Warren Buffett’s Gift to the Gates Foundation: Money that can make a difference

June 26, 2006

“It’s easier to create money than to spend it.” So said Warren Buffett, long before his announcement on Sunday that he would donate the lion’s share of his personal fortune to the Bill & Melinda Gates Foundation. The Foundation will then have the none-too-easy task of finding the right uses for an additional $1.5 billion of grants each year, doubling their current outflow. For those in the development world who have scrambled to keep up with the Gates Foundation’s influence — first on global health and soon on international agriculture and financial services for the poor — the prospect of a mega-foundation with some $70 billion in assets stirs the imagination. The Foundation’s influence on international development will be remarkable, in part because of the volume of resources (more than the market value of the IMF’s gold); but more importantly because of the special nature of the money: it’s flexible, patient and has a risk-reward calculus as part of its DNA. In other words, it is the polar opposite of the type of money that USAID and most other development agencies handle, which tends to be rigidly earmarked, allocated year-to-year, and driven by bureaucratic imperatives.

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1. Nandini Oomman Says:
   June 26th, 2006 at 12:24 pm

   BIG NEWS, BIG MONEY and even BIGGER EXPECTATIONS!
   The operative word here is “can.” This money CAN make a difference, but as we all know–it’s not just about money. The supply side of philanthropy will barely succeed if the demand side is not equipped to handle the money. More money can also bring higher expectations, more corruption and not necessarily the capacity to implement long-term solutions for development challenges that have existed for decades. The onus is on private donors to use their funds responsibly and effectively, so that being successful is not just about disbursing 5% of their returns (to comply with IRS requirements), but really about making an impact on the ground for the long-term. Not an easy task for sure!
   On another issue, wealthy industrialists and corporate magnates in the developing world should take note of the generous contributions of their peers in the developed world and learn by example, but in this case they would actually be working for the good of their own people. Is that possible?

2. Jim Cashel Says:
   June 26th, 2006 at 12:25 pm

   Keep in mind that Bill Gates has another $50 billion of personal wealth that will be added to the mix at some point. I agree, Ruth: the approach is as important as the amount. I’d add two adjectives to your list: smart and fast.

3. Jessica Pickett Says:
   June 27th, 2006 at 8:07 am

   There is a great NPR Q&A piece on Gates’ Growing Public Health Brand that provides an interesting commentary on the implications for both global health and the role of philanthropy.

4. Carol Realini Says:
   June 27th, 2006 at 10:21 am

   I am an entrepreneur who spent a couple of years between companies in Washington DC working on foreign aid issues. I think this is an incredible step for world health for a couple of reasons.
   - Gates Foundation has a fresh approach
   - This is enough money to fund some really strategic efforts. Most great efforts around the world are so underfunded that they never scale. The Gates Foundation works more like a VC than a traditional foundation; they take more risks, they believe more money is better for their investments, they provide great support after the funding.
   - The Gates Foundation is not afraid to take on the very tough issues and insist on world changing results
   - Bill & Melinda Gates and Warren Buffett are setting a great model for the rich people of the world. Instead of spending your wealth on personal gain, invest it in making an impact.
   - Less intellectualizing about world problems, more action!
   I love it!

5. Jane Yett Says:
   June 28th, 2006 at 1:12 am

   Gates has an opportunity, now, while he takes time to scale up his internal programs:
   Support the brilliant work of certain small foundations whose work is consistent with well-established research on women, and on grassroots initiatives. This approach to philanthropy still has so little cash behind it that it wouldn’t take much of a contribution to make a mark on history.
   But Gates could give at least a billion, now, to a number of these grassroots foundations, and help set a new standard for international philanthropy. It would be a watershed event.
   What a difference $100 million could make for the world, if it were entrusted, for example, to the Global Fund for Women, the exemplary foundation supporting projects designed by the women themselves. Or $100 million to endow the Global Greengrants Fund, supporting grassroots initiatives around the world, bridging environmental and human rights issues. Greengrants has been an early sponsor, many times, of groups that went on to win the Goldman Prize.
   There is considerable research indicating that
   1. The best way to improve the lives of poor families is most often education for mothers. And household nutrition and household finances flourish best if money enters the family via woman’s control. Philanthropic money that is for “genderless” or “general” purposes doesn’t filter down well to women. It takes a focus on women to get resources to women, and thus to benefit the whole family.
   2. Grants that support local groups’ initiatives, not outsider’s initiatives, contribute to the most useful and enduring improvements in people’s lives.
   Most mainstream foundations (with important exceptions, thank goodness) haven’t broadly incorporated this decades-old research on women’s priorities and grassroots initiatives into their giving, even while they describe these principles as the group wisdom in the philanthropic world, and cite them as part of their public image.
   Encouragement from Gates could bring a good many foundations to take a closer look at some of the now-clear ways the world works, and which they have been mostly discounting, to the peril of their grantees and their own success.
   This is a historic opportunity for Gates to strengthen gender-smart and grassroots-smart foundations, to expand their work and influence.
   It would be a watershed event.

6. John Says:
   June 28th, 2006 at 8:23 am

   I applaud Mr Buffet for making this wonderful
   contribution to the Gates Foundation. If only
   so many other rich people could take his lead.
   With $70 billion in assets this foundation really is ridiculously large. Thankfully Gates and Buffet are using their money for a good purpose instead of buying weapons ! Hopefully a huge amount of good work can come out of this !

7. Gary Carpenter Says:
   June 28th, 2006 at 8:39 am

   Globalization and the U.S. 8 Trillion $ Deficit!!
   You can’t take it with you anyways!! This is a beginning to world peace however I hope some of the cash will be used in this country creating infrastructure and jobs in U.S. My next door nieghbor lost his home and has no income at 58, a woman 38 lost her chefs job in our town and her electric got shut off. She has 2 children. A good philanthropic idea!!

8. Nancy Birdsall Says:
   June 29th, 2006 at 2:37 pm

   Ruth: Yes the key point is that the Gates money is flexible and patient. For that reason it has had tremendous leverage, transforming the way other bigger donors spend on health, and transforming even the way developing countries spend on health. But then: If $100 million of the additional $1.5 billion that Gates Foundation can now spend on global health went to support the Women’s Fund, as Jane Yett above suggests, would its marginal return be higher than the last $100 million spent for health? Might it trigger big changes in the way the aid community now spends on women’s issues, with the same influence and leverage as the foundation has had in health? $3 billion is more than a third of annual government health spending in sub-Saharan Africa. How should such big and flexible money be allocated?

9. Gizaw Tsehai,MD MPH Says:
   July 3rd, 2006 at 9:23 pm

   I am delighted to hear about the donation of $31 billion to Bill and Melinda Gates Foundation by Mr Warren Buffett. I am sure Global Health would be the beneficiary of this generous donation. I am a devout advocate for the cause of global control of HIV/AIDS, in particular in Sub-Saharan Africa. I only hope the local governments and private organizations that received this huge resources are prepared and able to use it wisely and consciously.
   Gizaw Tsehai, MD, MPH

10. Frank Fleischer Says:
    March 7th, 2007 at 9:31 am

    Question please. Where would one write to get a aplication to apply to Warren Buffett foundation for a grant? Frank Fleischer( Comming Together USA.)

11. christopher Says:
    September 10th, 2009 at 10:46 am

    im christopher ebere fom nigeria. im a very enterprising person aspiring to study medicine and surgery but the fund is not there. i hereby solicit your generous support to enable achieve my dream and also live a comfortable life.
    God bless you.
    my email address is dr4all21@yahoo.com and my number is +2347094269806 or +2347040411711

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