Melinda Gates Says Infusion of Money Is Accelerating Fund’s Progress

It will be “work as usual” at the Bill & Melinda Gates Foundation on June 26, one year after Warren E. Buffett promised more than $30-billion to the organization.

The nose-to-the-grindstone mentality is prompted by the heavy workload the group faces, thanks

to the gift. By 2009, it expects to increase its grant making to $3.2-billion.

On a recent afternoon at the foundation headquarters here, Ms. Gates, co-founder of the philanthropy with her husband, Bill, spoke with The Chronicle about the challenges facing the group as it expands its operations and why the Gateses recently have made major changes at the organization.

These changes include setting a date for its eventual closure, establishing a separate trust to hold its assets, and forming advisory boards for its three grant-making programs, which focus on improving global health, fighting poverty in poor nations and overhauling the American education system.

Ms. Gates says the Buffett donation has allowed the foundation to speed up work in assisting farmers in poor nations by supporting scientific research to increase the effectiveness of their seeds and helping them gain access to larger markets to sell their vegetables, fruits, and other products.

“I just was in a meeting where I was seeing some of the grants that are going to come forward to Bill and me on market access here in the fall that are really exciting,” she says.

But while the windfall has presented new opportunities, it has also brought increased scrutiny from the news media and others. In January, the Los Angeles Times published articles questioning Gates’s investments, arguing that the foundation held stock in companies that pollute the environment and employed practices that hurt low-income people.

Despite the criticism, Ms. Gates told The Chronicle that except for excluding tobacco companies, she and her husband, who control the foundation’s investments, would not screen out corporations or whole industries. She said the fund is set up to collaborate with businesses in charitable efforts, such as trying to curb the AIDS pandemic in Africa, rather than try to influence them as an investor.

The foundation’s talents lie “in getting corporations to come to the table, do what they do best, serve their shareholders in the right way, and yet do something great for the developing world,” she says.

She did admit that when the controversy erupted, the couple could have done a better job of explaining their investment philosophy to the public.

“One of the things that we learned in hindsight was we knew what our investment philosophy was, but we hadn’t been clear with the world about saying this is what we believe and why we do it,” she says. In addition to the investment controversy, Ms. Gates spoke about how she is teaching her three young children, who are all under the age of 11, about their responsibility to aid society and her thoughts on the forthcoming presidential election.

The following are excerpts from The Chronicle’s conversation with Ms. Gates.

Do you plan any celebration for the anniversary of the gift or is it going to be work as usual?

No, it’ll be work as usual. It’s an exciting time, though, for us to think back on: Wow, it’s been a year since the announcement of the gift. And when I look around the foundation about what that means — and we certainly did some planning before the gift was announced, clearly — but the acceleration of some of the work is really, really exciting around here. And it wasn’t work that hadn’t been started.

First and foremost, you have to understand that Warren came to us and said, I really believe in what you’re doing, keep doing what you’re doing, I’m not interested in seeing you take on, you know, 20 new program areas.

But he knew that we had already started some areas like the agriculture work or the microfinance work. You can’t just help people live healthier lives but they have to have a means for lifting themselves out of poverty.

So what I see the big change being in the last year [is] now we’ve named these three groups — global health, global development, and the U.S. programs. But the global development group now really is getting some traction.

What do you see as the biggest challenge to the foundation as a result of the Buffett gift?

Well, for the foundation overall we have to make sure that we stick to our roots as we continue this incredible work that we’re doing. And that means that every single person we hire, that comes in the door, has to understand what we’re about, and [we have to] inculcate our values as we get to be a larger organization. When you’re, you know, 50 people in size, and 75, that’s easier. When you get to be larger like we are now, when you start to get around 360 — and we’ll grow to 400 and beyond that — you have to make sure you have that in every single hire.

Some of the challenges [are] hiring incredibly talented people. The global-development group has about 46 people now. Half of them are from developing nations — as it should it be. But it takes us a long time to get their visas cleared.

Has the number of grants that come across your desk increased?

Well, the grants overall for the entire foundation have increased. Now, of course, any great organization, as you grow, you start to say, Okay, where should we make sure that people even at another level down get to make some of these decisions?

So we’ve mapped out for the next year our calendar and said, Okay, we need to be in real strategy reviews about looking back historically at what we’ve done, maybe let’s say, in the area of HIV, and looking forward and saying, Okay, how are we pushing on a microbicide? How are we pushing on the HIV vaccine? Are we doing everything we want to do? Are we being creative enough?

That’s our role. Once the strategy is set with the team — and, of course, they come in and present what they think is the right plan — we’ve been able to push down some of the specific grant making within that strategy. We’re doing that across the organization.

It would be very difficult, I’m sure, to sign off on every grant, if that were even possible.

It wouldn’t be the best use of our time or the people in the organization. They need to know that they have some say once their strategy’s approved.

Why did the foundation set a date for its closure? Is that something a lot of foundations should consider?

That’s a decision that any foundation needs to make for themselves. I don’t think that something we do ought to be dictated to another foundation, or say, This is the right thing.

