January 13, 2009 2:00 am

A profitable view of philanthropy

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The sun is setting over Seattle, but more than two hours into an interview, Bill Gates shows no sign of either running out of things to say or a desire to stop talking as he discusses the philanthropic foundation that now takes up most of his time.

For years, his agenda was tightly controlled by corporate media minders at Microsoft who jealously guarded their modest allocation of his time between journalists primarily interested in his contribution to profit-generating activities.

Several months into early retirement from the software company he co-founded with Paul Allen, Mr Gates seems to relish the extra hours he has for considering and communicating how best to spend $3bn (£2bn) a year via the Bill & Melinda Gates Foundation, the largest philanthropic organisation in the world.

"There's some point where there's a crossover," he says, relaxed in chinos and a black sweater, in an office devoid of personal touches except a family photograph. "I think Microsoft has got great people [in place], and the opportunity to have a dramatic impact on the foundation is particularly high. [If] I'd waited until I was full-time retired and I started the foundation six months ago, I'd be pretty frustrated right now."

He has been supporting his Foundation for a decade, backing projects including internet development, education reform and global health. With generous contributions ever since from him, more recently topped up by his friend Warren Buffett, its endowment stood at $35bn ahead of the downturn last autumn.

As he takes on a far more active role in its leadership, Mr Gates's staff, beneficiaries and observers are now asking how the Foundation will evolve, and whether it can make good on its optimistic objectives to foster equality of opportunity around the world.

Given the disproportionate clout of his high profile and the sheer size of giving, his particular, corporate-inspired approach has an impact on the wider non-profit world, sparking both praise and criticism. "His message that wealthy people should give, and do so in their lifetime, is good," says Pablo Eisenberg, a veteran commentator on philanthropy. "But he is totally unaccountable."

Mr Gates's own growing involvement with the Foundation seems likely to reinforce it in his own image. With nearly 700 employees today, it has become far more complex and, according to a recent poll of organisations receiving grants, more bureaucratic, with insufficient clarity about its priorities.

He has already strengthened management drawn from the for-profit world. Patty Stonesifer, the Foundation's chief executive and a former senior Microsoft executive, has recently stepped down. Mr Gates and his wife Melinda replaced her with Jeff Raikes, another top Microsoft executive, last autumn.

Mr Gates stresses that more decision-making on grants has been delegated, with his and his wife's say-so only formally required on sums above $50m. But there is also greater back-and-forth with employees as he immerses himself in the issues. "There's more e-mail now," he says. "I read more things."

He has been devouring academic textbooks on virology in his evenings, and taken piles of medical journal articles on malaria away on holiday to read. Now he describes still more frequent discussions with researchers and regular field trips to enrich and apply his knowledge.

The greater presence of a man with a reputation for strongly held views and an aggressive style makes some staff nervous. But, as he finalises his first Warren Buffett-style annual letter on the Foundation, he jokes: "Given how much I love this stuff . . . I could probably [write] 20 pages just on [the infection] rotavirus. That hasn't worked at cocktail parties."

Mr Gates bristles at critics' suggestions that the Foundation - which has only him, his wife and Mr Buffett as trustees - should broaden the number and diversity of those who set strategy. He has appointed outside experts to specialist advisory boards for each of its main activities, but sees no need for greater change at the top.

"Corporations have a CEO. We have a CEO. Corporations have a board. We have a board," he says. "It's not a gigantic board . . . It doesn't avoid mistakes, but I think we've really made our best effort on those things."

He seems surprised at suggestions the Foundation could do more to improve transparency, pointing out that it is posting ever more information on its website, from details of grants provided to the (still limited details of) lessons learned from those that failed and succeeded alike.

He is defiant on one more issue. Many argue that Mr Gates's passion for technology means he remains too focused on "magic bullet" technical fixes, such as developing new drugs and vaccines. Others suggest that most will remain useless without fresh effort to work out how to deliver them to the world's poorest and less accessible regions.

Mr Gates replies: "We look at problems and see where things like vaccines can solve those problems. We don't apologise that that was a thing that no aid group thought of themselves in any significant ways, driving new drug discovery for, say, a disease that kills a million people a year."

He concedes that the Foundation can play a catalytic role concerning delivery, but that the provision of healthcare services is primarily the responsibility of developing world countries and government donors with far greater resources than his.

At a time when the downturn is squeezing governments and philanthropists alike, he argues for continued public support for global health in the US, pledging that his Foundation will maintain its giving in spite of the downturn, and launching joint initiatives including an anti-smoking programme with Michael Bloomberg, the businessman turned mayor of New York.

A final theme on which Mr Gates remains unrepentant is his recognition of the need for patience to overcome slow change and periodic failures in order to succeed with his goals.

He can point to his educational support for hundreds of students from poor backgrounds; and funding to the UN-backed Global Alliance on Vaccines and Immunisations, which has extended the lives of millions in the developing world.

But the Foundation's work on US education reform has so far made only limited progress. And the scientific research he has supported to discover HIV vaccines and microbicides has so far reported more setbacks than successes.

Most of these issues, he says, are 15 to 20-year projects. "You only get the benefit if you really stay the course." Mr Gates may have withdrawn early from business, but given the complexity of his non-profit objectives, he will need to stay involved in his Foundation long after normal retirement age.

Charity 2.0: Bill takes a lesson in the business of doing good

Bill Gates is reluctant to offer general rules on philanthropy to others - other than to say that "philanthropy is fun" - but admits to learning several lessons from his involvement in the sector:

* Put your weight behind key funding bodies and organisations that implement your strategies: "We decided that because we were so dependent on the generosity of governments and multilateral organisations to achieve [our] goals . . . we had to be a voice to praise the good work that was going on in many of those partner groups."

* Do not stint on recruitment: "A lot of what makes something successful has to do with the specific people [philanthropists] hire and which breakthroughs they work in, which countries they do the pilots in."

* After gathering information, take swift action: "What do you want? You want quality of input and then you want crispness of decision-making."

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