So where he chooses to give his loot is important. It matters on its own terms–a billion a year isn’t chopped liver–but even more so because of Gates’s place in the firmament of the new economy. After Andrew Carnegie started endowing public libraries a century ago, the local rich guys kicked in, too. Americans became better educated; the country changed. That was a more important kind of leadership than anything Carnegie did in the steel industry. There are now 36,000 foundations in the United States; this week the new Bill and Melinda Gates Foundation will rock their world, dwarfing Carnegie, Ford, Rockefeller and the rest. Over time, the test for them will be to change the way philanthropy works–and make it cool for the rich to give most of their fortunes away.
Before e-mailing that grant proposal to Redmond, Wash., you should know that Gates is not going to play Santa Claus (except a bit in the Pacific Northwest). For his main categories of giving, he and his wife have chosen narrowly and well. “Global health” and “learning” (aimed at poor children in the United States) are not just worthy causes, but truly needy ones–where lives are saved and turned around. Too often, otherwise hardheaded benefactors fail to make this distinction. They do what Gates did at first–give to their alma maters or cultural institutions. These are deserving enough causes, and the giving has a certain logic: people tend to open their wallets for what they know and love. And they like the plaques.
But at this point in history, offering the middle class educational and cultural enrichment and expanding the sum of human knowledge (the goals of most higher education) are no longer Job One. The bigger challenge is the widening gap between haves and have-nots. Gates’s first big gift was $200 million for computers in libraries in poor areas. He soon recognized that “the digital divide” was only one of several growing resource disparities that threaten the future of the world.
Beyond vaccinations in developing countries and some talk of early-childhood programs at home, the specifics are all still vague. “We’re very early in identifying programs we want to support,” says Patty Stonesifer, a former Microsoft executive tapped to co-run the foundation with Gates’s father. “It’s a learning process.” Until now, Stonesifer has operated out of a small office above a pizzeria in Redmond. Even as their giving explodes, Bill and Melinda Gates are determined that the foundation not become a typical bureaucracy full of program officers and scattershot grants. But at the invitation of Vartan Gregorian, the talented president of the Carnegie Corporation, they will meet soon with the chiefs of all of the established big American foundations.
The Gateses need to listen hard, but not too hard. While American foundations do a huge amount of good, collectively they are failing to seriously affect most of the problems they confront. The heart of what’s wrong with American philanthropy is something that Bill Gates knows a little bit about–management.
The nonprofit sector as a whole is a mess: unorganized, unfocused and unable to communicate what really works and why. “Foundations need to provide not just cash, but competence,” says Bill Shore, author of “The Cathedral Within.” That doesn’t mean micromanaging the nonprofits from foundation headquarters but investing in their capacity so they run more like businesses.
When Gates first started giving away computers a couple of years ago, the gifts were criticized as self-interested–more Microsoft marketing. But self-interest–defined broadly–is a perfectly acceptable motive for philanthropy. In the next seven years, information-technologies industries will need to fill an additional 2.6 million jobs. They can’t all be immigrants. Meanwhile, 15 million American children are growing up seriously at risk of going off-track into crime and dependency. The good news is that with training and supervision, most of them can be saved. The trend lines on teen pregnancy and drug abuse are actually slightly favorable. What’s missing is a coordinated battle plan.
That leaves Gates with a rare opportunity. Unlike other foundations, his is unencumbered by hundreds of grant recipients, each with its own entrenched claim. If Gates can identify a few already-successful programs that can handle expansion, he could really dent some problems. For instance, if the Boys and Girls Clubs of America, which keeps poor kids active and out of trouble with sports and computers, received, say, $100 million from the foundation, they could open 625 new clubs, nearly doubling their capacity. That would give an additional 3 million at-risk kids something to do after school instead of hanging out. They might even grow up to work for Microsoft.
As the Gateses already know, “global health” and “learning” problems can be hugely complex and frustrating. But they will also find moments of magic–people living instead of dying; designing Web sites instead of mugging somebody–that will make even the wonders of the information age seem small by comparison.
