Purpose Mindset

How Microsoft Inspires Employees and Alumni to Change the World

Akhtar Badshah

• Publisher: HarperCollins Leadership
• Year: 2020
• eBook ISBN: 9781401603694
• Topic: Social Sciences
• Subtopic: Nonprofit Organizations & Charities
• Index: Social Sciences

Learn the innovative strategies Microsoft pioneered that created a virtuous cycle of giving and volunteerism that has benefited the company and fulfilled its employees while making the world a better place.

Early on in the Microsoft story, Bill Gates and other key executives met to decide how they would incentivize employees to make a charitable impact. The status quo was to offer a small percentage of your paycheck as a pretax deduction to a charity selected by your company. Microsoft decided to so something revolutionary instead.

The Purpose Mindset tells the inside story behind how Microsoft built its culture of giving, including powerful stories from Microsoft alumni who were in the room when these decisions were made or who went on to make powerful change in the world, emboldened by their time at Microsoft.

Throughout these pages, alumni such as author Akhtar Badshah, the head of Microsoft’s Philanthropy program from 2004-2014, take you through the first-of-its-kind decisions that have empowered and incentivized employees:

• Hear the first-hand accounts from interviews with Microsoft executives such as Jeff and Tricia Raikes, Patrick Awuah, Paul Maritz, and many others.
• Learn how Microsoft’s early decision to encourage employees to support causes personal to them was a key impetus to multiplying the impact.
• Get insider accounts on the key decisions Microsoft has made along its journey to make individual philanthropy a core element of their culture.
• See how its culture of giving is one of the key elements to Microsoft’s success in attracting and retaining top talent.

The Purpose Mindset examines how this culture of giving that has been successful at Microsoft regarding job satisfaction, recruiting, and employee retention can be duplicated in your own work life, whether you are a business leader or you are seeking employment at a company that contributes to something greater than themselves.

CHAPTER ONE

The Great Giving Machine

Entrepreneurs have a singular focus—create a great company and make sure the company survives, thrives, and grows. Philanthropy and giving back to the community are not necessarily a priority when the company is young and still on its growth trajectory—especially not in the 1980s. That’s why it’s important to delve into how Microsoft launched an employee giving campaign that has continued to grow itself and its impact around the world. This book and this chapter focus on how a young technology company established its employee giving and corporate philanthropy program in the early- to mid-1980s, which has subsequently grown into this “great giving machine” over the past thirty-five years.

On a cold December morning in 2017, I interviewed Bill Neukom at the Four Seasons Hotel in Seattle for his insights on how and why Microsoft decided to invest in the community and launch the employee giving and matching program. As the head of Microsoft’s philanthropy program from 2004 to 2014, I had a good sense of the program and its impact in the community, in Seattle and around the world. I was curious, however, about the program’s genesis.

This genesis can be traced to Neukom’s journey to becoming Microsoft’s chief legal officer. He was born into a comfortable middle-class family; his father led the West Coast and Asia practice for a leading business consulting firm. Though his father led a busy life, he served the community and chaired the United Way of California board for several years. Neukom’s mother was active with Planned Parenthood and other local advocacy organizations that worked on social justice issues. According to Neukom, “It was their intellectual curiosity and agility that caused them to think more broadly and invest time in the community.”

Neukom graduated from Stanford Law School and then clerked for the King County superior court in Seattle between 1967 and 1968. He then joined MacDonald Hoague & Bayless, an unconventional law firm focusing on civil rights and immigration law. The firm represented many minority organizations, such as the Urban League and the Neighborhood House. “My workplace became [a] sort of a laboratory for involvement in the community because we were very much the community’s lawyers,” he says. “We did not have many business clients, certainly no public companies, and it wasn’t that we wouldn’t have been happy to do that. But our clientele were largely individuals, community organizations, and small businesses.”

Neukom’s relationship with Bill Gates Sr. began through bar association activities. Bill Gates Sr. was the head of the King County Bar Association, and Neukom was the head of the young lawyers in King County. During the ’60s and ’70s, with the backdrops of the Civil Rights Movement and the Vietnam War, many younger lawyers felt newfound responsibility to become politically active and to give back to their communities.

A seminal moment for Neukom was when Bill Gates Sr. stood up to the opposition from established members of the bar association to start a law school scholarship for minorities. According to Neukom, “This must have been [the] early ’80s, late ’70s. There was no such scholarship out there, and it was something like $5,000 or $10,000. We had the money from dues, and the board exercising its fiduciary duty decided this would be a good use of that money. Some people didn’t like it. Some members called [for] a special meeting of the King County Bar [to] be convened at the Washington Athletic Club. With his image and his law firm’s reputation at stake, he stood tall in front of the members and faced them down. We prevailed in a vote, and to this day the King County Bar is continuing to invest its membership dues in this scholarship. Talk about a profile in courage.” He continues, “So I came to Microsoft with the belief that the company could do some good. Part of it was because of seeing law firms do good, part was my family exposure, and part of it was just that the more I looked around, the more it seemed to me that businesses could be agents of reform in a positive way.”

