PART 10: Bill Gates - Full-Time Philanthropist -I
On June 16, 2006, three decades after starting the most influential American technology company, Microsoft Corp. Chairman Bill Gates said that he plans to step down from day-to-day work at the software giant to focus his energy full time on the $29 billion foundation he started with his wife 12 years ago.
Although the transition will not take place until July 2008, the move signals a new era for the software company that has been closely associated with Gates' geeky persona and provides an opportunity, according to many in the public health community, for Gates to become one of the most important philanthropists in U.S. history.
Gates said he intends to remain chairman of Microsoft "for the rest of my life" but plans to relinquish all daily duties at the company and instead focus his legendary competitive drive on improving global health and access to technology. He and Microsoft chief executive Steven A. Ballmer laid out a two-year transition plan to begin grooming the next crop of executives to run the Redmond, Wash., firm.
Gates' sometimes relentless management style has bulled the company through many roadblocks. overcoming the government's attempt to break it up as a monopoly and overwhelming competitors such as Apple Computer Inc., International Business Machines Corp. and AOL. While Gates' founding vision of a personal computer on every desk has essentially come true, the basis on which he built the company software -- is being overtaken by the spread of high-speed Internet. New rivals such as Google Inc. promise a future where tools such as spreadsheets and e-mail reside online instead of in software on someone's hard drive. Gates' departure comes at a time when Microsoft is scrambling to adjust to that sudden shift.
"With success, I have been given great wealth. And with great wealth comes great responsibility to give back to society, to see that those resources are put to work in the best possible way to help those in need," Gates told a group of reporters. "Obviously, this decision was a hard one for me to make. I'm very lucky to have two passions."
Six years ago, Gates stepped down as chief executive to serve as "chief software architect," but he continued to be a towering daily presence at the company even as it saw the rise of Google and a new breed of competitors. Now 50, he made clear yesterday that he intends to step away from corporate life to focus on a foundation that already surpasses many governments across the globe in terms of spending and impact in the areas of vaccines, immunization and AIDS research.
The Bill & Melinda Gates Foundation's $29 billion endowment is 10 times the size of the Rockefeller Foundation and three times the size of the Ford Foundation. The foundation has contributed $159 million, or half of worldwide funding, for research and treatment that could result in nine or 10 new drugs that would help the world's poorest people fight diseases such as malaria and tuberculosis. Public health experts said the effort has invigorated areas of research that had fallen by the wayside and introduced innovative approaches by partnering with other nonprofit groups, governments and drug companies.
"This is good news for the world's poor," said Anne Lynam Goddard, chief of staff of CARE, an Atlanta-based nonprofit group focusing on ending global poverty and social injustice that received $10 million from the Gates foundation this year for health initiatives. "The Gates foundation has been a trendsetter. They've raised the bar in public health and reinvigorated interest in it."
Goddard and other public health experts said it is not just the sheer amount of money Gates brings to the table but also the businesslike focus on results and effectiveness that has made an impact. It's the "entrepreneurial, results-focused culture [that] has been a great thing for global health," said Orin Levine, executive director of a Johns Hopkins University program to spread access to pneumococcal vaccines, which received funding from the foundation.
"It wasn't that long ago people thought we couldn't make a malaria vaccine. But Bill said, 'No, let's do it,'" Levine recalled. "We had amazing results where we did a small but important trial in Mozambique, and this was the first evidence in the field that malaria vaccine could protect kids against malaria disease. It's indicative of what they've brought to the table. They're not afraid to tackle really big, difficult problems."
The Gates foundation has partnered with major drug companies to help subsidize research programs and bring a focus to some of the poorest countries. In Botswana. Bill and Melinda Gates spoke with former prostitutes to learn more about the spread of AIDS in that country. "In some countries, the issue of AIDS is very much an issue of commercial sex workers. Where others might have shied away from working in that sector, they haven't," Goddard said. "They come with no political agenda."
Gates made clear that he does not plan to take the helm of his foundation, where his wife, Melinda, already devotes much of her time. He said his role there will be similar to his current role at Microsoft, but he added, "I don't know what it will be like to not come to Microsoft every day."
Gates and Ballmer tried to assure investors and employees yesterday that the company would not change much once Gates departs, but that was hard to fathom given that his image and persona sona have long been intertwined with those of the company.
Microsoft went public in 1986, and the following year, Gates became the poster child for the self-made man and at 31 the youngest self-made billionaire.
