A Plea for Caring and Capitalism

Both business and philanthropy will be necessary to transform the lives of poor people in the developing world, Bill Gates told business and political leaders gathered in Davos, Switzerland, for the annual World Economic Forum.

In a speech delivered at the meeting, the co-founder of Microsoft called for a new “creative capitalism” that would harness both market forces and charity to help people living in poverty. The next day, he followed up on that theme by announcing $306-million in agricultural grants, several of which focused on helping poor farmers gain access to more-lucrative markets for their crops.

The philanthropist’s use of the bully pulpit at the World Economic Forum comes as he prepares to make the transition to working full time at the Bill & Melinda Gates Foundation, the $33-billion charitable fund he set up with his wife in Seattle.

Mr. Gates will be making the full switch from businessman to nonprofit leader in about six months and joins the foundation as its programs grow significantly.

In an interview with The Chronicle in June, Melinda Gates said that by 2009 the grant maker plans to be awarding $3.2-billion a year thanks to a massive gift from Warren Buffett. The chairman of the Berkshire Hathaway investment company pledged roughly $36-billion two years ago to the Gates Foundation, which focuses on global health, improving American education, and fighting poverty abroad.

‘Not Getting Better Fast Enough’

At the meeting, Mr. Gates said unfettered capitalism has primarily raised the living standards of the rich and not done enough to benefit the world’s 2.5 billion impoverished people.

“The world is getting better, but it’s not getting better fast enough, and it’s not getting better for everyone,” he said. “We have to find a way to make the aspects of capitalism that serve wealthier people serve poorer people as well.”

He said foundations and other nonprofit groups lack the money to care for all of those not benefiting from global markets. “If we’re going to find a sustainable way to help those who can’t pay, we have to use self-interest and caring — capitalism and philanthropy — to direct attention to people who have been left behind,” he said.

For example, he suggested that businesses develop more products and services for those who live in developing nations in Africa and elsewhere. “Such a system would have a twin mission: making profits and also improving lives for those who don’t fully benefit from market forces,” he said.

His speech drew a standing ovation at the conference, and many nonprofit leaders praised it too.

But Curt Weeden, who oversaw corporate giving at Johnson &Johnson for many years — said it remains to be seen what effect Mr. Gates’s words will have.

“The litmus test for Gates’s notion will be whether companies actually carve out time for their top people to focus on the problems of the poor,” he said. Getting business leaders to commit energy to remedying social inequities “will make running Microsoft look like a cakewalk.”

Changing the World

Mr. Gates noted several approaches already under way that were examples of what he wants to see happen, such as a partnership between the World Health Organization and an Indian pharmaceutical company to sell a meningitis vaccine to African nations at a price cheaper than the cost of other vaccines.

“Giving money away is a good way to change lives, but it is not a sustainable way to change the world,” he said.

But engaging market forces in the work of doing good has the potential to extend and amplify the work of traditional philanthropy, Mr. Gates wrote in an e-mail message to The Chronicle.

“By matching the intense need we see around the globe — and the work of our grantees — with the interests of business, creative capitalism has the potential to expand the reach and efficacy of efforts to improve lives beyond what is possible through traditional grant making,” wrote Mr. Gates.

That market-based approach was also evident in several of the agriculture grants that the Gates foundation announced at the forum.

In all, the foundation announced six grants totaling $306-million for programs designed to increase agricultural productivity and income for small-scale farmers in Africa and Asia. The new grants double the amount of money that the Gates foundation has awarded since the start of its agriculture program in 2006.

And the foundation says its spending on agriculture grants will reach $900-million by the end of this year.

Among the grant recipients is TechnoServe, a Washington group that works to fight rural poverty around the world. It will use a four-year, $46.9-million grant to expand its efforts to help coffee farmers in East Africa adopt growing and processing techniques they can use to sell their crops for a higher price on the premium coffee market.

The 10,000 farmers that TechnoServe has worked with in Tanzania have seen their household incomes double.

Because the program helps farmers create businesses that are taking advantage of a market opportunity, the benefits continue even after TechnoServe stops working with the groups, says Bruce McNamer, the organization’s chief executive officer.

“You don’t have to keep putting donor money into this,” he says. “Once those businesses are up and running, this becomes almost by definition self-sustaining.”

Improving Soil

Other agriculture grants just announced include projects that seek to improve farming soil, develop more-robust varieties of rice, and increase access to irrigation.

The Alliance for a Green Revolution in Africa will receive $164.5-million over five years for a program designed to improve the quality and productivity of soil in 14 countries. The alliance was founded by the Gates foundation and the Rockefeller Foundation, which will contribute an additional $15-million for the soil project. The program will work to increase farmers’ access to fertilizers; introduce farming techniques that can improve soil quality, such as crop rotation and planting crops that return nutrients back to the soil; and promote government policies that support soil health while protecting the environment.

But the foundation’s approach to agriculture is not without its critics.

Some groups worry that the emphasis on fertilizers and on developing new seeds and markets won’t benefit very poor farmers and will open the doors to large agricultural companies.

In November, a coalition of charities met in Mali to discuss their concerns about the new plan and to explore alternative ways to increase agricultural production in Africa.

The foundation says that all of its programs are designed to help poor farmers, a point that Mr. Gates emphasized in Davos. “If we are serious about ending extreme hunger and poverty around the world, we must be serious about transforming agriculture for small farmers — most of whom are women,” said Mr. Gates.

“These investments — from improving the quality of seeds, to developing healthier soil, to creating new markets — will pay off not only in children fed and lives saved. They can have a dramatic impact on poverty reduction as families generate additional income and improve their lives.”