Rockefeller 2.0: Gates relaunches philanthropy

By Marcia Stepanek and Cristina Maldonado

updated 10:33 a.m. ET June 24, 2008

There’s a story about Bill Gates that his wife, Melinda, likes to tell. Shortly before the couple established their philanthropic foundation in 1997, Bill carried around in his briefcase for a month an emotional letter from an American family asking him to help a sick child who needed a kidney. “Bill agonized over it,” Melinda recalled at a digital industry conference last month in California. “Do you spend $20,000 on a single transplant or buy vaccines for many children in Africa?”

For the past 10 years, the Gateses have opted for the latter: “How can we do the most good for the greatest number with the resources we have?” Bill asked a sea of Harvard University graduates at their commencement ceremony last year.

The answer? If you’re Bill Gates — with $37.5 billion in your foundation’s coffers and as much as $100 billion to contribute over the course of your lifetime — you do it very, very carefully, say philanthropy leaders. With that kind of wealth comes unprecedented giving power: you have the world’s biggest foundation — the Wal-Mart of the global charity sector — and you’ve got the single most powerful leadership platform in philanthropy today. “One out of every 10 foundation dollars spent is going to have the Gates name on it, and that gives (Gates and his foundation) an influence that is impossible to calculate,” says Rick Cohen, the former executive director of the National Committee for Responsive Philanthropy. Adds Steve Gunderson, president of the 2,000-member Council on Foundations: “Bill Gates is now the face of philanthropy for the country, if not the world” — and like it or not, Gunderson told Contribute Media, “the Gateses will have an obligation to lead and deliver for decades to come.”

Indeed, as Gates formally leaves his day job at Microsoft next week to start work full-time at his family foundation (“not to retire,” Gates says, but to “reorder my priorities”), all eyes in the nation’s $300 billion philanthropy sector are focused on the man that many in the field now call “the Rockefeller of our time,” the 52-year-old ex-computer nerd-turned-richest man in America (after Warren Buffett) — the guy who helped spawn the last century’s personal computer revolution and who now, with the same brainiac zeal, wants to make social problem-solving profitable, too.

The Rockefeller of his age
He’s definitely got the cash. Like Rockefeller, Gates is his generation’s richest; his personal assets are valued at an estimated $50 billion, and he remains the largest single shareholder in Microsoft, with 9.6 percent of the stock, a stake currently worth $21.6 billion. That makes for a total fortune greater, in inflation-adjusted currency, than his famous Gilded Age predecessor. Also like Rockefeller, Gates’ journey from tech-industry bad boy and cut-throat business strategist to philanthropist has been a slow and not-always-comfortable transition: Gates, early on, refused to give money away, afraid it would diminish his ability and focus on making money, he told Bill Moyers in a 2003 interview. (“I mean, is it going to erode your ability, you know, to make money? Are you going to somehow get confused about what you’re trying to do?”)

Gates Foundation by the numbers 543: Number of employees at the Bill & Melinda Gates Foundation $16.5 billion: The amount of money the Gates Foundation has pledged or given away since its 2000 inception $2.007 billion: The amount of money the Gates Foundation gave away in 2007 $3.5 billion: The amount of money the Gates Foundation plans to give away in 2009 $37.3 billion: The total size of the Gates Foundation’s endowment $50 billion: The estimated size of Bill Gates’ personal assets Source: Gates Foundation, Contribute Media

Years later, Gates still is making adjustments. During a recent trip to Africa to visit AIDS patients with Melinda, journalists wisecracked privately about Gates’ decidedly awkward “bedside manner” with patients compared to that of his wife’s during visits to the health clinics that the couple’s philanthropy is supporting. (“It’s awkward for me to be out in the field,” Gates told Moyers. “I’m not, you know, particularly good at it. Maybe I’ll never be good at it … but I know it’s important. If [more] people got out like that, you know, these problems would get addressed.”)

Yet also like Rockefeller, Gates believes in his own hyper-logical way that charity can and should have its biggest impact in the areas of health and education, since this can give people everywhere a better shot at overcoming their disadvantages. A Rockefeller gift led to the first successful vaccine for yellow fever: a Gates donation is supporting the quest for a vaccine against malaria, and the couple has joined fellow American philanthropist Eli Broad in his multibillion-dollar mission to reform the nation’s public school system over the next decade. Besides global health and U.S. education, the Gateses have made global development — anti-poverty work — a third key category for their giving.

Shield-bearer for new entrepreneurial class
But unlike Rockefeller, Gates epitomizes a new and expanding global class of people that didn’t exist at the turn of the last century — a young, impatient new group of entrepreneurial, first-generation millionaires and billionaires in established and emerging economies around the globe who see as their personal mission the goal of changing the world in large and measurable ways during their lifetimes. Gates “is on track to becoming their poster child,” says Harvard philanthropy historian Peter Dobkin Hall.

To be sure, Gates — though getting better at addressing a non-tech crowd — will probably never acquire the rock-star appeal of, say, a Bono or the easy eloquence of a Bill Clinton or the creative vision of ex-eBay President Jeff Skoll, whose philanthropic leadership of the social enterprise movement and support for today’s documentary film craze is seeding a hip new social consciousness among today’s cause-wired youth. But the sheer size of the Gateses’ charity enterprise — along with the couple’s willingness to take risks with its dollars and share what works and what doesn’t in their quest for systemic change — will only become more meaningful to fellow philanthropists over time, sector leaders say.

“I meet many high net-worth individuals that are watching Gates and what he does and how he does it, and that’s really exciting in a behavioral way,” says Jacqueline Novogratz, the founder and CEO of Acumen Fund, a nonprofit global venture fund that uses entrepreneurial approaches to solve the problems of global poverty. “It opens up people’s minds to what’s possible with philanthropy today.” Jeff Raikes, the Microsoft executive who was recently named as the foundation’s new CEO, told Fortune magazine in June: “Bill has an incredible opportunity to help shape the thinking of other multibillionaires by getting them to think about the process, the structure, the best practices” of giving money away.

Will he deliver? There’s no question that Gate’s move to focus on his foundation comes at a critical time. Buffett’s decision to give the foundation most of his $45 billion fortune over the next decade is, at least for now, proving to be both a blessing and a curse: already some $3.4 billion of Buffett’s money has been funneled into foundation coffers since 2006, with more coming soon — a rapid capital jolt that has turned the Gates foundation, practically overnight, into the largest private philanthropic foundation of all time. The Buffett mother lode is triggering enormous, startup-style tumult at the foundation and is exacerbating some existing uneasiness in the philanthropy sector over the sheer enormity of what the Gateses are building. Bill himself acknowledged the size challenge — “scale is a challenge” — when he announced he was leaving Microsoft on the heels of the Buffett gift to devote more time to the foundation.

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