Business of Beneficence

In inflation adjusted dollars, Warren Buffett will be giving away more money than John D. Rockefeller or Andrew Carnegie.

Even with Buffett's donation, the Gates Foundation's potential spending per poor person worldwide only doubles from 50 cents a year to $1.

Under the dome of the Celeste Bartos Forum in the New York Public Library Monday, Warren Buffett signed five commitment letters, one each to the foundations run by his three children, one to the foundation in his late wife's name and one the big $31 billion one to the foundation run by his bridge partner and friend of 15 years, Bill Gates, and his wife, Melinda.

At each stroke of his pen, each of the five doubled the size of its endowment as the world's second richest man started the process of turning over 85% of his $44 billion fortune.

Even with Buffett's donation, the Gates Foundation's potential spending per poor person worldwide only doubles from 50 cents a year to $1.

Its $60 billion endowment which will throw off, say $5 billion a year in funding, still falls short of the annual amount given in aid by official bodies including the World Bank and rich governments ($106 billion last year).

One counter to that official financial firepower is the increasing cooperation between foundations. Another is by just becoming more efficient and businesslike. Private foundations can sometimes achieve what official aid cannot. Innovativeness, fleetness of foot and a willingness to learn from mistakes and are characteristics of successful business people rather than officials.

Private foundations, for better or worse, are answerable only to themselves. They can tackle issues that interest them rather than what is politically expedient. They do not fall under pressure from taxpayers, lobbyists or voters to yield quick results or to a timetable driven by a domestic electoral cycle.

The World Bank can propose substantially reducing poverty by 2015, and it is laughed off as a bureaucrats' pie in the sky dream. Yet Bill Gates can propose eradicating 20 leading diseases by, say 2045, and be taken seriously. And he has a more credible bully pulpit when it comes getting his issues on the global agenda.

Bill Gates identified the importance of working with governments as one of the aspects to philanthropy that he has most under-appreciated. That is one reason why his foundation has had more success in tacking AIDS and malaria than he has education.

Forbes makes an excellent observation about the potential confict inherent in a global effort to create a greater good:

Such a business based approach to social and economic change will increasingly bring foundations into conflict with governments and special interests with their own political agendas, how will Muslim fundamentalists deal with programs that support the economic empowerment of women, say through micro financing; or Christian fundamentalists with AIDS programs that promote safe-sex measures apart from abstinence?

Nor will all cultures be comfortable with philanthropic foundations that promote Western values of freedom, technological progress and entrepreneurship to solve the world's underlying problems.

Yet as the Gates Foundation grows in size and ambition, it will raise questions about how it and others like it will fit into the world of policy making as they address problems that have hither too been the reserve of multilateral institutions, non governmental organizations and governments themselves. And with a greater role will come demands for greater accountability.

Buffett may well be, in the words of Patty Stonecipher, chief executive of the Gates Foundation, "a good man, whose great decision is going to change the world". Gates thinks Buffett will be remembered not just as 'the greatest investor" but "the greatest investor for good."

We may have to wait a lifetime, or at least the lifetime of the Gateses, before we know whether that will turn out to be true. No philanthropist has solved a worldwide problem since Carnegie brought universal access for the poor to books via libraries and Rockefeller used his billions to fund the research that would lead to the eradication of polio.

The tantalizing prospect is that, thanks to Buffett, the foundation that doesn't bear his name and entrepreneurial philanthropy could change that by investing in social change and bringing the innovation, efficiency and resources of the super wealthy to solve the problems of the poor. In the process it will globalize and modernize what Rockefeller called the "business of beneficence."

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