The €29 million Bill Gates gave to Concern this week will put only the most minuscule dent in his fortunes. The billion dollar question remains – as it does for his fellow mega-rich philanthropists – what to do with all that money
CONCERN Worldwide’s chief executive Tom Arnold expressed delight – and a touch of anxiety – this week when the Bill Melinda Gates Foundation announced a grant of €29 million to the charity to support child health initiatives in six developing countries.
Arnold saw the grant – the biggest individual sum Concern has ever received – as a tribute to his organisation’s track record in developing innovative responses to the effects of poverty. He was eager, however, to stress that Concern still depends on the generosity of the general public to carry out its work throughout the world.
“We’ve been trying to make the point that this grant from Gates is for a very specific purpose – maternal and child health – for a specific number of countries; six. And we’re working in 28 countries,” says Arnold, who is also a governor of The Irish Times Trust.
“The money they will be providing to us over the next five years represents less than 5 per cent of our budget. So we still need the resources to implement the other 95 per cent.” If this week’s grant represents a small proportion of Concern’s budget, it’s a tiny fraction of the $3.5 billion the Gates Foundation expects to spend this year. Since it was set up by Microsoft founder Bill Gates and his wife Melinda a decade ago, the foundation has dispersed more than $20 billion in grants to improve health and combat poverty around the world and enhance educational opportunities in the US.
Three years ago, Warren Buffett – the second richest man in the US, after Gates – joined forces with the foundation, and has contributed more than $5 billion since then, with the promise of five times as much in the future.
Gates and Buffett, each of whom have a personal fortune estimated at more than $50 billion, expect to give away most of their money during their lifetimes.
“You know, in many people’s cases, they decide they want to pass most of their wealth on to their children, and that’s a perfectly legitimate choice,” Gates told a television interviewer in 1998. “In my case, I think it’s better for society and better for my children if the vast bulk of the wealth that I’m lucky enough to be shepherding at this point, if that goes back to causes that are important, things like access to technology, education, medical research, social services and a variety of things.”
Born into a comfortable Seattle family in 1955 – his father was a successful lawyer and his mother a bank director – Gates discovered a talent for computer programming while still a teenager and dropped out of Harvard to write software fulltime.
He formed Microsoft with Paul Allen in 1975 and the company made its breakthrough five years later when it provided the operating system for IBM computers.
Throughout the 1980s and 1990s, Microsoft aggressively pursued a dominant position in the software market, attracting the attention of anti-trust regulators both in the US and Europe. The EU has ordered Microsoft to pay more than €1 billion in fines for breaching competition law and ignoring court rulings.
Gates gave up the day-to-day running of Microsoft a month ago, but Paul Schervish, who heads Boston College’s Centre on Wealth and Philanthropy, believes he and Buffett have applied the same market principles that made them successful in business to their philanthropic work.
“They’re oriented to pay attention to need. That’s how they invested their money and Bill Gates built his company. Philanthropy is a direct paying attention to need rather than an indirect one. The indirect one is that Microsoft will pay attention to people’s needs to the extent that buyers of their goods express their needs and reinforce the decisions of Microsoft through the medium of expenditures which are of benefit to the company,” Schervish says. “Philanthropy pays attention to needs but not because you are interested in the medium through which the needs are expressed – dollars, for instance.”
GATES AND BUFFETT are not unique in wanting to give away most of their money while they’re alive. Ireland has benefited greatly from the ambition of duty-free magnate Chuck Feeney – whose story Conor O’Clery told in his book The Billionaire Who Wasn’t – to secretly distribute his entire fortune to worthy causes.
Part of what makes the Gates Foundation unique is its sheer scale as the largest individual philanthropic enterprise in history, giving it what Schervish describes as the power of hyper-agency.
“A hyper-agent is an individual that is able to do relatively single-handedly what it takes coalitions to do otherwise. The Gates Foundation can do things relatively single-handedly and can create coalitions and it can set new directions,” he says. “Having such great resources provides an extraordinary capacity for meeting the true needs of people across the world. When it sets a direction that isn’t carried out well or isn’t aware of all the consequences or sets off unintended consequences, its impact is large there also.”
When Gates speaks about the foundation’s work, he stresses his belief in the central role of innovation in addressing global problems. The grant awarded to Concern this week is to generate and test ideas for reducing mortality and poor health among mothers and children.
Over the next few months, Concern will issue a call for ideas from health professionals, universities and the private sector, testing the most promising proposals for up to two years. The most effective ideas will then receive sufficient funding to bring them to scale.
In the scale of his philanthropy, Gates’s closest historical counterpart is Andrew Carnegie, the 19th-century steel magnate who gave away almost all his money to fund educational and scientific institutions and to promote world peace. Like Gates, Carnegie was widely criticised for sharp business practices but his legacy as a philanthropist has all but obscured his career as the world’s largest steel producer.
For Schervish, there is no mystery as to why rich men such as Gates, Buffett and Carnegie turn to philanthropy. It is, he says, what any of us would do if we had the chance.
“You’re paying attention to needs simply because they are human beings in need. And you pay attention to the vocal or to the silent entreaty. Now, the great thing about that is that it’s one of the most enjoyable aspects of being a human being. It’s the key to what brings enjoyment to parents, the ability to provide nourishment to their children without expecting to pay attention to the medium by which their children are expressing their needs. They don’t say to their children: ‘show me the money’,” he says.
“I think each of us, if we could put ourselves in the position of having a billion dollars or a couple of hundred million, we would be enjoying and looking for opportunities to spend that money for the care of other people because it is one of the most familiar, consistent and nourishing human activities.”
Foundation Facts
History:Based in Seattle, Washington, the foundation is led by Bill Gates' father, William H Gates Sr and Patty Stonesifer (a former vice president at Microsoft). The current foundation was formed in January 2000 by merging the Gates Learning Foundation and the William H Gates Foundation, both earlier charities set up by Bill Gates. Currently employs 760 people.
Current endowmentThe foundation has a $27.5 billion endowment and as a condition of its status as a charity, must spend at least 5% of its assets each year. Expected spending in 2009 is $3.5 billion
Grant commitments to date$20.1 billion, about 60 per cent of which goes towards public health issues, about the same as what the World Health Organisation (WHO) spends.
ReachOperates in 100 countries, and funds charities including The Global Alliance for Vaccines and Immunization, The Institute for OneWorld Health, Indian Ocean Earthquake, Children's Vaccine Program Access to Learning Award, Gates Cambridge Scholarships University Scholars Program.