Gates Foundation Announces That It Doesn’t Plan to Operate Forever

All good things must come to an end, as the saying goes, and the Bill & Melinda Gates Foundation is no exception.

The foundation, in Seattle, announced last week it had set up a timeline for its eventual closure, as part of changes the fund is making to facilitate the $31-billion pledge the investor Warren Buffett made to the organization last summer.

But grant seekers should not fret; the fund still has a long life ahead.

The Gates Foundation will shut down 50 years after the last of its three current trustees — Bill and Melinda Gates, and Mr. Buffett — dies, said Patty Stonesifer, the foundation’s chief executive.

Ms. Gates is 42, so the grant maker could easily continue well into the second half of the 21st century.

Ms. Stonesifer said the trustees believe there is a massive need — and opportunity — today and in the near future to eradicate killer diseases in poor nations, reduce global poverty, and improve American schools, the three causes the foundation primarily supports.

The mentality is “roll up your sleeves and get it done now,” Ms. Stonesifer said.

She added: “These three folks — Bill, Melinda, and Warren — felt that they wanted to put the spotlight on this time and try to have that as part of the underpinnings of the organization.”

Other Models

A few other foundations have followed a similar path. For example, the John M. Olin Foundation, in New York, closed last year in accordance with the late founder’s wishes; Mr. Olin was concerned that if the fund were to continue with no end in sight it would stray from its conservative principles.

But most large philanthropies, such as the Ford Foundation, the second-largest grant maker in the United States next to Gates, have no plans to shut down at a particular time.

In another unusual move, the Gateses have decided to set up in 2007 a separate organization to oversee the foundation’s assets, which currently are almost $32-billion.

The Bill & Melinda Gates Foundation Trust will hold the entirety of the assets, and Mr. Gates’s personal financial manager will be in charge of investing the money, as he has done at the Gates foundation.

Ms. Stonesifer said a firewall has always existed between the investment and program offices of the Gates Foundation — as is usual with most charitable funds — and that the move “just solidifies the process that was already used.”

The trust will pass money as needed to the foundation for grant-making purposes.

The structure is uncommon in the foundation world, although the W.K. Kellogg Foundation, in Battle Creek, Mich., uses a similar one, said Joel J. Orosz, a professor of philanthropy at the Dorothy A. Johnson Center for Philanthropy and Nonprofit Leadership, in Grand Rapids, Mich.

“The advantages basically are a check-and-balance system. The trustees of the trust at Kellogg can cut off the flow of money to the foundation if they feel the trustees of the foundation are not behaving appropriately,” said Mr. Orosz, who is a former Kellogg Foundation official.

In the case of the Gates trust, Bill and Melinda Gates will be the sole trustees, said Ms. Stonesifer.

Advisory Boards

Other recent changes at the foundation include:

• Setting up three advisory boards of scholars, nonprofit leaders, and other experts to help evaluate the foundation’s grant making in global health, global development, and U.S. programs.

  The foundation has been criticized for not bringing more-diverse opinions into its decision-making process. Ms. Stonesifer said the change should help counter that charge by providing “outside expertise and perspectives, and hopefully the very bold voices that will help us.”

• Increasing its giving incrementally from its current annual grant-making level — $1.75-billion — during the next three years until 2009.

  At that time it expects to provide $3.5-billion in grants annually until 2015, depending on investment returns. Ms. Stonesifer said the Gateses do not plan to contribute more money to the fund before 2015.

  And despite the increased dollar amount, the Gates foundation’s grant making will remain focused on the causes it currently supports.

• Accepting donations from people other than its three trustees, a move the fund had previously resisted.

  While the foundation would prefer that Americans support charities that are directly doing, say, aid work or vaccine research, after Mr. Buffett’s gift it received a number of donation offers from a broad mix of people.

  The inquiries have included contacts from wealthy friends of Mr. Gates and a 7-year-old girl who wanted to donate her $35 “life savings,” Ms. Stonesifer said.

  While the foundation is not soliciting money, “we just really have been touched by some of these offers and think it would ungracious to flat out turn the gifts away,” she said.

  “What do you tell a 7-year-old girl?” Ms. Stonesifer asked. “Warren can give, but you can’t?”