Gates typically dresses in the casual geek-chic style of khakis and V-neck sweaters - he wore one during his announcement yesterday -- and carries an equally self- effacing public demeanor. But behind closed doors, he has a reputation for being abrupt and dismissive of ideas he considers sub-par.
"There is that ruthless streak in him," said Laura DiDio, an analyst with the Yankee Group who also followed Gates as a reporter. During meetings, he was known to dismiss comments as "stupid," she said, and as his persona and Microsoft's corporate stature grew over the years, so did people's reluctance to challenge his authority, "You don't challenge the emperor on his home turf," DiDio said. "I don't think anybody's going to dominate Microsoft the way Bill has, and the company will benefit from new ideas and new blood of the younger generation of engineers," she said.
The Bill & Melinda Gates Foundation
The Bill & Melinda Gates Foundation is the largest transparently operated charitable foundation in the world, founded by Bill and Melinda Gates in 2000 and doubled in size by Warren Buffett in 2006. The primary aims of the foundation are, globally, to enhance healthcare and reduce extreme poverty, and, in the United States, to expand educational opportunities and access to information technology. The foundation, based in Seattle, Washington, is controlled by its three trustees: Bill Gates, Melinda Gates, and Warren Buffett. Other principal officers include Co-Chair William H. Gates, Sr. and Chief Executive Officer Patty Stonesifer. It has an endowinent of US$38.7 billion as of December 31, 2007.
History
The foundation was initially funded by Bill Gates with US$126 million in 2000. During the foundation's first two years, funding grew to US$2 billion. The B&MGF was endowed by Bill Gates, chairman and founder of Microsoft and his wife, Melinda Gates in January 2000, through the merger of the Gates Learning Foundation and the William H. Gates Foundation. The Gates Learning Foundation was formed out of the Gates Library Foundation, which was founded in 1996, as an outgrowth of the Microsoft Libraries Online initiative. On June 15, 2006, Gates announced his plans to transition out of a day-to-day role with Microsoft, effective July 31, 2008, to allow him to devote more time to working with the foundation.
Bill and Melinda Gates, along with the musician Bono, were named by TIME as Persons of the Year 2005 for their charitable work. In the case of Bill and Melinda Gates, the work referenced was that of this foundation. On May 4, 2006, the foundation received the Prince of Asturias award for International Cooperation.
The Warren Buffett donation
On June 25, 2006, Warren Buffett (then the world's second richest person at the time) pledged to give the foundation approximately 10 million Berkshire Hathaway Class B shares (worth US$62 billion on March 5, 2008) spread over multiple years through annual contributions. Buffett set conditions so that these contributions do not simply increase the foundation's endowment, but effectively work as a matching contribution, doubling the Foundation's annual giving: "Buffett's gift came with three conditions for the Gates foundation: Bill or Melinda Gates must be alive and active in its administration; it must continue to qualify as a charity; and each year it must give away an amount equal to the previous year's Berkshire gift, plus another 5 percent of net assets. Buffett gave the foundation two years to abide by the third requirement." The Gates Foundation received 5% (500,000) of the shares in July 2006 and will receive 5% of the remaining earmarked shares in the July of each following year (475,000 in 2007, 451,250 in 2008, and so on). Activities
As of 2006, the foundation has an endowment of approximately US$34.6 billion. To maintain its status as a charitable foundation, it must donate at least 5% of its assets each year. Thus the donations from the foundation each year would amount to over US$1.5 billion at a minimum.
The Foundation has been organized, as of April 2006, into four divisions, including core operations (public relations, finance and administration, human resources, etc.), under Chief Operating Officer Cheryl Scott, and three grant-making programs:
* Global Health Program
* Global Development Program
* United States Program
Global Health Program
The President of the Global Health Program is Tachi Yamada. The Gates Foundation has quickly become a major influence upon global health; the approximately US$800 million that the foundation gives every year for global health approaches the annual budget of the United Nations' World Health Organization (192 nations) and is comparable to the funds given to fight infectious disease by the United States Agency for International Development. The Foundation currently provides 17% (US$86 million in 2006) of the world budget for the
attempted eradication of poliomyelitis (polio). The Global Health Program's other significant grants include-
The Global Alliance for Vaccines and Immunization
The foundation gave The Global Alliance for Vaccines and Immunization a donation of US$750 million on 25 January 2005.
