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Big Giving

Buffett-fueled Gates Foundation begins rolling out great quantities of cash

THE BILL and Melinda Gates Foundation, already the largest charitable organization in the world, may break another record: its own. In the first nine months of this year, the foundation has made $1.6 billion in commitments to various domestic and international groups, programs and initiatives. In all of 2005, the foundation made $2.2 billion in commitments.

This would be remarkable in its own right. But the announcement in June that Omaha, Neb. investor Warren Buffett (the world's second- richest man) would add his substantial fortune to the Gates trove points to a future in which even more money will flow out the doors of the foundation's Seattle headquarters. The foundation's endowment currently sits at $31.9 billion, which includes a $1.6 billion first installment from Buffett. Rather than a one-time gift, Buffett announced he is donating 10 million shares of his Berkshire Hathaway stock, estimated to be worth about $31 billion, to the Gates Foundation in annual installments in decreasing amounts.

Internal Revenue Service rules require private foundations to give away 5 percent of their endowment per year, and starting in 2009 the Gates Foundation will be giving away that plus an amount equal to the value of the Buffett shares donated the prior year. Buffett believes the annual installments will rise as the value of the donated shares climb. In 2005 the foundation actually paid out $1.36 billion to new and ongoing programs and organizations. The running total for 2006 was not available.

Attacking global health problems is a significant and highly visible mandate of the foundation. Bill and Melinda Gates have supported efforts to develop an AIDS vaccine and have expressed a desire to eradicate the 20 leading diseases in their lifetimes. Many of the programs the foundation is committing to will receive payments spread out over a period of several years. The Global Fund to Fight AIDS, TB and Malaria, for example, will receive $500 million over five years to continue its work to distribute bed nets to ward off malaria-carrying mosquitoes and provide treatment for people with HIV/AIDS and tuberculosis. So far this year, $1.3 billion has been committed to global health initiatives.

But global health is just one element of a tripartite strategy, each with a division led by its own president within the foundation. For example, $106.7 million has been earmarked for the Global Development program, which aims to reduce poverty and hunger around the world over the next 10-15 years. One significant initiative announced in September pairs $100 million with $50 million from the Rockefeller Foundation to fund an agricultural green revolution among Africa's small-holder farmers. The jointly administered program has so far received more than 1,300 funding proposals from groups around the world.

Then there is the third part: another $155.7 million committed to the foundation's U.S. Program, which includes educational initiatives, a plan to connect every American library to the Internet, and programs to help low-income children and families in the Pacific Northwest.

Organizations in Washington state are significant beneficiaries of the largesse. This year, nearly $244 million will go to programs or initiatives either run out of or working in Washington. Some are major research programs, such as a $9.9 million grant to the Fred Hutchinson Cancer Research Center to establish a Vaccine Immunology Statistical Center, which will provide data management to other vaccine research programs. Then there is the recently announced $32 million grant to the Seattle-based Infectious Disease Research Institute to develop a vaccine to treat leishmaniasis, a tropical parasitic disease that affects more than 12 million people in developing countries and is often fatal.

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© Washington CEO Magazine 2008