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The flip side to Bill Gates' charity billions

This is an article from 2012, but content is more than actual at the moment. Microsoft's former CEO has made record-breaking donations to global health programs – but an investigation by Andrew Bowman reveals some unpleasant side-effects.

In 2011, Bill Gates reminisced in the Huffington Post about his first trip to Africa in 1993. ‘I saw that many of the world’s lifesaving, life-enhancing discoveries were not available in Africa,’ he said. ‘That was deeply upsetting…

I became convinced that if science and technology were better applied to the challenges of Africa, the tremendous potential of the continent would be unleashed and people could be healthier and fulfill their promise.’ Having spent 18 years making as much money as possible with Microsoft (the computer software company he co-founded in 1975), in 1994 Gates started giving it away.

Philanthropic funds are common among the super-rich in the US; they enable tax avoidance provided five per cent of net investment assets are given away annually. What quickly set Gates’ fund apart was its orientation towards the poor – rather than élite culture or religion – and its sheer size.

Targeting global health and US education, Gates’ giving rapidly ballooned into the billions. In 2006, his friend Warren Buffet (the business magnate currently ranked the world’s third richest person) pledged $31 billion in company stock to the Bill and Melinda Gates Foundation.

Combined with Gates’ committed assets of over $30 billion, this made it arguably the biggest philanthropic venture ever. That year, its Global Development Program extended its activities to agriculture and economic development and, with projects multiplying, Gates began working full-time on philanthropy in 2008.

In 2010, the Foundation gave $2.5 billion in grants – 80 per cent to international projects. In total it has disbursed over $26 billion, most of it to global health. To put these figures into perspective: since 1914 the Rockefeller Foundation has given $14 billion (adjusted to today’s values). Only the US and British governments give more to global health today. The World Health Organization (WHO ), meanwhile, operates on less than $2 billion a year.

The Foundation’s achievements are undoubtedly impressive. Through supporting vaccination programs, for example, it claims to have saved nearly six million lives. With rich world enthusiasm for foreign aid wavering, on 26 January this year Gates committed a further $750 million to the Global Fund to Fight AIDS, Tuberculosis and Malaria – an organization he claims saves 100,000 lives a month. Admirers credit the Foundation with putting global health back on world leaders’ agendas and, through Gates’ Giving Pledge initiative, encouraging several other US multi-billionaires to pledge their wealth to charity. What’s not to like?

Accountable to whom?

Philanthropy – and particularly philanthropy on this scale – isn’t a black-and-white issue though, and important questions have been raised about the way the Foundation operates, and the impact of its work.

The first question concerns accountability. While only around five per cent of the Foundation’s annual global health funding goes directly to lobbying and advocacy, this money (over $100 million) talks loudly. Gates funds institutions ranging from US university departments to major international development NGOs. The Foundation is the main player in several global health partnerships and one of the single largest donors to the WHO. This gives it considerable leverage in shaping health policy priorities and intellectual norms.

Gregg Gonsalves, an experienced AIDS activist and co-founder of the International Treatment Preparedness Coalition, welcomes the Foundation’s funding, but is concerned about its power. ‘Depending on what side of bed Gates gets out of in the morning,’ he remarks, ‘it can shift the terrain of global health.’

The Foundation’s 26 strategies are reviewed annually, and although CEO Jeff Rakes stresses that it is making ‘a systematic effort to listen’ to grantees, Gonsalves and others are skeptical: ‘It’s not a democracy. It’s not even a constitutional monarchy. It’s about what Bill and Melinda want. We depend on them learning, and it’s not as if there are many points of influence for this.’‘

The Foundation is more than a collection of grants and projects,’ says Dr David McCoy, a public health doctor and researcher at University College London and an advisor to the People’s Health Movement.

‘Through its funding it also operates through an interconnected network of organizations and individuals across academia and the NGO and business sectors. This allows it to leverage influence through a kind of “group-think” in international health.’ In 2008 the WHO’s head of malaria research, Aarata Kochi, accused a Gates Foundation ‘cartel’ of suppressing diversity of scientific opinion, claiming the organization was ‘accountable to no-one other than itself’.

