The $33 billion philanthropist

FRIDAY INTERVIEW:As chief executive of the Bill and Melinda Gates Foundation, Jeff Raikes runs a complex, highly visible and scrutinised organisation with a truly mind-boggling asset trust endowment

JEFF RAIKES’ notion of retirement is a bit different from the norm. When the former president of Microsoft’s business division stepped down from his role in 2008 after almost three decades with the company, it wasn’t to take up watercolour classes, travel or catch up on reading. Instead, he barely paused for breath before stepping into the biggest job in philanthropy: chief executive of the Bill and Melinda Gates Foundation.

Granted, he did go from overseeing 17,000 employees to a comparatively modest 1,000. But as head of what is, arguably, the world’s most powerful, and certainly the best endowed, charitable foundation, he took on a challenging task running a complex, highly visible and scrutinised organisation with an asset trust endowment of a mind-boggling $33.5 billion. That’s almost three times bigger than the next largest philanthropical organisation, the Ford Foundation.

Visiting Ireland recently to give Philanthropy Ireland’s annual Ray Murphy lecture in Belfast, Raikes says in an interview that running the Gates Foundation is certainly far from what he thought he’d be doing after growing up on the family farm in Nebraska.

But, he says, “One of my great values that my father intuited, and indirectly taught me, is that you should always have a plan, but be open to opportunity”.

After graduating from Stanford University with an engineering and agricultural economics degree, he assumed he would work in agriculture policy. But he bought an Apple II computer for his brother to help him run the family farm, found himself obsessed with it instead, “and the next thing I knew, I was working for Apple”.

He wasn’t there long before Microsoft lured him away in 1981 to work on that young company’s applications marketing strategy. Raikes says he ended up having “a tremendously fun and challenging career” as Microsoft grew to be one of the world’s biggest companies. “So I’ve kind of learned that there are these twists and turns [in life],” he says.

At Microsoft, the final twist took him into one of the company’s most prominent and influential positions. “In early 2000, Bill [Gates] and Steve [Ballmer] asked me to take on the leadership of the business division.”

While in that role, he tackled the task of revitalising the company’s Office suite of productivity software.

“I thought Office had plenty of life in it yet, and I spent 2000 to 2007 focusing on really driving that. I thought we could double the business in 10 years – and we did it in seven.”

He retired from Microsoft in 2008, and wasn’t initially sure of what he might do next.

“I thought I might work with my brother. I thought I might teach in a business school. I thought I might get involved in philanthropy.” Then the Gates Foundation leadership role suddenly opened up.

It wasn’t exactly a low-key position for a retiree? “Exactly! As Melinda said to me in one interview: ‘This is no retirement job.’ But I probably don’t really come from a retirement family,” he laughs.

“My dad worked on the family farm until he was 71, and he then continued working on other things. My grandfather was, at one point, the oldest taxi driver in LA. I knew I’d be very busy doing a number of things.”

The breadth and scope of the Gates Foundation certainly offers any number of things, but he also is busy with his own philanthropical Raikes Foundation.

“I’m a person who enjoys the hands-on experience of anything I do. Get your hands dirty – that’s the thing that drives and motivates me,” he says.

“The Raikes Foundation gives the opportunity to be very hands-on, as does the Gates Foundation. One of the challenges at the Gates foundation is, we have more than 25 different strategic areas.”

His personal interests in the Gates Foundation include almost anything on the agriculture front, given his own upbringing, and he’s also worked closely with the team focused on eradicating polio. But he says it is hard to identify any single area as his favourite.

“At Microsoft, people often would ask me what was my favourite product. And I’d ask them if they have kids, and if they did, which one do you love the most? Well, at the Gates Foundation, I have more than 25 kids, and I love them all.”

He says his experience in business, especially in the high-growth, high-tech sector, is extremely useful in running the foundation.

“There’s a lot of good things that get done, but philanthropy could be a lot better. I’m trying to bring the benefits of those [Microsoft] experiences to the Gates Foundation.”

When he stepped into the job, his first goal was to identify what precisely needed to be done in an organisation that had tripled in size in the previous three years.

“With that kind of growth, came ineffective infrastructure, processes, and human resource issues. Those were the things that I immediately identified. And there were some cultural aspects that needed to be changed,” he says.

“In business, there’s a constant focus on developing strategies, reviewing executive performance against those strategies each year, engaging with opposing or different points of view, and having intellectual dialogue,” he says, all things he wanted to bring to the Gates Foundation.

Does running the Gates Foundation provide a great contrast to running the Raikes Foundation?

“There are obvious differences, but there are similarities as well. The juxtaposition of the two can be helpful. The size and scale of the Gates Foundation can seem so large that people miss seeing the challenges we’re working on. And the lessons we learn [at the Gates Foundation] can help shape our philanthropy [at the Raikes Foundation].”

The Raikes Foundation, co-founded by Raikes and his wife Tricia, has been in existence for more than a decade, but Raikes says: “Our journey into philanthropy began a long time ago. It really starts when you’re growing up and your parents instill into you certain values. A farm in Nebraska, and going to school in a small community, shape my own sense of giving back to community.”

Raikes says he and his wife were also very influenced by Bill Gates’ mother, Mary Gates, an active philanthropist in her own community.

