Even With Lots More Money, Gates Foundation Faces High Hurdles

Warren Buffett’s breathtaking announcement that he will give more than $30-billion of his fortune to the

Bill & Melinda Gates Foundation has thrilled a philanthropic world already excited by the news, just days earlier, that Bill Gates himself was planning to become more active in managing the foundation in 2008.

But overshadowed by the attention paid to those developments was a BusinessWeek cover article that appeared at the same time, titled “Bill Gates Gets Schooled,” which made clear that a $3-billion annual grant-making budget and the leadership of one of the world’s most successful entrepreneurs may not necessarily add up to successful philanthropy by the Gates Foundation.

In fact, the foundation’s size and the scale of the problems it aims to tackle will create additional challenges for it.

The BusinessWeek article reported on the progress of one of the Gates Foundation’s signature projects, an effort to reduce dropout rates by replacing larger high schools with smaller ones in which students could receive more personalized instruction.

The foundation has already spent more than $1-billion on the small-schools effort in the past six years, but according to evaluators, the results have been nothing to brag about.

Students in the smaller schools have done slightly better in English and reading than their peers in the more traditional high schools; however, they fared significantly worse in math. Although more students were graduating, a large percentage still failed to complete high school.

To its credit, the Gates Foundation not only commissioned this evaluation, but also has been forthright about acknowledging its findings.

“If you want to equate being naïve with being inexperienced,” Melinda Gates told BusinessWeek, “then we were definitely naïve when we first started.”

Rather than giving up, Gates says it is redesigning the program, promising to pay more attention to curricular issues than it originally did.

However, the record of its small-schools grant-making effort underscores one of the challenges Gates Foundation faces in translating its unprecedented resources into effective philanthropy: deciding how and where to invest its funds.

Although some educational researchers believe that reducing the size of high schools will lower dropout rates, others have concluded that different approaches work better, such as intensive preschool and middle-school efforts or more rigorous academic programs (which smaller schools may lack the capacity to provide).

Much the same kind of debate surrounds the Gates Foundation’s global-health efforts, with some experts arguing that too much money is being spent on scientific research with uncertain prospects, rather than on less costly measures that could provide immediate help, such as wider distribution of antimosquito nets in malarial regions. Which approach (or mix of approaches) the grant maker takes will determine how much difference all its money will really make.

To be sure, the foundation has so far shown a willingness to adjust its programs in light of their results.

But as organizations become larger, older, and more dominant in their fields, change often becomes more difficult, as leaders and key staff members develop commitments to programs into which they have put much time and money and as honest assessments become tougher to obtain. Guarding against such hardening of the philanthropic arteries will be an increasingly important problem for the Gates Foundation in the future.

Compounding this difficulty will be the foundation’s relationships with other grant makers, government agencies, and nonprofit groups, which are sure to become more extensive with the increased size of its grant-making budget.

Partnerships in philanthropy, as in business (Microsoft being a good example), can be valuable, enabling organizations to gain access to expertise and access far beyond what they can acquire on their own.

But they can also have disadvantages, including leaving a foundation beholden to the professional and ideological views of its associates. If that happens, taking innovative approaches to problems could become more difficult.

In education, for example, the Gates Foundation has been working closely with public-school officials and organizations that have long worked to revamp the schools.

While such ties enabled it to get local backing for its programs, they have also limited its receptiveness to supporting new ideas, such as school vouchers that would allow parents to send their children to private or public schools of their choice. Such ideas may be worth trying, but are unpopular with many public-school leaders.

In the foundation’s global-health programs, the partnerships are even more complicated, involving governments, businesses, and international agencies, all of which have their own agendas, inevitably restricting the foundation’s freedom of action, regardless of how much it has to spend.

Moreover, the Gates Foundation not only must mobilize numerous allies, but also must induce those it is seeking to help — for example, high-school students at risk of dropping out or women and children in developing countries — to change their behavior.

Success in increasing educational opportunities for young Americans or eliminating global disease and poverty is a matter of giving money to the right set of programs, as well as persuading literally billions of people to live differently, despite whatever customs, beliefs, habits, or other factors may be motivating them.

In that context, not even the colossal fortune available to the Gates Foundation may be up to the tasks it has set for itself.

Indeed, for many years, governments have been spending much more to achieve many of the same ambitious goals with little to show for their efforts.

Speaking to reporters after he announced his gift to the Gates Foundation, Warren Buffett noted that economic growth has left too many of the world’s poor behind; so too have repeated waves of well-financed international-development plans like those his fortune will now finance.

And if American students are still leaving school without mastering essential skills, the reason is not because too little has been spent to educate them.

Some problems, in other words, may be so intractable and complex that they cannot really be solved, at least not without the kinds of restrictions on public and private activities, such as curbing government mismanagement or limiting choices people make about their personal lives, that are impossible to impose and that many people would not tolerate.

With all the money now at its disposal, the Gates Foundation should be admired for thinking boldly. But perhaps the most difficult task now facing its founders and new donor is to recognize that it is better to do many small things well than a few large ones badly.

Leslie Lenkowsky is professor of public affairs and philanthropic studies at Indiana University and a regular contributor to these pages. His e-mail address is llenkows@iupui.edu.