A View Inside the Gates

World’s wealthiest foundation steps up advocacy efforts

Tucked away on a quiet side street next door to the Lake Union Autobody repair shop here, the unassuming

headquarters building of the Bill & Melinda Gates Foundation reflects what has been a guiding principle of the world’s wealthiest foundation: Keep a low profile.

But now, five years after the foundation was established, its officials are speaking out more vigorously and stepping up support for charities that lobby governments and others to influence public policy.

“In the beginning we let other voices be heard because we were so new,” says Patty Stonesifer, the foundation’s president. “Now we intend to share our point of view.”

By raising its profile, the foundation hopes to increase its effectiveness as a grant maker, Gates officials say. The shift is not just in its grant making, but also in the actions of the foundation’s founders — William H. Gates III and his wife, Melinda F. Gates. Ms. Stonesifer says the Gateses have grown more comfortable using their status as celebrities to call attention to the foundation’s work. Ms. Gates, for example, agreed to a rare e-mail interview with The Chronicle, in which she discussed the future of the philanthropy, including the couple’s views on the life span of the foundation and the potential roles for their children.

A Long Shadow

Still, as the wealthiest foundation in history — more than twice the size of the second-richest American charitable fund, the Lilly Endowment — the Gates Foundation says it remains committed to not letting its size overshadow other philanthropic players and will continue to collaborate with other grant makers on many of its projects.

Yet achieving and maintaining this delicate balance will be easier said than done, some charity observers say,

particularly as the foundation’s assets continue to grow. Mr. Gates announced in July that he would give an estimated $3.35-billion dividend from his software company, the Microsoft Corporation, to his philanthropy. The gift, which the foundation expects to receive in installments over several years, will increase the foundation’s assets to more than $30-billion.

Such wealth has given the Gates Foundation unprecedented influence on charities and other grant makers. Some people in the nonprofit world describe Gates as the first “superpower” of philanthropy, comparing its clout to that of the U.S. government in terms of international relations.

Between its investments and future donations from the family, the Gates endowment could someday swell to $100-billion. Mr. Gates, whom Forbes magazine ranked this year as the wealthiest person in the world with a net worth of $48-billion, has said he wants to give 90 percent of his fortune to charity before he dies.

Some observers worry a foundation of that size, no matter how well run, could hurt other nonprofit organizations and, indeed, the world.

“You’re talking about an institution with assets larger than the gross national product of many countries,” says Rick Cohen, executive director of the National Committee for Responsive Philanthropy, a foundation watchdog in Washington. “It raises challenges to the foundation about how it addresses its accountability and how it thinks about its overall impact on the issues it’s working on and on society.”

As it grows, Mr. Cohen says, the foundation must make sure it listens to other opinions when making decisions about grants to make sure a “democratic process and a public voice” are involved.

Others, however, say the Gates Foundation’s approach to grant making to date provides strong reassurance that it will not be the “800-pound gorilla of philanthropy,” as the president of the Ford Foundation, Susan V. Berresford, put it.

Gates has not dominated education projects that it supports jointly with Ford, she says. “Gates is an equal partner at the table,” says Ms. Berresford. “That’s both its purpose and reflected in the personalities that run the foundation.”

Building on Past Efforts

Over the past five years, Gates has established itself as a thoughtful, if at times unorthodox, grant maker. For example, its primary focus is a field that previously had received relatively few philanthropic dollars — global health — and it has served as a mediator between pharmaceutical companies and health activists who advocate for the drug industry to do more to help the world’s poor people. The truce of sorts the foundation has brokered between longtime opponents has helped to expand the availability of medicines and vaccines in poor countries, as well as spurred the development of new drugs, observers say.

Another example of the foundation’s unusual grant making is its Grand Challenges in Global Health program. Gates created it last year and pledged $200-million to the effort, which solicited ideas from the world’s scientists for how to identify obstacles to alleviating medical problems in poor nations and then overcome them.

