absolutely nothing about computers except to click Send/Receive and read their email, or use the Outlook calendar. Believe me, if I had the time and the resources to build and deploy my own Linux desktops, I'd do it - oh god would I do it. But I have to face cold, hard facts and the fact is that as an IT guy at a non-profit I have to give as much with as little as I get, and that little is the "Microsoft Office environment" and goddamnit thats what these people know, and its what they expect and it's all they'll ever know.
Having said that - the money that I don't have to spend on Microsoft Office and the various OS' that I need to run it on are ALWAYS used (at least anywhere that I work) on as many servers as possible to run the important stuff -- stuff like intranets running apache & php, monitoring with netsaint, my sendmail relay, my free/swan VPN - don't get me wrong. There is more than a huge void in the non-profit world where OSS could be used, and should be. And the more progressive IT people do I think head in that direction.
But the fact is that the non-profit will always be strapped for cash, and more importantly IT staff and time. And thats why a full *NIX adoption would always be difficult in that environment, along with the "standard" of MS Office being important in such a creative environment, with many files being passed in and out to such non-technical people. That said, the foresight and generosity of OSS folk and their beliefs and awesome software are appreciated by the more foresight-friendly non-profit IT guys.
I don't dispute that MS ultimately profits from their donations -- just look at the other side of the coin before you say the non-profits are being hurt, dude.
A lot of these Microsoft "donations" are not pure software donations. Rather, Microsoft donates money but imposes obligations that effectively require the recipient to buy a lot of Microsoft products in the market. That kind of "donation" may end up being tax deductible.
Hey, there is a long tradition of that. The US does something similar with foreign aid, "giving away" billions of dollars but requiring purchases of US goods and services.