Gateses Double Size of Their Foundation by Making a $5-Billion Gift

The $5-billion gift of stock that Microsoft Chairman Bill Gates and his wife, Melinda,

this month poured into their private foundation has made the William H. Gates Foundation one of the five wealthiest philanthropies in the nation.

With assets of $10.3-billion, the Gates Foundation now ranks fourth behind the Lilly Endowment, the David and Lucile Packard Foundation, and the Ford Foundation. Rounding out the top five is the Robert Wood Johnson Foundation.

The gift is believed to be the largest ever by a living donor. But with the size of its assets doubled in one fell swoop, the Gates Foundation now faces the task of figuring out how to spend the roughly half-billion dollars it will be required to distribute in grants over the next year. Under federal law, foundations must give away at least 5 per cent of their assets, on average, every year.

“It’s pretty obvious we are going to have to expand our grants,” says William H. Gates, Sr., who runs the foundation and who is Bill Gates’s father. “I think we will continue our emphasis in areas where we’ve been active — global health, the Pacific Northwest, and education. But we definitely have a challenge to put the additional funds to good use.”

The reason for the substantial donation to the foundation, says the senior Mr. Gates, is simply that his son wanted to give away more money. “He feels like what we’ve been doing is very worthwhile and he wants to increase it.”

Mr. Gates, Sr., says the foundation will continue to be “very active” in awarding grants over the next six months. In recent weeks, the fund has distributed tens of millions of dollars in grants, including a $50-million grant to PATH (Program for Appropriate Technology in Health), a Seattle group that will use the money to help develop vaccines for malaria. That grant was announced on the same day that the Gateses announced their $5-billion gift to their foundation. In December, the foundation made a $100-million grant to PATH for a children’s vaccine program.

Other recent health-related grants include $50-million to Columbia University’s Joseph L. Mailman School of Public Health for a program to prevent maternal death and disability in developing countries, $25-million to the International AIDS Vaccine Initiative to help accelerate the development and human testing of an AIDS vaccine, and $20-million to the Johns Hopkins University to establish an institute for family planning and reproductive health.

Gordon Perkin, who runs PATH and who is also the Gates Foundation’s health adviser, says the latest infusion of cash to the foundation will almost certainly enable the Gateses to turn their attention to other emerging global health issues.

In addition to the William H. Gates Foundation, the Gates family also makes grants through its Gates Learning Foundation, which has about $1.3-billion in assets.

That foundation makes technology-related grants to libraries and public schools.

But unlike the Gates Learning Foundation, which has more than 100 employees who help train librarians and hook up computers, the William H. Gates Foundation has until now operated with just three part-time employees, including the senior Mr. Gates.

That is likely to change, he says. The foundation plans to add two to three employees this year. But, Mr. Gates says, “there will be a strong policy of not having a really large head count.”

There are other signs of growth. The foundation, which has until now been run out of the senior Mr. Gates’s basement, is moving to an office building in Seattle, where the Gates Learning Foundation is already located.

And, jokes the senior Mr. Gates, “we bought a file cabinet.”

Marina Dundjerski and Jennifer Moore contributed to this article.