March 25, 1999 | Read Time: 2 minutes
Microsoft founder Bill Gates faces a daunting challenge in deciding how to give away his wealth, according to a story in Fortune magazine (March 15).
His two foundations, the William H. Gates and the Gates Learning Foundations, are “so large that they will have to give away some $325-million a year just to comply with tax laws on charitable giving,” Fortune said. Federal law requires foundations to disburse at least 5 per cent of the value of their assets, on average, each year.
The William H. Gates Foundation, which is only a few years old, already has a $5.2-billion endowment, placing it sixth among the nation’s richest funds, according to a ranking that The Chronicle of Philanthropy published in the February 25 issue. The Gates Learning Foundation has $1.3-billion in assets. And, Mr. Gates told Fortune, “we will be increasing the size of these foundations over time.”
Mr. Gates suggested that giving away billions can be as tricky as making the money in the first place.
“Effective philanthropy,” he told the magazine, “requires a lot of time and creativity — the same kind of focus and skills that building a business requires.”
But Mr. Gates has been getting plenty of help in meeting his well-publicized goal of giving away most of his wealth during his lifetime. Not only do his father, Bill, Sr., and his wife, Melinda, pitch in, but Mr. Gates’ private money manager, Michael Larson, oversees $11.5-billion in Gates assets: the foundation endowments plus $5-billion in Mr. Gates’ personal portfolio.
Fortune analyzed Mr. Larson’s investment style at length, noting that he takes a conservative, low-profile approach in handling the Gates assets.
The magazine noted that Mr. Gates’s critics have suggested that he is using his philanthropy to soften his monopolistic image and influence the outcome of a huge antitrust suit against Microsoft. However, Fortune quoted Warren Buffett, a billionaire financier and a philanthropist himself, declaring such assertions to be “baloney.”
Added Mr. Gates, Sr., who runs the William H. Gates Foundation: “It ain’t true. It just doesn’t have anything to do with it.”
So far, the William H. Gates Foundation has given away, or has promised to give, about $222-million. “We give to projects we think can improve the lives of people,” the younger Mr. Gates said. “Our goal is that millions of people will receive the benefits of new medicines and the empowerment of access to information.”
The article is available on the magazine’s Web site at http://www.fortune.com.
