First, don’t get me wrong. The Gates Foundation does incredible good. The problem exists not with the work the Foundation itself does, but rather with the way it invests the money it has.
The Gates Foundation had $35 billion in assets at the end of 2005, and then received a promise from Warren Buffet for $31 million of his money last year. This is a huge amount of money. That said, the Foundation “only” distributed about $1.4 billion last year. The rest of the money is invested, and here lies the problem.
The LA Times has a two-part series (here and here) about the conflicts between the philanthropy of the Foundation and the interests of its investments.
Examples:
- A vaccination drive in Ebocha, Nigeria, funded by the Gates Foundation, at the same time that fumes spout from a nearby power plant, owned by Eni, whose investors include The Gates Foundation. These fumes are causing bronchitis, asthma and blurred vision.
- That same plant has oil workers, and they and the soldiers that protect them are magnets for prostitutes, contributing to HIV spread … a target of the Gates Foundation.
- Investments by the foundation in mortgage companies that were accused in lawsuits or by government officials of making it easier for thousands of people to lose their homes.
- Investments in chocolate companies said by the U.S. government to be profiting from the slave labor of children.
Now, there is a firewall between the investment side of the business and the philanthropic side. This can explain the sometimes direct clashes where the Foundation may be working on something in an area which is actually being harmed by the investment side.
It doesn’t explain why the investment side should even be looking into these type of investments at all. Don’t get me wrong; I’m sure my private investments in mutual funds and the like are not 100% socially responsible. But the Foundation and its huge assets make a much larger impact on the market when its money is invested.
What do I think will happen? Likely, Bill and Melinda Gates will take a closer look at these issues. In fact, I have no doubt. Now that it’s public (and it’s possible they didn’t know, or simply didn’t have the time to now), they could (and I hope they do) lay down the law to ensure that future investments are socially responsible.
Time will tell.