News and analysis
March 07, 2011

Gates Fund’s CEO Outlines Giving Plans for 2011

Courtesy of the Bill & Melinda Gates Foundation

Jeffrey S. Raikes, chief executive officer of the Bill & Melinda Gates Foundation in Seattle.

The Bill & Melinda Gates Foundation gave out far less money in 2010 than anticipated because staff members were given the option of distributing some of their grant dollars in later years, according to the fund’s chief executive, Jeffrey Raikes.

The world’s largest philanthropy donated $2.6-billion last year, compared with $3-billion in 2009, because program officers decided to hold off on distributing about $500-million in grants. That money is now available for 2011.

In an interview with The Chronicle, Mr. Raikes said he expected that the Seattle foundation’s grant budget would be about $3.3-billion this year, although staff members would have the same flexibility to spend that money in later years depending on when they felt the money would be best used. (Editor's note: This corrects an earlier version of the story, which stated the figure as $3.5-billion).

“We want to stick to the principle of trying to make sure people are making high-quality grants at the right time,” he said.

The foundation’s endowment, meanwhile, has recovered much of its value following the 2008 stock-market plunge. It now totals $36.7-billion, compared with $38.9-billion in 2007, according to a Chronicle survey released on Monday.

Mr. Raikes said he felt “very comfortable about where we are,” particularly given the rise in Berkshire Hathaway stock. Its founder, Warren Buffett, has pledged to give 10 million Berkshire shares to the philanthropy and directs that it spend his money, which in 2009 totaled $1.2-billion, the year after it is received.

Mr. Raikes, a former senior executive at Microsoft who has led the Gates fund since 2008, warned, however, that progress in global health, development, and American education—the causes that garner most of the foundation’s money—could stall because of budget cutting by governments around the world. For example, he questioned whether a $22-billion pledge by the world’s eight richest countries to increase agricultural productivity would be met.

Support for News

In a wide-ranging conversation, Mr. Raikes also talked about the foundation’s approach to supporting journalism.

The Gates fund has put about $50-million into journalism so far, according to The Seattle Times, including grants to for-profit news-media such ABC News and the British newspaper The Guardian. The money, which pays for reporting on global health and other causes that Gates supports, has spurred a debate about whether foundation-financed reporting on specific topics sacrifices journalistic objectivity.

Mr. Raikes acknowledged that foundation support of journalism raises complicated questions but said struggling news-media outlets just don’t have the money anymore to ensure quality coverage of topics like how the world’s poorest people live.

“We feel a very strong responsibility to enable the voice of the poor,” he said.

Mr. Raikes said that he thought the foundation could avoid any problems so long as it approached the work carefully. “I do think people get a little self-righteous about it and forget there’s been this issue for a long time with advertisers,” he said. “If we pick the right organizations who are very dedicated to quality journalism and dedicated to maintaining their integrity, I really don’t think there’s that much of an issue.”

Mr. Raikes said he anticipated that journalism projects would continue to receive about the same level of support from Gates that it has to date.

Investment Questions

Another area for which the Gates foundation has long been criticized is its approach to how its endowment is invested.

While some philanthropies have moved toward investing some of their assets in “socially responsible” companies that advance the foundation’s mission, Gates has stayed away from this approach, although it has put about $400-million into program-related investments such as providing guarantees for bonds for charter schools.

Mr. Raikes said the foundation did not plan to make any changes to its investment strategy.

“I prefer our approach where we’re either investing to create a return that will grow our endowment and give us more resources to be able to do our programmatic work, or we’re investing in our programmatic work without trying to set some goals regarding returns,” he said.

Mr. Raikes also said the foundation is continuing to explore new ways to improve communication with grantees following a critical report last June in which many nonprofits complained that Gates is often unresponsive.

He said the foundation is working with the Center for Effective Philanthropy, the group that produced the report, to identify new avenues for eliciting feedback from grantees. Perhaps foundations could use online tools like Survey Monkey, which enable people to easily create and send out surveys, to engage with grantees, Mr. Raikes said.

“Our sector in general needs to put itself in a position of more continuous feedback loops,” he said.

Agricultural Controversies

Recent spikes in food prices have raised concerns about a looming food crisis and focused attention on agriculture productivity, a key area of Gates’s work.

Mr. Raikes said that the fund’s work in agriculture continues to be focused on the medium and longer term, although the foundation is already helping farmers grow more food. He cited a coffee farmer in Uganda who, with assistance from the Gates fund, has been able to increase his production eightfold by relying on better trees and fertilizer, using different techniques, and gaining access to new markets.

He also discussed the foundation’s support of genetic engineering of crops, which has sparked criticism from advocates who worry such crops may be unsafe and benefit large agribusinesses at the expense of the small farmers that Gates says it is trying to help.

Mr. Raikes said that only 5 to 10 percent of the Gates foundation’s work in crop breeding is “transgenic,” meaning the crop contains a gene or genes that have been transplanted from another plant or species.

“But I think that technology is important,” he said. “It’s really made a difference for farmers in the developed world. African crop breeders who are breeding better crops for farmers in Africa should be allowed to use the tools that the rich world uses.”

He said safety hasn’t proven to be an issue: “The scientific evidence points to the safety of crop breeding, whether it’s conventional or transgenic.” Mr. Raikes also said that people who have attacked the foundation for working with agribusinesses such as Cargill often misunderstand the role of such companies. In one recent arrangement, the nonprofit TechnoServe will use Gates money to work with Cargill to help farmers in Zambia gain new markets for their soya crops.

Some critics “think that this is somehow trying to open up new markets for U.S. commercial agriculture, but in fact what’s really happening is these companies are contributing intellectual property that’s being used by African breeders,” Mr. Raikes said, noting that farmers always have the option of whether or not to use hybrid and genetically-modified crops.

Marisa López-Rivera contributed to this article.