Still part of Shidler, McBroom, Gates, and Lucas (Bill Gates Sr.’s firm), Neukom did legal work for Microsoft when the company had just twelve employees. He joined Microsoft as its first general counsel in 1985 and was with the company until 2002. He was instrumental in developing the ethos of giving at Microsoft from its early days and instituting the culture that turned giving into a way of life.

The Moment—for the Great Giving Machine

In his book Showing Up for Life, Bill Gates Sr. eloquently describes his ethos: “I show up because I care about a cause. Or because I care about the person who asked me to show up. And maybe sometimes I show up because it irritates me when other people don’t show up.”¹ When Bill Neukom showed up at Microsoft in 1985, he made two critical decisions that have since impacted millions of lives over the last thirty-five years and have been instrumental in creating a program that has inspired thousands of employees to become engaged deeply into their communities. The first was the creation of the Community Affairs Department as part of the legal group that would focus on the company’s philanthropic efforts, and second was the introduction of the employee giving charitable match for every full-time employee in the United States. These two decisions were the moment that enabled many Microsoft employees to not only activate their generosity but become inspired to create their own movements as changemakers.

Neukom persuaded Bill Gates and Jon Shirley (then president of Microsoft) that the legal department should also include three other disciplines—Government Affairs, Industry Affairs, and Community Affairs. Neukom thought Community Affairs was important because he was convinced the business community could play an important role in advancing community causes and that Microsoft should be a part of that.

In 1985, when Neukom joined the company, the workforce was very young. They worked extremely long hours fulfilling the company’s mission of a computer on every desk and every home. They did not have the time to focus on anything else. The challenge was to involve this young workforce to care about the community. For Neukom, this was a perfect opportunity, creating an employee giving program that was both fun and educational. Over time, as the employees matured and established roots in the community, the program also grew and matured.

Community Affairs has two major responsibilities: guiding the company’s direct investment into the community and guiding an employee program to encourage philanthropy. On the employee philanthropy front, the first employee giving effort was launched in 1983 with the United Way at the urging of Bill Gates’s mother, Mary Gates, who was deeply involved with the local and national United Way. She encouraged her son to start an employee payroll-deduction effort so that employees could donate to the United Way and have their donation get deducted bimonthly from their paychecks. With an initial thousand-dollar match, this effort raised $17,000. According to Brad Smith, Microsoft’s president and chief legal officer, “I think that in the early years it was perceived in part as simply an employee benefit. And you know this was at a time when companies were not trying to provide free food for everybody in cafeterias and free laundry service and other things that they could generally afford themselves. A free matching gift was something that people might value, and sure enough they did.”

After Neukom established the giving effort within Community Affairs, he convinced Bill Gates and John Shirley to increase the match to $10,000; in 1990, the match was expanded to any registered nonprofit of the employee’s choice. It is an astounding figure for 1985 and would lead to amazing results. Microsoft’s evolving employee giving program has generated over $1.8 billion in total, affected tens of thousands of nonprofits every year, and redefined how purpose and empathy can be harmonized with careers and the instinct to do good for the community. Gates felt that it was important to set a high ceiling to encourage giving. He was somewhat disappointed that in the early years “people did take advantage of the match but not as much as I thought they would.” The match was the key where you could double your money to the community. “In the early days, employees were donating to their alma mater, and then eventually certain environmental causes caught on as well and some local causes including Planned Parenthood that did pretty well,” he says. In the early nineties, Gates had this realization: “Well, should I really build the company for all this giving?” Fortunately, the employee giving program had established deep enough roots and had become part of the company culture, and the program continued to grow and extend that benefit to thousands of nonprofits.

For Gates, United Way King County was central to the employee giving campaign. With his family’s rich history with it, he felt United Way opened up opportunities for employees to get connected to their communities and get a better perspective of the needs. “In a technology company, you are hiring people from a global marketplace, and many come from outside the United States,” he says. “These employees have had no exposure to charitable giving, and even if they come from other parts of the US, they don’t know the agencies in Seattle, they have not been to a food bank or homeless shelter, so it is an unnatural match.” United Way served a purpose to connect the dots for the employees.

Corporate Matching Gift Programs

Corporate philanthropy has a long history in the United States. Since the seventeenth century, business leaders have donated to social causes. Such gifts were made by individuals, however, as there were legal restrictions that prevented companies from meddling in social affairs. It was only in the mid-1950s, after a series of legal decisions, that the last of these barriers fell, and companies started to develop employee giving and corporate giving programs.² General Electric established the first corporate employee matching gift program in 1954. Since that point, GE has matched over $1.07 billion in donations to nonprofits. Last year alone, the GE match was $39 million. In the Tech Sector, Apple introduced its $10,000 per year employee match in 2011 when Tim Cook became CEO. Apple raised more than $50 million in 2014 when it expanded the program to all the countries in which it has a presence. In 2018, Apple’s employee giving program topped $125 million.³ These programs are not limited to the tech sector. Pepsi offers to match gifts up to $10,000 per year per employee, and it matches at a 2:1 ratio if the employee volunteers more than fifty hours with a single organization. Johnson & Johnson matches up to $20,000 per year at a 2:1 ratio for full-time employees and at 1:1 for part-time employees and retirees. Soros Fund Management has one of the most generous programs, matching donations of up to $100,000 at a 3:1 ratio. Some companies have more creative matching programs. For example, Nestle gives employees two extra days of personal time off if they donate a full day’s pay to a nonprofit, and the company will also match that donation. While many companies offer generous matching programs, other large companies like Amazon and Facebook were late to launch their employee matching programs.⁴