Its innovative approach to philanthropy has helped to quiet initial skepticism that the foundation’s benefactors started the fund to improve the public image of Mr. Gates, whose company was fighting a bruising antitrust battle with the U.S. Department of Justice when the foundation was created.

Since 1999, when the William H. Gates Foundation and the Gates Learning Foundation merged, the Bill & Melinda Gates Foundation has approved more than $4.7-billion in grants. By comparison, the Ford Foundation, the nation’s third-largest foundation, approved about $2.6-billion in that same period.

When the giving includes the grants awarded by the precursor organizations — the William H. Gates Foundation was established in 1994 and the Gates Learning Foundation in 1997 — the total comes to more than $7.6-billion in grants and charitable projects approved through September 2004.

Impact Hard to Measure

The results of this spending can be hard to measure, particularly since many of the projects have long-term goals that may take a lifetime or more to meet.

Some grant recipients, however, say they have already seen benefits. In a written statement to The Chronicle, Jimmy Carter, the former U.S. president, says, “The Gates Foundation’s support of bold efforts to eradicate disease, such as Guinea worm disease, not only has a direct, immediate effect on the alleviation of human suffering, but also serves to inspire solutions to other global health problems.”

In 2000, Gates gave Mr. Carter’s group, the Carter Center, in Atlanta, $28.5-million to eradicate Guinea worm, a disease found in poor sections of Africa, Asia, and South America that is usually contracted by drinking contaminated water. According to the center, the number of reported cases of Guinea worm has declined 99 percent from 1986 to 2003, thanks in part to the foundation.

That said, the foundation’s global health grants have also generated some criticism. For example, a $6.5-million Gates grant to Family Health International for a human trial of an experimental drug, tenofovir, that may prevent the transmission of HIV raised ethical questions in Cambodia last summer. While the Cambodian government initially approved the trials — which would have given the drug to prostitutes who are at risk of contracting the disease — it changed its mind after AIDS activists protested, saying the prostitutes were unfairly being used to test the drug.

Despite the protest, the Gates Foundation will continue to support trials in Africa and other Asian nations, pointing out that the tests meet both U.S. and international standards.

Changes Possible

Besides global health grants, other substantial investments by Gates include grants to provide Internet access in American libraries and to help minority high-school students graduate and prepare for college.

Melinda Gates says the foundation doesn’t plan to change its grant-making priorities anytime soon. But she did not rule out the potential for changes.

“Our foundation values flexibility and the ability to remain nimble,” she told The Chronicle. “So within those program areas, and perhaps new areas, we will remain alert to changes and opportunities to make a difference.”

For example, she adds, “if scientists around the world are successful at developing effective vaccines for HIV, TB, and malaria, then we might well want to accelerate our grant making significantly.”

While most nonprofit officials applaud the foundation for choosing a small number of programs, some critics would like to see the Gates Foundation branch out into new areas.

Steven Kirsch, a technology entrepreneur who founded the Steven and Michele Kirsch Foundation, in San Jose, Calif., says he is worried the foundation will not create new grant-making programs as its assets grow. Having a small number of grant programs is “good in some sense because it means it can really do a good job in the areas it focuses on,” he says. “It’s bad in a sense because here’s a foundation with such a huge asset base that can make a difference in so many different areas where people aren’t making a difference.”

Mr. Kirsch says for about $10-million, or “a rounding error” for the foundation, Gates could significantly improve nuclear disarmament or other efforts with potentially disastrous consequences that he says are not adequately supported by philanthropy.

Ms. Gates says she prefers that the organization remain on the lookout for new opportunities in its established grant-making programs, including long shots with the potential for big payoffs. “As we learn more about our areas of giving and where we can make the greatest difference, I think Bill and I will actually become more willing to take risks in pursuit of our foundation’s mission,” she says.

More Money for Advocacy

For now, the one specific change the foundation plans is a greater emphasis on shaping the federal government’s policies.