Seeking miracles

In what direction, then, has the Foundation been pushing global health policy? Warren Buffet once said of his approach to finance: ‘I don’t look to jump over seven-foot bars. I look around for one-foot bars I can step over.’ Gates asserts his philosophy of philanthropy to be the opposite: ‘We should be looking around for the seven-foot bars; that’s why we exist.’

This entails game-changing technologies, specifically vaccines – ‘a miracle because with three doses you can prevent deadly diseases for an entire lifetime’. Just as a vaccine eliminated smallpox in the 20th century, science could, Gates hopes, do the same for AIDS, malaria and tuberculosis in the 21st. Research on new drugs and vaccines has been the single largest destination for his funds, receiving 36.5 per cent of grants given between 1998 and 2007.

Through the public-private GAVI Alliance – which Gates helped found a decade ago with an initial grant of $750 million and which aims to increase access to immunization – vaccines for Hepatitis B and the HiB bacteria have been brought into widespread use. GAVI’s current focus is on new vaccines for pneumococcus and rotavirus – causes of pneumonia and diarrhea – which could, it suggests, save nearly 700,000 lives by 2015.

Making greed good?

Coupled with a belief in science and innovation is Gates’ vision of ‘creative capitalism’. Setting out his approach at the 2008 World Economic Forum in Davos, he said: ‘There are two great forces: self-interest and caring for others.’

To reconcile the two, the Foundation pursues partnerships in which, guided by NGOs, academics and assorted ‘stakeholders’, donor funds are used to overcome the ‘market failures’ which deny the poor access to medicine, by paying pharmaceutical companies to sell their products cheaper and pursue research projects they would otherwise ignore.

Through GAVI, the Foundation claims to have lowered the costs of Hepatitis B inoculations by 68 per cent, and is supporting a $1.5 billion ‘advanced market commitment’ to develop pneumococcal vaccines.

For supporters, it’s a win-win: the poor get new medicines faster and cheaper; and, as the Financial Times explains, it’s a leg-up for pharmaceutical companies ‘seeking to expand into faster-growing, lower-income countries where they need to charge less and co-operate more’ to share the risks of development.

The arrangements have, however, created concerns. As Tido von Schoen Angerer, Executive Director of the Access Campaign at Médecins Sans Frontières, explains, ‘The Foundation wants the private sector to do more on global health, and sets up partnerships with the private sector involved in governance. As these institutions are clearly also trying to influence policymaking, there are huge conflicts of interests... the companies should not play a role in setting the rules of the game.’

The Foundation itself has employed numerous former Big Pharma figures, leading to accusations of industry bias. Many campaigners see loosening intellectual property laws as a better way of increasing access to medicines, both in lowering prices through generic competition and in enabling innovation outside patent-hoarding companies.

However, Microsoft lobbied vociferously for the World Trade Organization’s TRIPS agreement (the agreement on trade-related aspects of intellectual property), which obliges member countries to defend patents for a minimum of 20 years after the filing date. As recently as 2007, Microsoft was lobbying the G8 to tighten global intellectual property (IP) protection, a move that would, Oxfam said, ‘worsen the health crisis in developing countries’.

Global access agreements – to keep prices low and share results – are required for companies receiving Foundation money, von Schoen Angerer says, ‘but could they go further? Definitely yes. In examples like GAVI, industry gets quite beneficial deals.’ Gonsalves, himself HIV positive, explains, ‘I would be dead were it not for the pharmaceutical industry. That said, a lot more people will be dead if we don’t have robust generic competition.’

The Gates’ mettle will be tested around the combustible issue of IP in middle-income countries. Big Pharma is sometimes willing to relax IP for the world’s poorest nations, but rarely in emerging markets – which still contain most of the world’s poorest people.

Philantro-Capitalism vs Democracy?

Gates’ philanthropy seeks not just to make businesses more charitable, but to make charity more business-like. Dubbed ‘philanthro-capitalism’ or ‘venture philanthropy’, the approach is based on NGOs competing for grants with their performance evaluated using business metrics.

