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by Jim Lobe

Does Gates Foundation Deserve Good Press? (2002)

(IPS) WASHINGTON -- With the decision by mega-investor Warren Buffett to contribute some $31 billion of his personal fortune, the Bill & Melinda Gates Foundation, already a major player on the global health scene, is set to become even more powerful.

Buffett's contribution, which will be doled out in annual increments beginning with $1.5 billion this year, will bring the foundation's total endowment to some $60 billion, nearly five times the size of the next largest U.S. charity, the Ford Foundation.

That total is greater than the 2004 gross domestic product (GDP) of all but 53 countries, according to the World Bank, or the total official development assistance (ODA) provided by the European Union and its member states to poor countries and multilateral agencies last year.

The foundation, which in 2005 disbursed almost $1.4 billion from its $30 billion endowment, is expected to at least double its annual giving to some three billion dollars, which is twice the annual budget of the Geneva-based World Health Organization (WHO) with which it has established close working relations in recent years.

The foundation's donations to global health programs came to about $850 million last year. In addition, it provided nearly 300 million to education projects, most of them designed to promote schools and scholarships for poor and minority youth in the United States.

Since its creation in 1995, the foundation, whose current staff totals less than 300 but is expected to grow to 500 over the next two years, has approved a total of about $10 billion in grants, some 60 percent of which has been devoted to global health and most of the rest to education.

Of the health grants, nearly two billion dollars have gone to child immunization programs, and much of the rest to fighting what the Gates refer to as "the Big Three Diseases" -- HIV/AIDS, malaria and tuberculosis.

The foundation has given hundreds of millions of dollars to fund efforts to develop vaccines for malaria and HIV/AIDS, in particular, helping to create in the process "public-private" enterprises, such as the Malaria Vaccine Initiative (MVI), that offer financial incentives for western pharmaceutical companies to invest in research & development (R&D) that would otherwise not be profitable.

The Seattle-based foundation has recently shown interest in two other areas that are poized to benefit from Buffett's largesse -- micro-lending and agricultural research in developing countries, particularly in Africa, which has long been a major focus of the Gates couple's philanthropic work.

"If you go watch the people standing in line in Zambia who are getting treated for tuberculosis, they can hardly swallow their medication if they can't at least have a banana to go with it or some water," Melinda Gates said Monday at an invitation-only conference at the New York Public Library where she appeared with her husband and Buffett.

Buffett's announcement came just two weeks after Bill Gates announced that he intended to phase out of his operational duties as chief of Microsoft, the software company that made him the world's richest man, over the next two years in order to devote himself full-time to the foundation's work.

Buffett, the world's second wealthiest man, will join Gates and his wife as the foundation's trustees, although he insisted Monday that he, unlike the Gateses, does not intend to get very involved in its operations.

"They'll spend more time and energy on it," Buffett, 75, told the New York conference. "I wouldn't want to listen to as many people with as many different opinions as they do."

"(I)f your goal is to return the money to society by attacking truly major problems that don't have a commensurate funding base -- what could you find that's better than turning to a couple of people who are young, who are ungodly bright, whose ideas have been proven, who already have shown an ability to scale it up and do it right?" he told Fortune magazine.

Buffett, who turned an initial investment of $105,000 some 50 years ago into a 44-billion-dollar fortune, has been close to Bill Gates, who just turned 50, since they first met in the early 1990s. The latter said Monday that Buffett helped convince him to devote the major portion of his fortune, now estimated at more than 50 billion dollars, to philanthropy.

The creation of the Gates foundation was greeted by considerable skepticism among many analysts who wondered whether it was motivated primarily to counter growing criticism of Microsoft's often-controversial business practices. But as it has become an ever more important player in global health, the skepticism has largely subsided.

Buffett also developed a relationship with Bill Gates' father, William Gates Sr., a prominent Seattle attorney who has co-chaired the foundation since its inception.

The two older men, for example, have led a public campaign to persuade the Republican-dominated Congress -- so far unsuccessfully -- against repealing the federal estate tax on the wealthiest citizens, arguing that doing so, in Gates' words, "would enrich the heirs of America's millionaires and billionaires while hurting families who struggle to make ends meet."

Buffett's decision was hailed by global health advocates around the world. "The community of global health practitioners and activists sees this as a historic world-changing moment," said Dr. Nils Daulaire, president of the Global Health Council (GHC) here.

"The combined philanthropy of Warren Buffett's donation and the Bill and Melinda Gates Foundation is absolutely unprecedented, and makes them the pace-setter for all governments and charitable foundations across the globe," he added.

"This is the magnitude and type of resources devoted to global health problems that we've never before seen," said Ruth Levine, a public health expert at the Center for Global Development (CGD) here. "It is flexible money, (and) it has a long time horizon -- much longer than most (government) development agencies have."

At the same time, she cautioned that there were potential downsides as well, most notably the possibility that its own agenda could dominate the global health agenda to the detriment of other possible priorities.

"The center of gravity will shift to what the foundation's priorities are, and that puts an enormous responsibility on them," she said, noting that the foundation remains "more of a family foundation" in which just a small handful of people make key decisions, in contrast to traditional foundations with boards made up "prestigious individuals known for their integrity and broad expertise and experience."

Another potential downside is that the public sector -- both donor governments and host governments -- will treat the additional money and resources provided by the foundation as a substitute for their own, rather than as supplemental support for what they should be providing themselves.

"So you won't necessarily get a net increase in support for global-health programs," she told IPS. "This has not been a concern so far because the foundation has tried to be very disciplined about not investing in areas that are squarely the responsibility of the public sector, but rather in R&D that is not the daily business of government," she added.

Gates Sr. has himself expressed strong concern that the public sector in the U.S. is encouraging private philanthropies to fund activities that should be the responsibility of government. In 2004, he helped form a Seattle-based group of mainly liberal Republicans, the Initiative for Global Development, that has called on the Bush administration and Congress to more than double U.S. development assistance.

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Albion Monitor   June 27, 2006   (

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