“In terms of ‘why advocacy,’ it came with the realization that the problems we are working on are problems that would never, ever be solved even if we spent our entire corpus,” says Sylvia Mathews, a former Clinton administration official who now oversees the foundation’s advocacy work.

The foundation opened an office in Washington in late 2001 with the original intent of employing five staff members. But that number has doubled, in part because advocacy has become a higher priority, says David Lane, the foundation official in charge of that office.

The foundation has worked to influence the Bush administration’s education and foreign-aid policy and helped craft the Global HIV Vaccine Enterprise, which will help nations share information about a possible vaccine.

Yet despite the growing emphasis on advocacy, Mr. Lane says it shouldn’t generate images of foundation officials “grabbing congressmen by the lapel” in the halls of Capitol Hill. While he does meet with government officials, he says he actually spends most of his time helping charities supported by Gates craft and promote their message. “We spend a lot of time with grantees who are in the policy realm, rather than with Congressional staffers,” he says.

Gates is also providing more money to advocacy groups, says Ms. Mathews. She says it will provide $50-million this year to such groups, an amount that will increase next year.

Bono’s AIDS Tour

Among the recipients of the advocacy grants is Debt, AIDS and Trade in Africa, or DATA, a Washington nonprofit organization founded by the rock musician Bono to put pressure on affluent countries to provide more foreign aid and debt relief for poor nations. DATA has received $2.5-million from Gates since 2002.

Part of the money has supported a tour of the Midwestern United States by Bono and other celebrities to educate Americans about the AIDS pandemic in Africa, says Jamie Drummond, the group’s executive director. He credits that effort and other advocacy projects financed by the foundation with helping to persuade President Bush to provide federal funds to programs that offer AIDS drugs to Africans, an idea that previously had been considered infeasible by the U.S. government.

Mr. Drummond says the growing interest the Gates Foundation has shown in supporting advocacy work is a natural progression in its development. The foundation, he says, started off supporting academic studies, creating medicines, and developing the delivery services to get them to sick people, but is now “looking up and seeing the big picture.”

Future grant decisions will be determined in large part by whether the founders expect it to operate forever or to shut down after a specific time. Ms. Gates says no decision has been made on that issue. “It is simply too early to make predictions about the life span of our foundation, but what I do know is that the four areas we focus on involve difficult, long-term challenges,” she says, referring to global health, education in the United States, libraries, and charitable programs in the Pacific Northwest.

If the Gateses do decide they want the foundation to continue after their deaths, their children may play a role in operating it. While the three Gates children are young — ages 8, 5, and 2 — Ms. Gates says, “we talk a lot in our house already about the responsibility we as a family have to give back to the world.” She says the children will have the option of being involved with the foundation when they are older.

Family Ties

Just how much of a family affair the foundation should remain, however, is a matter of some debate.

Several observers of the foundation question whether the world’s largest charitable resource should be controlled by essentially four people: the Gateses, Ms. Stonesifer, and Mr. Gates’s father, William H. Gates Sr., who serves as the foundation’s co-chair.

“Who is the foundation accountable to?” asks Carol C. Adelman, a senior fellow at the Hudson Institute, in Washington, and a former official with the U.S. Agency for International Development. “If I have a problem with my government contribution to WHO [the World Health Organization], I can go complain to my congressman. If I have it with the Gates Foundation, who do I go to?”

She would like to see the foundation create an advisory board as its assets increase.

Foundation program officers counter that the Gateses provide sufficient oversight.

“Bill and Melinda are as tough as any Congressional panel I’ve faced,” says Helene Gayle, the foundation’s director of HIV/AIDS, tuberculosis, and reproductive-health grants. Ms. Gayle previously worked at the federal Centers for Disease Control and Prevention, in Atlanta.

Indeed, a message from Mr. Gates on parasitic diseases such as hookworm, which foundation officials shared with The Chronicle and described as typical, shows his detailed, almost scientific, examination of the fund’s work. “Of the helminths, I am not sure which ones human hosting is key to maintaining the life cycle of the organism,” he wrote to his science adviser. “If it is key, then you have a chance of dramatic reduction if you block the life cycle in people.”

