Will Bill Gates Become One of History’s Great Philanthropists?

Bill Gates’s decision to relinquish his day-to-day duties at Microsoft to devote himself to his foundation has aroused considerable anticipation in the philanthropic world and beyond.

Already far wealthier than any other grant maker in the world, the Bill & Melinda Gates Foundation now stands to benefit from the leadership of the man who built the most successful company of the high-tech era.

But whether his decision to give up his business duties over the next two years so he can focus most of his time on his foundation will produce similar accomplishments in philanthropy could be a different story.

Although none of history’s most-important donors started their philanthropic careers as young or as rich as Mr. Gates is, few business leaders have succeeded in giving away money as effectively as they made it.

Andrew Carnegie’s gifts to libraries and other institutions were important in their day, but he ultimately failed to dispose of his fortune during his lifetime, and his foundation’s greatest successes occurred after his death.

While he was amassing his fortune, John D. Rockefeller regularly donated large amounts of it for projects of lasting importance, such as establishing the University of Chicago. But even though he stepped away from his business at the midpoint of his life, he relied chiefly on talented aides to carry out the work of his foundation.

Little that the Ford Foundation did under Henry Ford’s direction was notable outside Michigan, and Thomas Edison’s giving is largely forgotten today.

Recognizing where their abilities really are, some business leaders, including Warren Buffett, one of the few Americans whose wealth comes close to that of Bill Gates, have even gone so far as to insist that they will not engage in philanthropy during their lifetimes. Instead, they plan to leave their fortunes to their wives and children.

Bill Gates has chosen a different course, but whether it will prove to be better than those of earlier entrepreneurs remains to be seen.

One place he might look for guidance is to the philanthropic career of Julius Rosenwald, the merchandising mastermind behind Sears, Roebuck, whose life is the subject of a new biography by his grandson, Peter Ascoli, published by Indiana University Press.

Although Mr. Rosenwald continued to manage his company for many years afterward, he devoted increasing amounts of his time to philanthropy once he reached the age of 50.

His particular focus was Southern education, especially for black students.

Through a matching-grant program that sought to elicit local community and state government support, Mr. Rosenwald helped underwrite the construction of nearly 5,000 schools from 1912 to 1932.

With educational opportunities for black people restricted by segregation, those schools are widely credited with having laid the groundwork for the civil-rights movement that followed.

Particularly noteworthy about Mr. Rosenwald’s accomplishment is how little money it required. The Rosenwald schools are estimated to have cost $28-million — about $350-million today — not counting donated services and equipment. Only 15 percent came from Mr. Rosenwald himself.

Not all problems, of course, especially those of global scale, can be solved so inexpensively. But unlike business, in philanthropy, bigger is not necessarily better.

To the contrary, too much money can sometimes create its own difficulties, such as by fostering overdependency by grantees, a challenge the Gates Foundation will undoubtedly be required to face.

Mr. Rosenwald’s career also illustrates the virtues of simplicity.

At the time, the obstacles to racial equality in the United States must have seemed complex and intractable, a bit like dealing with global poverty today, as the Gates Foundation is seeking to do.

But instead of trying to change the laws and practices of the segregated South, Rosenwald adopted a more modest and feasible — though by no means uncontroversial — approach of improving opportunities for black youth by building better schools.

If less ambitious, in hindsight, than some advocates for blacks might have wished, this strategy nonetheless produced real progress during hard times for Southern blacks and opened avenues for more extensive changes to come. Sometimes, the best ideas — Carnegie’s libraries are another example — are the simplest.

Through its efforts to create small high schools, the Gates Foundation has shown that it understands this lesson — in sharp contrast to the systemwide school-overhaul efforts recently favored by the Annenberg Foundation and other grant makers, which have generally produced disappointing results.

But in other areas of its grant making, the Gates Foundation has come under fire for allocating too much of its money to scientific research and similar long-range projects, involving delicate arrangements with governments and other partners.

In his business life, Bill Gates was able to transform complex processes into simple actions. He would be well-advised to do something similar if his charitable activities are to succeed.

Finally, not least important about Mr. Rosenwald’s philanthropy was that it was his own.

Not only was he personally involved in his grant making (to the point of conducting site visits, as well as reading requests for support), but he also set up his foundation to dissolve not long after his death.

Today, in fact, Mr. Rosenwald may be best remembered for his opposition to “perpetuities.” Funds established with unlimited lifetimes, he feared, would eventually become stale and bureaucratic in their operations.

And those donors who hoped to gain immortality through their philanthropy, he counseled, are bound to be disappointed. For better or worse, they will be known by what their foundations did, rather than what they believed in and stood for.

Bill Gates’s decision to commit himself to his foundation is a sign that he would like to make it his own, which should guard against the dangers that concerned Mr. Rosenwald. How much of himself he puts into it, and what exactly he wants to do with his philanthropy, will determine if he is remembered as a great philanthropist or a great businessman.

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

A postscript: Within a few days after Bill Gates announced he would devote himself entirely to his foundation starting in 2008, two other billionaires made surprising revelations about their own philanthropic plans.

George Soros, who had long said that he intended to follow Julius Rosenwald’s example by dissolving his foundation — the Open Society Institute — upon his death, changed his mind and said it would keep operating. And Warren Buffett, who had told associates he did not expect to become involved in philanthropy during his lifetime, announced he would start giving his fortune to five foundations: three headed by his children, one set up by his wife’s will, and the last — the Bill & Melinda Gates Foundation. The additional billions to be contributed by Mr. Buffett will further magnify the disparity in wealth and grant-making power between the Gates Foundation and the rest of foundation world.

Even so, Soros’ legacy as a philanthropist will probably remain the creative — even courageous — efforts he undertook to promote education and political liberalization in formerly Communist countries, goals which, as a refugee from Hungary, were of great personal significance to him. And in his own way, Warren Buffett has remained true to his stated intention of not becoming a philanthropist, leaving that responsibility to his children and to his friends, Bill and Melinda Gates. The additional funds donated by Mr. Buffett will enable the Gates Foundation to make more (or larger) grants, but leave unanswered the crucial question of what kinds of grants they will be, on which not only the Gates’ but now Mr. Buffett’s reputations as philanthropists will rest.