Philanthropy With A Business Bent

Under the dome of the Celeste Bartos Forum in the New York Public Library Monday, Warren Buffett signed five commitment letters, one each to the foundations run by his three children, one to the foundation in his late wife's name and one--the big $31 billion one--to the foundation run by his bridge partner and friend of 15 years, Bill Gates, and his wife, Melinda.

At each stroke of his pen, each of the five doubled the size of its endowment as the world's second richest man started the process of turning over 85% of his $44 billion fortune. Even in inflation-adjusted dollars, Buffett will be giving away more money than John D. Rockefeller or Andrew Carnegie. For what must count as one of the most momentous days in philanthropy, it was a remarkably low-key affair.

But that's the Cherry Coke Buffett way. "How often do you give away a billion dollars with a letter starting 'Dear Suse'," he joked to a roomful of foundation pros about the commitment to the foundation run by his daughter Susan.


Most are as hands-on in their philanthropy as they were in their companies. Not so Buffet. He makes no secret of the fact that he is better making money than dispersing it. And he likes to keep things simple, whereas the world's problems are difficult and complex. So he sought out, he says, "the talent to distribute the money" in an "effective manner."

He recognized the quality absent in himself in abundance in Gates. It is hard to escape the conclusion that Buffett, even at 75, still has so much fun managing money that he can't compartmentalize his mind to focus even a corner of it on giving it away.

Not so, we suspect, with Gates, who earlier this month said he would be stepping down from running the company he founded to concentrate on running his and his wife's foundation.

Gates has a polymath's mind that revels in the complexity of the challenges he and his wife have set their foundation to solve--global health and, in the U.S., education. While his wife told their New York Public Library audience that finding an AIDS vaccine was the No. 1 goal for their foundation, Gates, who turns 51 in October, talked of eradicating the 20 leading diseases in his and his wife's lifetime.

Gates is an information sponge. You can almost see him mentally piecing together the necessary parts from the fundamental scientific research to create low-cost delivery systems for the finished vaccine, as if he were designing some monumental piece of Microsoft software.

Gates also has the breadth of mind to join the dots between health and broader societal issues. How do you get a poor person to take a dose of medicine when they are too malnourished to swallow?


Such a business-based approach to social and economic change will increasingly bring foundations into conflict with governments and special interests with their own political agendas--how will Muslim fundamentalists deal with programs that support the economic empowerment of women, say through micro-financing; or Christian fundamentalists with AIDS programs that promote safe-sex measures apart from abstinence?


That day is still a ways off, that of foundation imperialism even further. Even with Buffett's donation, the Gates Foundation's potential spending per poor person worldwide only doubles from 50 cents a year to $1. Its $60 billion endowment--which will throw off, say $5 billion a year in funding, still falls short of the annual amount given in aid by official bodies including the World Bank and rich governments ($106 billion last year).

One counter to that official financial firepower is the increasing cooperation between foundations. Another is by just becoming more efficient and businesslike. Private foundations can sometimes achieve what official aid cannot. Innovativeness, fleetness of foot and a willingness to learn from mistakes and are characteristics of successful business people rather than officials.

Private foundations, for better or worse, are answerable only to themselves. They can tackle issues that interest them rather than what is politically expedient. They do not fall under pressure from taxpayers, lobbyists or voters to yield quick results or to a timetable driven by a domestic electoral cycle.

The World Bank can propose substantially reducing poverty by 2015, and it is laughed off as a bureaucrats' pie in the sky dream. Yet Bill Gates can propose eradicating 20 leading diseases by, say 2045, and be taken seriously. And he has a more credible bully pulpit when it comes getting his issues on the global agenda.

Bill Gates identified the importance of working with governments as one of the aspects to philanthropy that he has most under-appreciated. That is one reason why his foundation has had more success in tacking AIDS and malaria than he has education.

Yet as the Gates Foundation grows in size and ambition, it will raise questions about how it and others like it will fit into the world of policy making as they address problems that have hither too been the reserve of multilateral institutions, non-governmental organizations and governments themselves. And with a greater role will come demands for greater accountability.

Buffett may well be, in the words of Patty Stonecipher, chief executive of the Gates Foundation, "a good man, whose great decision is going to change the world". Gates thinks Buffett will be remembered not just as 'the greatest investor" but "the greatest investor for good."

We may have to wait a lifetime--or at least the lifetime of the Gateses--before we know whether that will turn out to be true. No philanthropist has solved a worldwide problem since Carnegie brought universal access for the poor to books via libraries and Rockefeller used his billions to fund the research that would lead to the eradication of polio.

The tantalizing prospect is that, thanks to Buffett, the foundation that doesn't bear his name and entrepreneurial philanthropy could change that by investing in social change and bringing the innovation, efficiency and resources of the super wealthy to solve the problems of the poor. In the process it will globalize and modernize what Rockefeller called the "business of beneficence."
