Bill Gates’s announcement in early May that he will donate most of his wealth to his foundation — and then close it by 2045 — revealed more than his own plans. It provided further evidence that a once-heralded era of giving is coming to an end.
Established as two organizations in the 1990s, what became known as the Bill and Melinda Gates Foundation signaled the emergence of a new wave of ultrawealthy tech entrepreneurs who believed they could apply their success in the business world to tackling society’s most challenging problems. By putting their money behind the right combination of experts and novel strategies, they aimed to achieve breakthroughs in areas such as health, education, and the environment similar to their accomplishments in the digital world.
The Gates Foundation’s change of plans does not amount to an admission that this approach was wrong. On the contrary, Gates defended his organization’s record but noted that the times and the political landscape have changed and that grant-maker strategies must change as well. In fact, long before the second Trump administration took power, the tech entrepreneurs’ expert-oriented philanthropy had already lost much of its luster. Even among institutional grant makers, interest has been growing in “trust-based philanthropy,” which gives more decision-making authority to grant recipients instead of foundation staff and consultants.
The Gates Foundation’s decision to end its grant making sooner than expected underscores that reality. It also reflects similar historical shifts.
Historic
al
Precedence
The grant making of Gates and other tech entrepreneurs was rooted in the philanthropy of the early 20th-century Progressive era. Most notably, the Rockefeller Foundation, established in 1913, sought no less than to “promote the well-being of mankind throughout the world.” To do that, it poured unprecedented amounts of money into science and technology to address societal problems, especially to fight disease. Other foundations, such as the Russell Sage Foundation, the Carnegie Corporation, and the Alfred P. Sloan Foundation, followed suit.
Because of their lofty aspirations, sizable endowments, and professional staffs, the 1960s Commission on Foundations and Private Philanthropy described these knowledge-driven foundations as a form of social “venture capital” that could support experimentation and innovation.
Not surprisingly, when Gates and his fellow tech entrepreneurs began taking a similar approach, they became known as “venture philanthropists.” Even before Warren Buffett’s contributions, the Gates Foundation used its enormous endowment to build a staff of experts and pursue ambitious goals, such as eliminating preventable childhood diseases — with Bill and his then-wife, Melinda, guiding the way.
Their approach, however, is no longer as attractive as it once was. That’s partly because confidence in experts’ ability to devise answers for complex social problems has declined and their ideas are more likely to be challenged. And in a period of growing populism, what used to be seen as advantages for foundations — wealth, independence, longevity, private governance — now make them vulnerable to charges that they are undemocratic and unaccountable.
This pattern also echoes history. Around the time Rockefeller and other Progressive-era grant makers were getting started, another wealthy philanthropist — Sears, Roebuck and Company magnate Julius Rosenwald — was arguing against unlimited lifetimes for foundations, charging that they would become too bureaucratic and unresponsive to urgent needs. That view seems to be enjoying a resurgence.
The Ford Foundation, the second-largest American grant maker after Gates, also took a different path, focusing more on political and social advocacy than research and problem-solving. While controversial, Ford now has a growing number of imitators across the political spectrum.
Some donors have recently turned to other ways of giving besides creating foundations, such as through donor-advised funds or social-purpose businesses. And many have embraced trust-based philanthropy.
Bill Gates’s announcement did not indicate if his foundation might adopt any of these methods in the future. But with more money to spend and fewer years to spend it, some changes in how the foundation operates seem likely.
What Now?
Although Gates had long intended his foundation to sunset after his death, he originally set its closing several decades later than he now has. Some wondered if it would really shut its doors at all. Now there is no doubt — and little chance that Gates will change his mind.
Despite the continuing growth of its endowment and grant making, the last few years have not been kind to the foundation. As Gates noted in his announcement, its progress on priority issues has slowed down or even reversed. Key partners, such as the World Health Organization, have become embattled or, like the U.S. Agency for International Development, effectively shuttered. Warren Buffett has decided to leave the rest of his fortune to his family’s foundations, not to the Gates Foundation.
Gates has also faced personal controversy. Media accounts and books have exposed his private life and criticized his philanthropy. Following Melinda French Gates’s departure from the foundation, its board was restructured, adding several outside directors to its governance. While Bill Gates’s giving helped change his reputation from cutthroat business executive to opinion leader on issues such as global health and education, it also made him a target for conspiracy theorists, especially in the wake of the Covid-19 pandemic.
In his announcement, Gates did not express concern about new money replacing the foundation’s grants after it closes. He noted how many people have signed the Giving Pledge, which he helped create, committing much of their wealth to philanthropy.
Although knowledge-driven foundations from Rockefeller to Gates may no longer be as admired as they once were, their records include many important accomplishments. As Bill Gates begins his long goodbye, he should be remembered not just for the amount he gave but for the way he gave it.