The Institute for One World Health The foundation gave The Institute for One World Health a donation of nearly US$10 million to support the organization's work on a drug for visceral leishmaniasis (VL).
Children's Vaccine Program
The Children's Vaccine Program, run by the Program for Appropriate Technology in Health (PATH), received a donation of US$27 million to help vaccinate against Japanese encephalitis on 9 December 2003.
University of Washington Department of Global
Health
The foundation provided approximately US$30 million for the foundation of the new Department of Global Health at the University of Washington in Seattle. The donation promoted three of the Foundation's target areas: education, Pacific Northwest and global health.
HIV Research
The foundation has donated a grand total of US$287 million to various HIV/AIDS researchers. The money was split between sixteen different research teams across the world, on the condition that they share their findings with one another.
Global Development Program
President Sylvia Mathews leads the Global Development Program, which combats extreme poverty through grants such as the following: Financial Services for the Poor
Financial Access Initiative
A $5 million grant allows Financial Access Initiative to do field research and answer important questions about microfinance and financial access in impoverished countries around the world.
Grameen Foundation
A $1.5 million grant allows Grameen Foundation to make more microloans, with the goal of helping five million additional families and successfully freeing 50 percent of those families from poverty within five years.
Agricultural Development
Rice Research
Donated US$15,000,000 to the Philippine Rice Research Institute to develop rice with higher amounts of micronutrients.
Alliance for a Green Revolution in Africa (AGRA)
The Gates Foundation has partnered with the Rockefeller Foundation to enhance agricultural science and small-farm productivity in Africa, building on the Green Revolution which the Rockefeller Foundation spurred in the 1940s and 1960s. The Gates Foundation has made an initial $100 million investment in this effort, to which the Rockefeller foundation has contributed $50 million.
Global Libraries
Access to Learning Award
Each year an award of up to US$1 million is given to a public library or similar organization outside the United States that has an innovative program offering the public free access to information technology.
Global Special Initiatives
The Foundation's Special Initiatives include responses to catastrophes as well as learning grants, which are used to experiment with new areas of giving. Currently, the Foundation is exploring water, hygiene and sanitation as a new focus within Global Development.
Indian Ocean Earthquake
The foundation made total grant donations of US$3 million to various charities to help with the aid effort for victims of the 2004 Indian Ocean Earthquake. These charities include:
* CARE international
* International Rescue Committee
* Mercy Corps
* Save the Children
* World Vision
Kashmir Earthquake
The foundation made a donation of US$500,000 for the 2005 Kashmir earthquake.
Water, Hygiene and Sanitation
The Foundation is giving the International Bank for Reconstruction and Development US$1,200,000 over 3 years to find new, sustainable ways to make water, sanitation and hygiene services safer and more affordable.
United States Program
Under President Allan Golston, the United States Program has made grants such as the following:
U.S. Libraries
In 1997, the foundation introduced a U.S. Libraries initiative with a goal of "ensuring that if you can get to a public library, you can reach the Internet." The foundation has given grants, installed computers and software, and provided training and technical support in partnership with public libraries nationwide.
Most recently, the foundation gave a $12.2-million grant to the Southeastern Library Network (SOLINET) to assist libraries on the Gulf Coast of Louisiana and Mississippi, many of which were damaged or destroyed by Hurricanes Katrina and Rita.
Education
Carnegie Mellon University
The Foundation gifted US$20 million to the Carnegie Mellon University School of Computer Science for a new Computer Science building which will be named the Gates Center for Computer Science.
New Schools Venture Fund
The Foundation contributed US$30 million to help New Schools to manage more charter schools, which aim to prepare students in historically underserved areas for college and careers.
Gates Millennium Scholars
Administered by the United Negro College Fund the foundation donated US$1 billion for scholarships to high achieving minority students.
Gates Cambridge Scholarships
Donated US$210 million in October 2000 to help outstanding graduate students outside of the United Kingdom study at the University of Cambridge. Approximately 100 new students every year are funded.
University Scholars Program
Donated US$20 million in 1998 to endow a scholarship program at Melinda Gates' alma mater, Duke University. The program provides full scholarships to about 10 members of each undergraduate class and one member in each class in each of the professional schools (Schools of Medicine, Business, Law, Divinity, Environment, and Nursing). The program also pays for a full-time administrator who organizes seminars to bring these scholars together for interdisciplinary discussions as well as the selection process in the Spring.
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