When Warren E. Buffett pulled out a pen and, in the most generous act of philanthropy ever, signed away 85% of his $37 billion fortune on June 26, the 75-year-old chairman of Berkshire Hathaway was lobbing the problem of abundance right into the lap of his biggest beneficiary. The Bill & Melinda Gates Foundation will now receive the bulk of Buffett's vast wealth in installments of Berkshire Hathaway. (BRK-A) stock, valued at $30 billion, with the first chunk due in July. Says Bill Gates: "It'll be hard work to make sure it's all well spent. It means doubling, over the next three years, up to over $3 billion a year in giving." (see BusinessWeek.com, 6/27/06, "Buffett's Mega-Gift").
Already, the foundation is bracing for the challenge. Federal tax law requires philanthropies to give away 5% of their total assets each year to maintain their nonprofit status. So the first thing the foundation is likely to do is ramp up hiring in order to dole out the cash. The $30 billion foundation has always run lean, with 275 employees, sparse relative to the staff at the $11.6 billion Ford Foundation, the world's No. 2 philanthropy. “We'll obviously have to expand that somewhat and grow the foundation a bit over time,” says Melinda Gates.
The Seattle-based foundation had already been in the throes of change. On June 15, Gates announced plans to step down from a day-to-day role at Microsoft Corp. (MSFT) two years hence to pursue philanthropy full-time. Known for peppering staff with e-mails about projects, he spent only about 15 hours a month at the foundation. But the notoriously demanding boss will soon be sucking up a lot more oxygen when he moves into his office at the nondescript headquarters overlooking Lake Union. (see BusinessWeek.com, 6/16/06, "Bill Gates's Long Goodbye")
TAPPING EXPERTS. Foundation CEO Patty Stonesifer, a former Microsoft executive, has been Gates' eyes and ears in philanthropy since 1997. She brought a business discipline to grant-making, funding hard-nosed critiques of the foundation's own giving. In April she restructured its operations, naming three presidents, all of whom now report to her.
Stonesifer is no micromanager, though. She has hired countless experts, such as David Fleming, the foundation's director of global health strategies, who was previously acting director of the U.S. Centers for Disease Control & Prevention. Stonesifer and the Gateses travel the globe to comprehend the magnitude of the issues they're tackling, but they also bring experts to headquarters to educate the staff, a practice that will only grow with the new largesse.
New digs for the nonprofit were already in the works, in anticipation of expanding to handle more of the Gateses' wealth, estimated at $50 billion. A 12-acre campus in the shadow of Seattle's Space Needle is expected to open in 2010. But Gates says the foundation won't become a bloated bureaucracy and will continue to do much of its work through partners. “We're more of a convener,” Gates says (see BusinessWeek.com, 6/26/06, "Bill Gates Gets Schooled").
"DEEPEN OUR COMMITMENT." One thing the foundation is unlikely to change is its focus. It has two core concerns—inequities in global health and in U.S. high school education—and the Gateses say they won't be straying from those. That means pushing deeper into global development, funding micro-lending efforts to promote self-sufficiency, thus improving families' chances of avoiding diseases that plague their regions.
Another interest: biotech to help develop drought-resistant seeds for Africa. The foundation also expects to use the new money to fund costly trials for a variety of vaccines. Says Melinda Gates: “We're not going to broaden the foundation into a whole lot of new areas, but deepen our commitment.” (see BusinessWeek.com, 6/16/06, "The Education of Bill and Melinda").
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