« Author: Cherney, D. »

How much influence should a ‘mega-foundation’ have?

Tomorrow is Bill Gates’ last official day at Microsoft. His energy will now be reoriented toward philanthropic efforts at the Bill & Melinda Gates Foundation. The foundation’s assets currently exceed $37 billion. In 2006, Warren Buffet pledged roughly $31 billion in Berkshire Hathaway stock -- at rate of approximately $1.5 billion per year -- to the Gates Foundation. The exact dollar value of his pledged donation is impossible to calculate, since it is directly tied to the performance of his stock. Regardless, the current assets and pledged donations to the Gates Foundation exceed $60 billion.

As a basis for comparison, The Nonprofit Almanac 2008 (p.102) asserts that the 71,095 active foundations in the United States granted $36.4 billion in 2005 (The most recent year for which data was available to the authors). In 2005, the Gates Foundation granted just over $1.5 billion. Their contribution accounts for more than 4% of the total $36.4 billion foundation dollars granted that year. In 2007, the Gates Foundation donated $2 billion. In short, the Gates Foundation contribution to total foundation giving is likely increasing.

I applaud the extreme generosity of Bill and Melinda Gates and Warren Buffet. However, their concentrated wealth raises serious democratic and scientific questions. In a June 9th WSJ article, Melinda Gates rightly points out that $20,000 helping “a child who needed a kidney” is “$20,000 that doesn’t go to buy life-saving vaccines” to children in developing countries. These types of decisions can have large social implications, impacting both domestic and foreign policy. For example, if the Gates Foundation were to give $2 billion towards AIDS research, it could potentially shift research efforts away from other worthwhile pursuits. My point is not about effectiveness, which is another important discussion. I am speaking to the influence donors can have.

Who is best suited to make such decisions?

How much influence should one private foundation have? Is it too much for one foundation to control 5%, 10%, 25%, or 50% of total foundation giving?

Is it possible for a single foundation to drive research and programmatic agendas? If so, how much control/influence should a foundation have?