Mr. Gates said he relishes this type of interaction. “It’s really fun for me to meet with smart people at the foundation and talk about world health issues, and how we’re going to get the brightest brains on these things,” he said during a speech at the Community Foundation Silicon Valley, in San Jose. He compared the creative energy at the foundation to the early days of Microsoft.

Size a Concern

Even as Mr. Gates and other foundation officials develop their own expertise, they continue to value partnerships with others, including top researchers, charity officials, and grant makers.

Yet figuring out how to ensure that its vast size doesn’t thwart its efforts remains a challenge.

David Bergholz, former executive director of the George Gund Foundation, in Cleveland, says the financial stakes are so high that nonprofit groups will feel a stronger than usual pressure to change their missions to receive funds. “You have a huge foundation coming to town with money and a point of view, and most people line up,” he says.

That has not been a problem so far, says Dennis Littky, co-founder and co-director of the Big Picture Company, an education charity that is receiving about $16-million from Gates to train principals and teachers using personalized education curricula for high-school students. He says the foundation has respected the opinions of organizations like his that have more intimate knowledge of local school districts.

However, Mr. Littky says a different issue has emerged: Gates’s support has hurt its fund-raising efforts. “I think, ‘Thank God for Gates,’” he says. But “it has been much harder for us to raise money since we got the Gates money.” The foundation’s support, which accounts for about 50 percent of the Big Picture Company’s annual budget, intimidates potential supporters because “they want their own thing,” Mr. Littky says.

The foundation is working to counter this problem by encouraging other foundations to collaborate with it from the start. In Baltimore, for example, Gates persuaded two local grant makers, the Abell and the Annie E. Casey Foundations, to join forces with it on a $20-million project to create smaller high schools.

In education alone, Gates has worked with at least 13 other foundations. In addition, it has alliances with world governments, pharmaceutical companies, and even the World Bank on global health problems.

According to Ms. Gates, when the foundation first opened its doors, she and her husband were reluctant to work alongside other groups.

“I don’t think we had full appreciation for just how important it is to work in close partnership,” she says. “We have come to see that it needs to be a core operating principle for our foundation, because we simply don’t have the knowledge or resources necessary to solve by ourselves a single one of the big challenges we’re taking on.

“As the African saying goes,” she adds, “if you want to go fast, go alone; but if you want to go far, go with others.”

THE BILL & MELINDA GATES FOUNDATION

History: The foundation was established in 1999 when the William H. Gates Foundation and the Gates Learning Foundation merged. The William H. Gates Foundation, which supported world health programs and charitable projects in the Pacific Northwest, started in 1994. The Gates Learning Foundation, which helped to bring Internet access to libraries and other educational institutions in the United States, started in 1997.

Purpose and areas of support: The foundation awards grants in four program areas: global health, education, public libraries, and social-service efforts in the Pacific Northwest. The fund also provides grants at the discretion of the Gates family that fall outside its main programs.

Assets: $27-billion as of September 2004.

Grants programs: In 2003, the Gates Foundation paid out $1.18-billion in grants. The largest grant, $100-million, went to the Program for Appropriate Technology in Health, or PATH, in Seattle, to support efforts to develop a vaccine for malaria.

Key officials:William H. Gates III and Melinda F. Gates, co-founders; William H. Gates Sr. and Patty Stonesifer, co-chairs.

Application procedures: For the global health or Pacific Northwest programs, grant seekers are asked to send a two-page letter of inquiry to the foundation after reviewing its guidelines to be sure their work would qualify. The foundation will follow up with a request for a more formal proposal from the projects it believes most closely meet its guidelines. The foundation does not accept unsolicited proposals for its education or library programs.

Address: P.O. Box 23350, Seattle, Wash. 98102; (206) 709-3100

Web site: http://www.gatesfoundation.org