How Generous Is the Bill Gates Foundation?

If you gave a friend five dollars, and at the same time picked his pocket of five dollars, neither one of you would be much worse off -- but you wouldn't be much better off either. The largest foundation in the world, the Bill and Melinda Gates Foundation, is doing just that, only on a multi-billion-dollar scale, and at the expense of millions of people living in the poorest parts of the world.

The Los Angeles Times recently published a carefully researched article about the conflicts that exist within the Gates Foundation between the companies that the foundation invests in and the grants that it makes, particularly in Africa. For instance, the article explains that Gates is investing in an Italian oil company, Eni, that spews pollution, and "250 toxic chemicals in [its] fumes and soot have long been linked to respiratory disease and cancer." This is the same part of the world where the Gates Foundation grants millions of dollars on vaccinations to immunize children against deadly diseases like polio and measles.

Given its size and visibility it is easy to criticize how the Gates Foundation works. This is, however, more than incidental criticism of a very big target. It is a morality tale, for philanthropy can operate more responsibly and morally, but only if the most powerful among us choose to think differently about how they work.

We've all heard the Hippocratic oath: Doctors should first do no harm. Foundations have the same obligation; they should aim to do no harm to their individual grantees. With the anticipated contributions from Warren Buffet, the Gates Foundation's endowment will near $70 billion in the next few years. The second largest foundation in the world is the Ford Foundation with an endowment of $12.5 billion.

To put this in further perspective, if The Gates Foundation were a country, it would rank number 56 out of 177, according to World Bank statistics from 2005, comfortably sandwiched between Kuwait and Bangladesh. Its endowment is certainly larger than the economies of almost all of the countries in which it works. Given its size, visibility and ambitions, just doing no harm to individual grantees would be nice, but it isn't enough. The Gates Foundation has to do no harm to whole communities and countries. Investing millions of dollars in companies like British Petroleum that pollutes the air and land, and Abbott Laboratories that makes AIDS vaccinations that are unaffordable for Africans is diametrically opposed to the foundation's programmatic goals of improving health outcomes of residents of these same countries.

Bill Gates built a business empire by focusing on products and profits. He has built a foundation empire by focusing on programs and profits -- but what's good for his personal finances or for Microsoft isn't necessarily good for the people of Africa. The key point is that the endowment that fuels the Foundation is no longer the Gates family's personal money. These are tax-exempt funds and through the creation of the entity of the Gates Foundation itself, their investment and use has a very public purpose that deserves better stewardship.

When the Times news story revealed that the investments of the Gates Foundation are neutralizing the positive benefits of the grants, the foundation's initial response was to agree to review their investment policies. The Foundation then quickly changed course. According to Patty Stonisfer the Foundation's CEO, in a letter to the editor of the LA Times, " It would be naive to think that changing the foundation's investment policy could stop the human suffering blamed on the practices of companies in which it invests billions of dollars."

This is disappointing and disingenuous reasoning on many levels.

Stonesifer implies that Gates is like any other individual investor. Again, some perspective on the size of the endowment of the foundation is in order. I might invest $1,000 or even $5,000 in Abbott Laboratories. The Gates Foundation invests $159 million -- which one of us has more say in how Abbott operates?