Microsoft Plans To Donate $1B in Cloud Services To Nonprofits

In a major expansion of its corporate philanthropy efforts, Microsoft announced plans Tuesday to donate about $1 billion worth of cloud-computing services to nonprofits during the next three years.

The program, which goes well beyond Microsoft’s current software donations, will make many of the company’s next-generation Web tools available to select nonprofits. It also extends Microsoft’s existing donations that support academic projects and Internet connectivity initiatives.

The philanthropic push comes as the company works to grow its businesses of selling the Web-based computing power and data storage, collectively termed the “public cloud.”

Microsoft is in a fevered battle in that arena with market leader Amazon.com, as well as Google and IBM. A bigger presence in the nonprofit community could burnish Microsoft’s image among commercial customers.
In outlining the new programs, executives say the goal is to open up the fast-growing realm of online software to groups that might not otherwise have access to the latest technology.

“It’s really important for the public cloud to serve the public good,” Brad Smith, Microsoft’s president and chief legal officer, said in an interview. “We see philanthropy as complementing our core business” and helping Microsoft achieve its mission, he said.

The announcement was timed to coincide with this week’s World Economic Forum in Davos, Switzerland, which Microsoft Chief Executive Satya Nadella will be attending along with a host of global business, governmental and nonprofit leaders. Nadella is to speak on a panel alongside Facebook Chief Operating Officer Sheryl Sandberg and Rwandan President Paul Kagame, among others.

Microsoft already donates its mainstay Office suite and Windows operating system to nonprofits. By its calculations, the company donated $922 million worth of software and services to nonprofits during its most recent fiscal year, which ended June 30.

During that same year, Microsoft earned $12.1 billion in net profit on sales of $93.5 billion.

Microsoft’s existing donations in many cases involve giving nonprofits a copy of software already on the market. Such arrangements eliminate the recipient as a potential paying customer but don’t add any significant cost to Microsoft.

Tuesday’s announcement, the first since Microsoft announced expanded ambitions for its philanthropic efforts under the “Microsoft Philanthropies” banner, is different.

Microsoft is offering nonprofits access to its Azure cloud-computing program, along with a slate of programs run on Microsoft’s network of data centers. That means when a nonprofit stores a large chunk of data on a Microsoft server, it is adding to Microsoft’s electricity and upkeep costs and tying up that slice of its network, making it unavailable for other customers.

“There’s real cost,” Smith said. “We’re using up the computational power of our servers. We see this as a new investment.”

In addition to Azure, Microsoft’s soon-to-be ramped-up nonprofit software-donation program also includes the Office 365 Web-based productivity suite and Power BI analytics tools. Smith said Microsoft hopes to reach 70,000 nonprofits with those services over the three years.

“I would hope and expect that we’d meet this and exceed it,” he said of the $1 billion figure, which is an estimate of the market value of projected donations during the next three years.

Not all constituents of the giant nonprofit sector, itself a major software buyer, will be eligible for free software. Smith said the limits on eligibility are still being determined.

Microsoft’s existing limits on traditional, out-of-the-box software offer some clues. In some cases, the number of users who receive free software at any organization is capped.

Meanwhile, big international governmental organizations like the United Nations are ineligible for Microsoft’s existing software donations. So are most educational institutions and health-care organizations, which can get software through Microsoft’s bulk sales programs.

Microsoft also announced Tuesday it would expand by 50 percent its donations of cloud-computing resources to faculty research at universities. The program now supports more than 600 research projects worldwide.

Among them is the work of Parker MacCready, a professor at the University of Washington School of Oceanography. MacCready, in research funded by the state of Washington, develops models that simulate the flow of water and its conditions, focusing particularly on the coastal waters of the Pacific Northwest.
The results of his daily forecasting models, calculated with the use of dozens of university-owned computer processors working as one, are stored free in Microsoft’s Azure data centers.

“It gets it off my servers, which is helpful to me,” MacCready said. “Anybody can access it because it’s freely available.”

MacCready, who spent four months a couple of years ago as a visiting researcher with Microsoft Research, said he’s hoping to make greater use of Azure, eventually using Microsoft’s own processing power to run the models themselves.

The third element Microsoft announced Tuesday commits the company to donating cloud services and training, and investing in low-cost Internet access projects. Microsoft plans to invest in 20 projects, in at least 15 countries, by mid-2017.

“We put these three things together (because) we see this as a major way to ensure the cloud serves the broadest array of public needs,” Smith said.