Management & Leadership

Philanthropy the Microsoft Way


Accra, Ghana - It's lunchtime at the Ashongman School in Accra, the capital city of Ghana, and dozens of children in orange-and-brown uniforms file out to a serving table to pick up plates of jollof rice, a hearty dish with stewed chicken and tomatoes.

As the kids sit down, Jeffrey S. Raikes approaches them with the air of a waiter checking to see if his customers are enjoying their meal. "Do you like the rice?" he asks, as the kids stick their fingers into bowls to scoop up their meals in the dimly lit room. The kids nod, not entirely sure what to make of the stranger.

Raikes isn't there to gauge if the menu is a hit, nor can the chief executive of the Bill & Melinda Gates Foundation claim credit for the three-year-old Ghana School Feeding Program. Of the $2.8 billion the foundation doled out last year, not a penny was spent on putting food in the mouths of these children. Instead, Raikes wants to learn why much of the rice eaten by the program's participants comes from Thailand instead of from farms a few miles away. If Ghana's farmers can find buyers for their crops, Raikes argues, they will have an incentive to make their land more productive and give this West African nation a more secure food supply. "The real opportunity here is to create a stabilized market," says Raikes. "You can use the school feeding program to bootstrap those efforts."

"Bootstrap" is a word that Raikes uses a lot. To him, it means creating a virtuous cycle in which suppliers can build businesses around long-term alliances with a strong partner. For anyone who has ever worked with Microsoft (MSFT), as Raikes did for 27 years before retiring and joining the Gates Foundation, it's a familiar concept. The software giant created an ecosystem of partners that fed off Microsoft technology. Raikes is eager to import these ideas into the world of philanthropy. In October the foundation said it would donate $15 million to the Alliance for a Green Revolution in Africa to help small farmers in Ghana and four other countries improve access to markets for their crops, among other things.

When Raikes, 51, took over the planet's largest philanthropy from Patty Stonesifer a little more than a year ago, he was an unconventional and somewhat controversial choice. Other than giving away much of the fortune he had amassed at Microsoft—his stock was worth $400 million when he stepped down as president of the Business Division in early 2008—Raikes had no philanthropic pedigree. He lacked expertise in the Gates Foundation's core areas of interest: improving health in developing countries, eradicating poverty, and improving high school graduation rates in the U.S. "He was an unknown quantity," says Vartan Gregorian, president of Carnegie Corp., one of the country's largest philanthropies.

UNDERSTANDING BILL

But Raikes has something few could match: a deep understanding of Bill Gates. That mattered to Gates. He wanted a chief executive who could adapt to his intense, often impatient style and bring a different approach to the world of philanthropy. "We looked for somebody who wants to learn because a lot of things we're doing are very novel," says Gates. "We're not just trying to do what's been done in the past." Raikes also had the chops to run a large and complex organization, having created the Microsoft Office word-processing, e-mail, and spreadsheet business, turning it into a highly profitable unit that brought in $19 billion the year he left.

Now Raikes is reshaping the $34 billion foundation, in the process giving it some of the characteristics that made Microsoft both revered and reviled. He's encouraging many of his 781 employees to place big bets on innovations that might someday make it easy to, say, detect malaria or tuberculosis quickly. He has also pushed to make sure that his people focus on funding projects that can yield measurable results. And while Raikes is making efforts to improve the foundation's image, he's clearly comfortable with using the organization's financial might to set its own agenda in trying to solve seemingly intractable problems.

Raikes' approach isn't likely to assuage concerns that the 12-year-old foundation's sway extends well beyond the funds it doles out. The huge pot of money it offers can shift the direction of research in a field. When it comes to global development, for example, the foundation spends millions on the creation of new seed varieties that are resistant to specific pests and diseases. That's a huge carrot for researchers, keen to attract funding for their work. But it may come at a cost to simpler solutions like planting existing insect-repellent crops next to ones that are vulnerable. "They have a disproportionate influence on the direction of agriculture research," says Raj Patel, a visiting scholar at the University of California at Berkeley's Center for African Studies. "There's an opportunity cost to what Gates is doing. He can spend his money however he likes. But in doing so, he smothers [other] opportunities."

Like his boss, Raikes isn't cowed by criticism. Accusations that the foundation is overly influential, unaccountable, and arrogant are similar to the complaints that Microsoft weathered for decades as it dominated techdom. "The point here is not to get everybody to agree with our approach," Raikes says. "We have to have the courage of our convictions."

Yet he also recognizes the need to solicit alternate viewpoints, even if he doesn't follow them. Various governments sued Microsoft for antitrust violations in the late 1990s. Critics say the actions that led to those suits reflected an institutional arrogance. "At Microsoft during the early '90s, we didn't really feel like the politics associated with our industry should be on the radar," Raikes says. "I think it's very important to be in tune with what people are thinking about the foundation and make sure that we are viewed as a collaborative partner." Earlier this fall he asked the Center for Effective Philanthropy to conduct a survey of the foundation's current grantees to learn what it can do better.

Raikes is also willing to spar with Gates. Toward the end of summer, Gates sent Raikes a memo expressing frustration with the slow progress of one division at the foundation and suggested a reorganization. Raikes pushed back: "I said, 'So Bill, are you going to be the decision-maker, or am I, as the leader of this organization, going to be the decision-maker?' " Raikes recalls. Gates backed down. "If Bill gets intense," Raikes says, "it doesn't really ruffle my feathers."

Many who have worked with Raikes note that he's quick to put people at ease. Back in Ghana, a day after visiting the Ashongman School, he traveled to Ayisa, a tiny farming village where about 65 families live in mud huts with thatched roofs and no electricity. As he sat with the locals to talk about the local farm radio station the foundation has helped finance, he pointed out that he grew up on a farm in Ashland, Neb. He didn't mention that, while the Ayisa farmers scratch out what amounts to a living on plots of 35 acres or so, the Raikes family farm covers more than 2,500 acres. But he did note that his family's farm produces 8 to 12 tons of corn per acre, an eye-popping amount to the Ayisa farmers, who are lucky to get a ton per acre and often produce much less.

Raikes might have stayed a farmer had he not stumbled into the computer revolution as a student at Stanford University in the late 1970s. Back then, he learned how to program an Apple II to do complex economic modeling, something that helped land him a job with Apple. A few years later he moved to Microsoft, realizing his passion was in developing software. When he left, he was seen as the third-most-powerful executive behind Gates and CEO Steven A. Ballmer.

Now he's trying to apply the lessons of running a big organization to the foundation. "There was a bit of decision-making constipation, and that frustrated the employees," Raikes says. He posted something of a management manifesto on the foundation's internal Web site in July, calling for "decision-making hygiene." With any meeting, any strategy, any position paper, one staffer is in charge, he wrote. Gone are the days of trying to please everyone.

In his quest to improve both the perception and the impact of the foundation, Raikes has sought inspiration far and wide. Earlier this year he met with Norman Borlaug, the Nobel Peace Prize winner who was credited with creating the Green Revolution that brought new food production techniques to developing countries. Borlaug, who died just a few months after their meeting, was a brilliant scientist, Raikes says, "but the guy's success was even more related to the fact that he was a butt-kicker."

Return to the Philanthropy 2010 Special Report Table of Contents

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