But I can tell you why we set it for us. It shows the incredible optimism we have, that the problems that we’re trying to tackle in this century can be tackled with the current technology and what we see coming along in biotechnology. And that we have real optimism about in our lifetime having an HIV/AIDS vaccine, really making a dent in malaria, really making a dent in tuberculosis.

Some people have questioned why you don’t create a larger board of trustees with decision-making authority.

Part of that involves that we’re alive; we’re extremely engaged in the foundation. I was trying to think today: Is there any day that goes by in our household that we’re not talking about the foundation? I think I came up with may be two days so far this year and they were days we were off on a vacation. But even on vacations, we are thinking about and trying to sort through what the right thing is for this place. Given our level of engagement and level of decision making we want to be involved in, this just is the right structure for this place.

We absolutely need to take counsel from outside people, we need to listen carefully, we need to have scientists involved in our work, people in the developing world. By no means do Bill, Warren, or I think we have all the answers. Far, far from it.

But having that counsel of people, such as in the Grand Challenges [in Global Health], where we got so many scientists to participate, from 33 countries, listening to those voices and then deciding for this place. Given the strategies we’ve set out, we feel like we have the right structure to listen and do that well.

Have you been surprised by the scrutiny since the gift was announced?

Not at all.

It just comes with the territory?

Look, people should ask questions of a place that is of the size and the magnitude of what we’re trying to do. I think it’s a natural that people would ask questions and I think we learn from that as well.

One of the things that we learned was we knew what our investment philosophy was but we hadn’t been clear with the world about saying this is what we believe and why we do it. And so once the questions came, Bill’s got a full-time job, we’ve got kids at home, it took us a few days to answer. But we knew what we were about. We just weren’t communicating that well enough.

How do you respond to critics who say the foundation’s investments may undermine its grant making?

Well, you have to look at what is the foundation set up to do and where are its talents best served. And that is the place which we work from. And so where we can be the most productive is leading organizations to do the work that we need to do.

So, for instance, we worked with Merck very early on, in the early part of the foundation. We both put a $50-million investment in Botswana. We didn’t set out to do this, we set out to figure out how to deliver antiretrovirals in Africa. It turned out that for the longest time it was the largest antiretroviral program on the continent of Africa. So when the Pepfar [President’s Emergency Plan for AIDS Relief] money came in, it turned out there was a model there from which it could build and learn lessons. So the way to get Merck to do the right thing is to lead.

Or some of the work we’ve done in Gain [Global Alliance for Improved Nutrition], where you’ve got Procter & Gamble really fortifying — putting nutrients and fortifications in the foods for the developing world. Or you’ve got GlaxoSmithKline with a fantastic lead-candidate malaria vaccine. That’s where our talents lie, in getting those corporations to come to the table, do what they do best, serve their shareholders in the right way, and yet do something great for the developing world.

Have you changed how you invest because of some of the criticism, though?

No, we’ve communicated finally what our investment philosophy is. We had always had the position, not because we think it changes the market in any way, but Bill and I both felt the area of tobacco just for us was not a social area that we wanted to invest in. So we’ve always had that as part of our philosophy, but we’ve never communicated that.

You recently announced that the Gates foundation and Eli Broad’s foundation are providing $60-million to make sure education is an issue in the U.S. presidential campaign. What prompted this?

We felt the time was right, and that education wasn’t very high on the domestic agenda right now, in terms of the things people were talking about as part of the presidential debates.

Part of what we see in the schools is that you’ve got to get people to understand how broken they are, or how bored kids are in school. And so we felt like this was a prime time to make sure that we demand that of the presidential candidates, so whoever gets in really says, I’m going to address this issue. It seemed like the right time and the right sort of place that we were in, what we were seeing in the education system; it doesn’t quite seem to be out there in the psyche of the American people.

Is there a candidate you think will bring that issue to the forefront?

Not yet. I’ll let you know when I find that one. I’ll keep watching the debates.

What is important for the nonprofit sector to know specifically about the foundation and its work in the years ahead?

Well, I think just having some sense that Bill and I are deeply engaged in these issues and that it’s something that we think about and spend time on basically every day now. We care passionately about them, and it’s also fun. I mean, we enjoy coming to the meetings with the scientists. I enjoy being out, as does Bill, in Vietnam and learning about what it really takes to deliver a vaccine on the ground, a new one in Vietnam, how complicated is that.

We both enjoy going into the slums and seeing what’s that like for the families that live there. I think [it’s important] for people to understand that this will be our lifetime work and our commitment; we’re going to stick to the issues we’re working on now for as long as they take. And that it’s brought a fulfillment to our lives in a way that is hard to describe.

With Bill transitioning from Microsoft, if there wasn’t this he was coming to, I think it would be different. Part of it is he wants to spend time on it, as do I, because it is deeply fulfilling. That you can have this incredible career and you can do something else that gives back to the world in a way that deeply fulfills your life is something we both want people to have some sense of. It’s why we do what we do.