According to Gates, ‘our net effect should be to save years of life for well under $100; so, if we waste even $500,000, we are wasting 5,000 years of life.’ Under these terms, the best results are achieved through ‘vertically’ funded projects – interventions targeted at specific diseases or health problems, largely bypassing existing health systems. The pay-offs from ‘horizontal’ integration with public-health systems can, in contrast, be comparatively slow to materialize and hard to measure.

A study in the Lancet in 2009 showed only 1.4 per cent of the Foundation’s grants between 1998 and 2007 went to public-sector organizations, while of the 659 NGOs receiving grants, only 37 were headquartered in low- or middle-income countries.

In many Majority World countries, state healthcare was eviscerated by structural adjustment programs enforced by the World Bank and International Monetary Fund, and by the continued loss of skilled personnel in globalized labor markets. Now, says McCoy, NGOs have stepped into the breach but have also created a ‘fragmented “patchwork quilt” landscape of healthcare provision’ which governments struggle to co-ordinate and align to national priorities.

This has potentially serious implications. Polly Clayden of i-Base, an HIV information and activist organization, says, ‘some of the research Gates funds is ill-advised, but if you had HIV and somebody was paying for your anti-retroviral drugs in a trial, perhaps you wouldn’t really care [who provided it]. What you really want is for those people to be treated.

’‘However,’ she warns, ‘the problem is sustainability. Donors are quite capricious: AIDS might be the priority one year, and then suddenly they will go on to something else.’

Research by Devi Sridhar at Oxford University warns that philanthropic interventions are ‘radically skewing public health programs towards issues of the greatest concern to wealthy donors’. ‘Issues,’ she writes, ‘which are not necessarily top priority for people in the recipient country.’

The situation is replicated at an international level. With the rise of health partnerships, the proportion of global health funding channeled through the UN fell from 32 to 14 per cent between 1990 and 2008, placing major limits on the possibility for poorer nations to influence international health policy. Although the Gates Foundation provides considerable support to the WHO, the money is, as with much of the WHO’s funding nowadays, earmarked for preconceived projects rather than the decisions of the World Health Assembly.

For critics, then, the way ‘venture philanthropy’ focuses on measurable impact may obscure the less tangible, but equally important, goals of democracy and empowerment. As the philanthropy analyst Michael Edwards has asked: ‘Would philanthro-capitalism have helped fund the civil rights movement in the US? I hope so, but it wasn’t “data driven”, it didn’t operate through competition, it couldn’t generate much revenue, and it didn’t measure its impact in terms of the numbers of people who were served each day. Yet it changed the world forever.’

The fruit ot the trees?

Mark Harrington, Director of the Treatment Action Group, an AIDS advocacy think tank which has received Foundation money in the past, also feels that, ultimately, democratically accountable governments should solve global health problems, but that in the absence of their commitment there is a need for pragmatism.

‘Medical research and global health are both public goods: the benefits accrue to everyone, even though only some people pay for them. Industry will only do it if they see return on investment; and philanthropists, well, it’s better Gates doing this with his money than what the Koch brothers [funders of the right wing Tea Party political movement in the US] are doing with theirs. Do I think it’s good that we live in a world where some people have so much money? Not really, but I don’t get to choose that. We have to work with the world the way it is.’

McCoy insists, however, that it is important to mount a challenge: ‘Appealing to the mega rich to be more charitable is not a solution to global health problems. We need a system that does not create so many billionaires and, until we do that, this kind of philanthropy is either a distraction or potentially harmful to the need for systemic change to the political economy.’

Carlos Slim, the Mexican multi-billionaire who replaced Gates at the top the world’s rich list (due to Gates’ charity), likened philanthropy to owning an orchard: ‘You have to give away the fruit, but not the trees.’ He and Gates are products of an economic system that has produced monopolies and redistributed wealth upwards for 30 years.

Parallels may be drawn between the inequalities of today and the Victorian era, when health provision for the poor depended on the largesse of the rich. Oscar Wilde observed of the philanthropists of that era:

‘They seriously and very sentimentally set themselves to the task of remedying the evils that they see in poverty, but their remedies do not cure the disease: they merely prolong it.’ Then and now, as Wilde said, ‘the proper aim is to try and reconstruct society on such a basis that poverty will be impossible.’

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