New philanthropy isn't just about big bucks

[Guest guest]

New philanthropy isn't just about big bucks. Giving wisely to get

the greatest social benefits

Curiel, Chronicle Staff Writer, Sunday, July 9, 2006

Lost amid the hoopla over Warren Buffett's $31 billion gift to the

Bill and Melinda Gates Foundation are some important points about

the evolution of philanthropy.

Much of Buffett's big-ticket bequest will go toward large-scale

programs fighting AIDS, malaria and other major scourges around the

world, but it will also be used for small projects funded by

Microsoft's benevolent First Couple. Many of the foundation's grants

are tiny -- one in February for operating expenses to the University

of Washington Foundation, which raises money for the school, was for

a thousand bucks.

Project Concern International, a San Diego-based nonprofit, used a

Gates Foundation grant of $10,000 to offset expenses for a yearlong

AIDS walk in India that used street theater, video shows and a

mobile clinic to educate people about the disease. " For us, it was

major, " Janine Schooley, Project Concern's vice president for

project development, says of the grant. " We used it in the end for

unexpected expenses. We're going to be following up soon with the

Gates. "

Project Concern may have a good chance for another grant because of

what analysts say is an X-factor of Buffett's generosity: The Gates

Foundation must hand out the first installment of Buffett's

largesse, about $1.5 billion, in the next two years. This relatively

tight time frame favors -- at least at first -- previous grantees

with a proven track record.

" Their funding will go deeper, rather than much broader, " says

Eugene R. Temple, executive director of the Center on Philanthropy

at Indiana University. " The Gates Foundation really isn't out there

looking for (new) proposals. "

Buffett's partnership with the Gates Foundation, announced two weeks

ago with great fanfare, signifies a fundamental shift in the world

of philanthropy: More than ever, both the endower and the endowed

are using business models to guide their grant-giving and decision-

making. The Economist magazine describes this new paradigm

as " philanthrocapitalism, " whereby the super wealthy " invest " in

social causes as they would the stock market. Instead of maximum

profit and dividends, they look for the greatest social return their

money can buy. More often than not, these wealthy funders are

businesspeople who made their fortunes (as Buffett and Gates did)

wheeling and dealing.

" I call it entrepreneurial philanthropy, " says G. Schervish, a

sociology professor at Boston College who directs its Center on

Wealth and Philanthropy. " You find an area where there's a gap

between supply and demand -- that is, an area where there's more

need than supply, or no supply. Then you have an idea about how to

fill that gap, where you're going to create 'product,' whether it's

vaccine or something else. Then, you're directly involved in

affecting the rate of return. What the Gates Foundation is doing is

creating new ventures, new philanthropic activities, that didn't

exist before. They're investing in the creation of product, of what

needs to be distributed. "

These " products " are aimed mainly at combatting three health issues -

- HIV-AIDS, tuberculosis and malaria. In India, the Gates Foundation

has already awarded $200 million to a program designed to prevent

HIV-AIDS in a country in which an estimated 5 million people live

with the disease -- the worst rate of infection in the world.

Rather than being a United Nations-like organization that tries to

tackle all issues around the world, the Gates Foundation picks and

chooses carefully. In the letter announcing his gift to the

foundation, Buffett praised its efficiency, saying that by

concentrating on " a few extraordinarily important but underfunded

issues, " the foundation was following a policy " that I believe

offers the highest probability of your achieving goals of great

consequence. "

It's impossible to say how many lives the Gates Foundation has saved

since its creation in 2000, but the number is arguably in the

millions. Asked by PBS interviewer Charlie Rose, Melinda Gates

talked about the tens of millions of dollars her foundation has

given to the Global Alliance for Vaccines and Immunizations, a

public- and private-sector partnership that immunizes children in

developing countries. " We think we know that 1.7 million lives have

been saved, " she said, " just by children getting the basic vaccines

that we take for granted in our country. "

Is it fair to reduce a foundation's work to the lives it saves? Is

measuring it this way too clinical? That's what philanthropists and

foundations are starting to do as they assess their work.

" There is an emphasis and a push within the foundation world to

develop a metric that can effectively evaluate the use of grant

dollars, " says Eugene D. , Assistant Director of the Center on

Philanthropy and Civil Society at the City University of New

York. " And the field of health lends itself to that in very

measurable ways. And I think that's good. You can identify the

number of vaccines delivered. You can measure the effectiveness of

vaccines developed. So, there is a real quantitative piece to this

that's good. "

For the Gates Foundation, the numbers are both impressive and

misleading. Buffett's billions turn a $30 billion foundation into a

$60 billion one, making it by far the richest foundation in the

world. But its annual expenditures will still fall far short of

what's needed to eradicate tuberculosis, malaria, yellow fever and

other diseases that are on the top of the Gates' priority list.

" With the Buffett gift, the Gates Foundation will be able to

administer somewhere in the neighborhood of $3 billion a year, which

is one-tenth of the National Institutes of Health annual budget, and

that's just an important agency of the U.S. government, " says

. " With the Buffett gift, the Gates Foundation is able to

spend one dollar for every poor person, up from 50 cents, if it was

to do it in a per-capita way. The scale of the problems is immense. "

But Gates and other foundations are taking a kind of if-they-build-

it approach that they hope will inspire others to follow. With their

choices of funding, they're saying in effect, " these are causes

worth more support. "

Even smaller recipients feel they get new visibility with Gates'

money. " Just being able to say we have Gates' funding will be

important to use in the future, " says Project Concern's Schooley.

E-mail Curiel at jcuriel@....

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