“She got us, and particularly Tricia, involved in philanthropy, especially the Boys and Girls Clubs in the immediate Seattle area.”

He also says he was inspired by Warren Buffett, who once said that he wanted his kids to have enough money that they can do anything, but not enough that they can do nothing.

“And also, I was thinking about how to take the wealth from Microsoft – I see us as temporary stewards of that wealth – and invest it back into the community.”

He says they initially chose “some of the safer aspects of philanthropy” – for example, he gave funds to his alma mater, Stanford University – “but eventually, we wanted to put funds back into society”.

They chose to focus on children between 10-14. Why? “Well, we knew of a girl who suffered in middle school, and we knew how that shaped her thinking. That experience helped shape our view of early adolescence.”

The girl in question was his eldest daughter, he says.

“We know the challenge that kids, especially girls, go through in middle school. Also, it was an area that’s less funded, and less focused on – transitions and early adolescence.”

Those years are a particularly formative time for young adults, he says, and a child’s academic performance at that point – or lack of it – prepares them for life, for better or worse. He believes therefore that working to help kids at this pivotal juncture has a higher lifetime payoff.

He describes the charity as being in its “research and early development phase, where we’ve made grants to places like Stanford, and the Consortium on Chicago School Research.

“But we’re also getting some on-the-ground experience, for example in programme development, and working with school districts on transition. We have our fingers in a few pies as we triangulate around what would be the most effective strategic approach.”

His foundation is also actively making grants, mostly in Seattle, he says.

So now, rather unexpectedly, he leads a very busy life that revolves around philanthropy, at both an intimate and world stage level.

While his own foundation seems to provide anchoring and rewarding personal ballast, Raikes clearly relishes having taken on the Gates Foundation leadership role “as a prime time focus – as opposed to my last act,” he says, laughing.

“I want to try and use my experience in ways that will bring a very broad contribution. If I can do that, it would be incredibly satisfying.”

Name: Jeff Raikes

Title: Chief executive of the Bill and Melinda Gates Foundation

Age: 54

Born: Ashland, Nebraska

Family: Married to Tricia McGinnis Raikes, he has three children

Education: Raikes has a Bachelor of Science degree in engineering-economics systems from Stanford University

Career: Raikes expected to go into the area of agricultural policy, but instead ended up working for Apple after buying an Apple II to help his brother on the family farm. He was at Apple for little over a year when Steve Ballmer headhunted him to Microsoft in 1981 to work as a product manager.

He quickly worked his way up the corporation, and was pivotal in developing the Office suite of productivity software for the Macintosh and Windows. He also held positions in North American operations, worldwide sales, marketing and services.

He was promoted to lead Microsoft’s business division in 2000, where he managed a quarter of the company’s 91,000 employees, He was named company vice-president in 2005. When he retired in 2008 after nearly three decades, the only people who had been at Microsoft longer where founders Bill Gates and Steve Ballmer.

He was appointed chief executive of the Bill and Melinda Gates Foundation, the world’s largest philanthropical foundation, in 2008 and also runs the Raikes Foundation, focused on adolescent issues, with his wife Tricia.

Something you might expect:Raikes takes a keen interest in the many agricultural projects funded by the Gates Foundation

Something that might surprise:His grandfather was, at one point, the oldest taxi driver in Los Angeles

THE BILL AND MELINDA GATES FOUNDATION

Founded in 1994 by Microsoft founder Bill Gates and his wife, Melinda, the Bill and Melinda Gates Foundation is the largest transparently operated, philanthropic private foundation in the world.

Funded primarily through Gates’ personal wealth, with additional significant funding coming from investor Warren Buffett, it has an endowment of $33.5 billion.

Bill and Melinda Gates and Warren Buffett are the foundation’s three trustees. Former Microsoft senior executive Jeff Raikes has been the Gates Foundation’s chief executive since 2008.

The foundation has three primary, grant-making programmes, in the areas of global health (which constitutes more than half the foundation’s budget), global development, and its United States programme, which concentrates on literacy and education in the US.

Under those three headings come 25 different strategic focus areas, which aim to take on some of the world’s biggest and most difficult health, development and education problems – particularly, those that damage lives but attract little research or funding because they aren’t financially motivating to the private sector or covered by the public sector.

These include research into HIV, malaria, and tuberculosis – for example, the foundation recently donated $750 million, on top of a previous $650 million, to the charitable Global Fund that tackles these three health problems.

The foundation also focuses on neglected tropical diseases and has launched a $250,000 award to spark innovation in the delivery of vaccines.

In all, the Gates Foundation has donated to programmes in more than 100 countries.

In 2010, the last year for which figures have been released, the foundation made grant payments of $2.6 billion. Since its inception, it has paid out more than $26 billion in grants.

The organisation is not without controversy. Given its size, it wields considerable power and can determine global philanthropic agendas. Some in the charitable sector complain that it is too hands-on in managing how grants are spent by recipients, expecting specific goals to be achieved within a given time frame.

However, others feel the charitable sector benefits from having such clear goals, rather than handing over total discretion to recipient bodies. This more corporate managerial approach Is sometimes termed “philanthropocapitalism”.