Priming the Giving Machine

By the time I joined Microsoft in 2004 to head Community Affairs, four additional important decisions had been made that would further fuel the “great giving machine.” In 2002, Pamela Passman was appointed as the corporate vice president for corporate affairs in the law and corporate affairs group. She made three decisions. First, she convinced then CEO Steve Ballmer that the employee giving budget should be budgeted as an employee benefit within human resources rather than part of the philanthropic budget. She argued that as the employee base grew and the popularity of the employee giving campaign grew, the philanthropic budget was under constant pressure. Making the giving program an HR benefit would free up Community Affairs funds for ongoing community-based projects. More importantly, by moving the budget within HR it would ensure its permanency and be treated similarly to other employee benefits. According to Passman, “This was the fastest decision that I had seen Steve make. It showed that, at the highest level, leadership was committed to support employees to follow their passions.”

The second decision, also in 2002, was to discontinue processing employee donations through United Way. Even though employees could donate to any eligible US-based 501(c)(3) nonprofit organization in the late 1990s, the money was still processed by United Way and employees paid a pass-through fee. Employees expected their entire donation to go directly to the nonprofit of their choice and not to have to pay this fee. This decision meant that Microsoft started picking up the processing fees. The company was increasing its financial participation in the giving program and increasing employee trust that their donations were having maximal impact.

The third major decision was to extend the employee match to a year-round match. This meant that employees did not have to wait until October to donate and have their donations matched. Now, employees could plan their donations based on their financial cycles and respond to the needs of the nonprofits they supported. Emergencies do not wait, and employees wanted to respond and have their match sent right away. I remember in 2001, when the Gujarat earthquake struck on January 26, many in the Indian community got mobilized to raise funds to support the victims and recovery effort. My wife, Alka Badshah, was then at Microsoft coordinating the effort there. She had to get special permission from Community Affairs for the donations to be matched immediately and not have to wait till October. This experience was still fresh when Passman joined in 2002, and she got the leadership to agree to extend the employee match to a year-round match.

Bill Gates, in his 1997 memo launching the employee giving campaign for that year, increased the employee match from $10,000 to $12,000. It remained at that level till 2013, when it was increased to $15,000, where it now stands.

A Month of Madness

October is Giving Campaign Month at Microsoft. Employee-driven groups create fundraising campaigns; volunteer at events; hold bake sales; create cat and dog calendars; and create and sell employee cookbooks and photography books. They become involved in a 5K race, a car show, golf tournaments, and an auction. In the past, Bill Gates offered dinner at his house, which he enjoyed hosting. “It was a nice kind of personal thing that you can’t buy anywhere else; so, people paid a lot of money and not feel they had overpaid,” says Gates. Steve Ballmer hosted a pickup basketball game. Both Gates and Ballmer were the top auction items. The auction alone last year raised more than $2.3 million.

Gates remembers the various events that made the month of October exciting, including the dunking tank where senior executives would sit over a tank of water and employees would throw baseballs to dunk them. “It was all about making events relevant to employees and fun,” he says. According to Brad Smith, “It’s like the equivalent of . . . the fall football season or the spring parties on university campuses.” It brings employees from different parts of the company together and helps develop the culture of the company.

For Gates, the payroll deduction was a big factor in driving increased participation and giving. “It’s a heck of a tactic; it didn’t feel as large of a gift, you know, a per paycheck kind of a thing.” He was wistful that payroll deduction did not catch on in other technology companies as it did at Microsoft.

Kevin Espirito joined Microsoft in his midtwenties in 2000 after being a vendor for the company for a year. At his first one-on-one meeting with his manager, he was excited to share his four written pages of genius—the perfect strategy and plan for his project. His manager cut him off after the first few sentences. His ideas were great, the manager said, but the first one-on-one meeting was about what Microsoft does for the community, about the employee giving program, and identifying what Espirito was passionate about and how the company would support him in that giving. Initially, Es...

Table of contents

• Cover
• Title Page
• Copyright
• Contents
• Foreword
• Acknowledgments
• Introduction
• 1. The Great Giving Machine
• 2. The Origin Story
• 3. The Great Escape
• 4. Extending the Common Good
• 5. Climbing the Second Mountain
• 6. The Most Good You Can Do
• 7. Purpose Mindset
• Endnotes
• Index
• About the Author
• About the Microsoft Alumni Network Series