It’s hard to imagine that enough hasn’t already been written about the merger of Bill Gates’s and Warren Buffett’s philanthropic billions and visions. Apparently not, as Patty Stonesifer, CEO of the Bill and Melinda Gates Foundation, quickly followed up the flurry of reactions to the big Buffett announcement on June 25th with an e-mail to the Foundation’s grantees, asking them “to do something for us.”
“As we grow, truth-tellers will become ever more important to us. So please: Let us know when things are going well, and even more importantly, when they aren’t. Everyone at the foundation understands that we need to learn from bad news as well as from good, but we can only do that if you help us.”
Stonesifer’s welcome invitation, she probably knows, runs against the grain of philanthropic grantor-grantee discourse. The power imbalance, the difference between running an organization that has to ask for money versus running an organization that gets to dispense billions based only on what the organization—its senior staff and its three or four trustees—determines to be right, makes candor a quality in short supply in the sector. But Stonesifer is right—if the Gates Foundation, or any foundation for that matter, can’t hear and absorb unflinching commentary from the nonprofit sector, the echo chamber characterizing much of institutional philanthropy will persist. Oh, how many nonprofits would love to tell foundations about some of the disastrous results of their best intentions, but refrain because they fear, in some instances with good reason, of being “iced” not only by the foundations in question, but also by their “circle the wagons” peers.
Sometimes raising questions for discussion and debate is just as important as giving foundations specific feedback on their superlative or disastrous grantmaking. And the questions are as relevant from non-grantees as they are from the nonprofits that have landed grants.
Raising questions about the Buffett/Gates announcement triggered comments akin to, “Who the hell are you to criticize these people? All you should be doing is praising and cheering their visionary benevolence and hoping that more rich captains of industry follow the Buffett/Gates lead!”
There’s no question among most knowledgeable observers that the Gates Foundation to date has been among the top echelon of foundations in terms of both substantive and procedural accountability. It puts its money out on the street, apparently reaching a grants-only payout (not including any of the Foundation’s other charitable or administrative expenditures) of 5.08 percent in 2004 and 5.37 percent in 2005,1 although reportedly it has been struggling to maintain its 5 percent payout. The Gates Foundation functions with a comparatively low overhead, with around 275 staff running the world’s largest foundation sitting on $30 billion in assets, and even with its plans to double its staffing in the wake of the Buffett announcement,2 it will still be administratively small in terms of staff-to-assets compared to many of the other top foundations.3
The Gates Foundation takes on critical and controversial issues (public schools, international health) that make most other foundations exceptionally skittish. Because the Foundation’s grantmaking is so gargantuan, the categorical grant totals get overlooked, but the Foundation’s grantmaking in some areas in 2005 alone adds up to huge parts of the entire foundation sector’s commitments to some issues: 4
- $284.3m in education grants ($2.69b overall between 1994 and mid-2006)
- $843.7m in grants for global health ($6.51b through mid-2006)
- $25.1m for global libraries ($301.1m since 1994)
- $75.1m for the Pacific Northwest ($584.6m since 1994)
- $128.2m for other initiatives (apparently around $730m total between 1994 and 2006)
Despite handling grant numbers that most nonprofits cannot even fathom, some Gates Foundation program officers are known for a responsiveness and decency that contrasts sharply with interactions with some other high profile foundation program officers.
There’s no reason to take mindlessly critical potshots at Buffett’s donation of $1.5 billion annually from a $30 billion Berkshire Hathaway stock pool to the Gates Foundation. He had untold options available to him, ranging from creating yet one more mega-foundation from scratch to spending like George Steinbrenner to make his Omaha Royals into the Yankees of Triple A baseball. Rather than playing ego-oriented business and foundation games, he simply invested his philanthropic capital in a going concern, building on a track record of accomplishment on issues of concern to him and his family. Compared to the alternatives, Buffett hit a philanthropic home run.
The Gates Foundation’s clean living, the Buffett beneficence, Warren Buffett’s admirable position on the estate tax, and the two moguls’ self-effacing modesty notwithstanding, the Buffett commitment raises issues for their foundation and nonprofit colleagues and partners that cannot be summarily dismissed because, unlike them, we are not billionaire philanthropists or tycoons. Stonesifer’s e-mail appears to want something more from the sector than the over-the-top sycophancy that characterized most experts contacted by the press. It looked like a grantseeker’s scrum, except that the game was played on a pitch of quotable accolades, signaling to the Gates staff the experts’ availability for contracts and grants. Since then, the game has become more overt, with published commentary reading much like, “Hey Bill, hey Warren, hey Patty, fund this!”5 Or maybe, “Fund me!”
Without criticizing Bill or Melinda Gates or Warren Buffett, there are significant issues brought into relief for all of us to consider.
The press has had the numbers count wrong. Commentary that they’re blending $30 billion of Gates’s philanthropic wealth with $31 billion of Buffett’s fortune into a $61 billion philanthropic casserole is simply wrong. Buffett is going to give the Gates Foundation a sum annually, to be spent entirely in one year’s time, that will be added to the continuing underlying grantmaking of the Gates Foundation itself. Given that the Buffett billions will still be increasing in value in the market, it is entirely possible that if Buffett’s money is fully transferred to the Gates Foundation over a 20–year period, the value could be even substantially higher.
The Gates Foundation won’t double in assets, but it will roughly double its annual grantmaking, not to mention probably substantially increasing its overall spending as well.6 It is possible that the Gates Foundation, while not becoming a $60 billion foundation, will spend like one, accounting for as much as perhaps one out of every ten dollars in foundation spending or grantmaking in the near future. Pre-Buffett, the Gates Foundation had already left other grantmakers far behind in the numbers game, making grants of more than $1.26 billion in 2004 compared to Ford’s 522.9 million.7 In some grantmaking categories, the pre-Buffett Gates is its own ballgame. For example, the Foundation Center’s count of international grants for health in 2004 put the Gates Foundation’s total at $1.19 billion, again compared to Ford in second place with $29.4 million. Of the top 10 grantmakers in this category, the Gates Foundation accounted for more than 90 percent of the total.
Warren Buffett made his philanthropic investment in the Gates Foundation because he found Bill and Melinda—and, one must assume, implicitly, the staff like Stonesifer, Sylvia Mathews, and others—to be the best foundation management and grantmaking team on the market. The team certainly has cachet, well indicated by the enormous press coverage of the Gates’s statement in Toronto calling for the world to rachet up attention and accelerate research on anti-HIV microbicides to protect women from AIDS.8
The Foundation’s latent power is obvious not just in press attention, but in attracting the powerful. No slouch when it comes to leveraging access and power, former president Bill Clinton recently shared the spotlight with the Gateses at the international AIDS conference and traveled with Bill Gates to Lesotho, Uganda, and other parts of Africa in July.9 The Gates Foundation recently awarded Bill Clinton’s foundation three-quarters of a million dollars to investigate how to best deliver HIV/AIDS drugs—an indication of the increasing “collaboration” between Gates and Clinton, leading to what the Clinton Administration’s UN ambassador, Richard Holbrook, called the beginning of the world’s first “super NGO.”10
Holbrook’s comment is simultaneously exciting and unnerving. Our society is already one that celebrates gargantuan behemoths in the same breath as it extols the virtues of small groups, small business, and small towns. The Gates Foundation already dwarfs other philanthropic colossi, with assets nearly three times the size of the Ford Foundation’s, not including the new infusion of Buffett’s philanthropic muscle into the Gates Foundation. Is there a downside for charity and philanthropy in this concentration of grantmaking prowess in one organization?