On giving 1%

Recently I attended the keynote session of "Dreamforce," the annual cloud-computing conference put on by Salesforce.com. Salesforce is a multi-billion dollar corporation, and the conference, held at the Moscone center, is apparently second only to Oracle's annual shindig (or so a seemingly in-the-know cabbie told me). Regardless of who's the biggest, Dreamforce is undoubtedly impressive; they pull out all the stops. This year's musical guest was Stevie Wonder, followed by a Will.i.am-dj'ed after-party. The keynote speaker was none other than Bill Clinton, which prompted me to register (free of charge) for the event. Bill gave a rather stock speech, emphasizing the role of Salesforce.com's software in various projects of the Clinton Global Initiative. More interestingly, however, was Clinton's argument that the principles of business and charity need not be exclusive. This, as I learned from Salesforce CEO Marc Benioff's introductory speech has become somewhat of a cause célèbre among the business world. Benioff has pioneered the "1/1/1" model of corporate charity. On this model, Salesforce devotes one percent of its revenue, equity, and employee hours, respectively, to charitable causes (organized by their philanthropic arm, the Salesforce Foundation). This model of Compassionate Capitalism has been adopted by other companies, namely Google. While one percent may not sound very substantial, when the scale is in the hundreds of millions and even billions, we are talking about a lot of money here. As I sat there, observing the suits fawn over Benioff's magnificence, I felt the philospher's skepticism start to take hold of me. I thought of a question for Benioff, which could be phrased two ways:
Highfalutin jargon version of my question: "Mr. Benioff, how does a company of Saleforce's stature establish rational parameters for charitable giving when formulating a business model?"
Or, in other words: "So Marc, why not two percent?"
After bringing this up at dinner later, I was all but reprimanded for my naive, ungracious inquiry. Attempting to rephrase my question, I thought it would perhaps be better formulated: "Okay, on what grounds did you decide upon one percent?" Or in still other words: "What are your reasons for choosing one percent?" I had to emphasize that I was not trying to be cynical, and that I was perfectly open to there being valid reasons for choosing 1%, as opposed to 2%, or even, say, 1.5%. I simply was curious as to why this number was chosen. Was this a decision made by the PR department? Was it made purely on the basis of evaluating what other companies gave and merely giving the bare minimum more than them? Were there aesthetic reasons involved? Does 1% just sound "snappier" than most other numbers? What would happen if they did give 2%? Would the company cease to be profitable? Would shareholders flee thus devaluing the company and making 2% an actually smaller amount? I simply wished to know the reasoning behind this decision. Seeking such reasoning, as I have found in this area and others, is rarely a popular activity.
In the ensuing weeks I began to be won over by Benioff's 1/1/1 idea. There seems to be a movement gathering around the idea that businesses ought to conduct themselves (a bit) more like charities, and that charities ought to conduct themselves (a lot) more like businesses. For those who oppose the principles of the welfare state, yet recognize the need for a safety-net, this marriage of capitalism and charity isn't unholy at all. For sure, businesses must remain committed to profit, for that is their core mission. In fact, were they to compromise this mission, they would compromise their very ability to be charitable at all. Charities on the other hand, are held back by their non-profit status. How can we really be serious about charity if we can't employ business principles for the sake of charity? Or so the reasoning goes.
Another argument that was appealing to me was the idea that one percent is a perfectly acceptable amount of annual income for an individual to give to charity. Peter Singer has argued that this minimal amount is an attractive way to get more people to open their wallets (although he typically champions giving much greater amounts). Furthermore, we can think of corporations as individuals (as the law does), or better yet, as collections of individuals jointly consenting to the 1/1/1 model by working for a company like Salesforce rather than taking their talents elsewhere, perhaps for a bigger bonus.
One final consideration that I will conclude with comes from Aristotle's Nicomachean Ethics. For Aristotle, the virtue of magnificence is similar to generosity, but concerns only those of large means. The magnificent give the right amount to the right parties at the right time, all the while being sure to retain enough of their wealth to continue being magnificent in the future. Giving away too much, as Aristotle pointed out so long ago, ends up being counterproductive since one will quickly exhaust his resources and cease to be able to give anything at all.


  1. Those a good questions in re: the seemingly arbitrary rational parameters for charitable giving. Did you receive any cogent answer whatsoever, or have a sense as to why that number was chosen?

  2. I have heard a pretty sustained chorus to the tune of "one percent" being very "marketable," i.e., it has a nice ring to it--this is Singer's point in the first of his articles that I link. He basically says: "Look, I've been saying for years that individuals ought to give much more than one percent; but if the one percent idea catches on like a meme and it ends up causing a lot more benefit than just a small collection of individuals giving, say, ten percent, then its a good idea." Presumably, in Benioff's book "Compassionate Capitalism" (also linked above), he provides case studies and a more rigorous analysis of the numbers. But I haven't read it. Like I said, I'm open to it actually being a wise choice for accounting reasons, other than its marketable ring, but I suspect the marketability of it is the primary rationale. Afterall, we all know something has to be marketable to catch on--because we all know about the essence of the market!