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Washington Journal: Bill Gates Follows Philanthropical Tradition

  • Bruce Keppel

Bellingham, Washington; 12 March 1999 (RFE/RL) -- Like many a self-made American tycoon of the Industrial Age at the turn of the last century, the man who has become one of the world's wealthiest in the Information Age, Bill Gates of Microsoft, has at last discovered philanthropy -- and in a typically big way.

Since he turned 43 years old last October, Gates and his wife, Melinda, have pumped $4.43 billion in Microsoft shares into two family philanthropies. That massive infusion of assets overnight propelled the William H. Gates Foundation and the Gates Learning Foundation into sixth place among the nation's largest grant-making private trusts.

It may be that great wealth breeds such generosity. After all, it was another fabulously wealthy man, international financier George Soros, who told " USA Today" a few years ago: "When I'd been successful enough in my business, I asked myself, 'What the hell am I doing this for? What am I knocking myself out for to make a few extra million dollars?'"

It is unrecorded whether Bill Gates has been asking himself those kinds of questions. But the president of the family's Gates Learning Foundation, Patty Stonesifer, says that "Bill and Melinda (Gates) have said for years that they intend to turn over all their wealth to charity."

State and national income tax laws certainly encourage the wealthy to turn philanthropic. If they don't assign part of their earnings to charity -- either as gifts to established nonprofit entities or to their own foundations -- that money will go to the government anyway. That's true also of the corporate philanthropy to which most big businesses assign a share of their annual profits.

Making such donations allows the givers -- whether corporations or private taxpayers -- to control how their money is spent rather than paying it in taxes.

U.S. tax laws also require, however, that charitable foundations give away at least 5 percent of their assets each year. Most of them give away much more than that.

In any case, Bill and Melinda Gates' moves clearly echo the footsteps toward philanthropy taken a century ago by such "barons" of industry as Carnegie, Rockefeller and Ford, whose fortunes continue to benefit society decades after the original donors' deaths.

Gates grew up in Seattle, and he currently directs a share of his foundation funds as grants to encourage existing nonprofit activities in his home state of Washington. But "Philanthropy News Digest" reports that $100 million was granted this year to create a Children's Vaccine Program. And Gates' foundations also support a variety of world health and population programs, as well as educational projects, that extend far beyond the Pacific Northwest.

Not surprisingly, Gates' philanthropy also supports bringing computers, technical training and Internet access to library patrons in low-income communities that could not otherwise afford them.

George Soros's story is, of course, far different. A native of Hungary, his philanthropic interests support what he calls "open societies" in, among other formerly Soviet satellites as Hungary and the Baltic states, as well as Russia. This year, however, Soros has also moved to help Guatemala, the Central American nation hardest hit by last fall's devastating Hurricane Mitch.

Like Bill Gates, George Soros also supports numerous nonprofit programs within the United States as well. This puts both men squarely in the U.S. philanthropic tradition.

According to The Foundation Center, a clearinghouse of philanthropic information in New York, there are nearly 50,000 private, charitable institutions in the United States. About one-fifth of these account for about 90 percent of the nation's charitable assets and grants to support nonprofit welfare and health-service agencies, museums, theaters, orchestras and public broadcasting, among other activities.

The Foundation Center reports that charitable donations, which were in decline earlier this decade, rose along with the continuing strong economy by 28 percent last year. That increased total foundation assets to $6.24 billion. Foundations also gave away $7.7 billion.

These numbers add up to a sizable private or independent sector that complements the taxpayer-funded welfare, health, culture and educational programs run by the local, state and federal governments.

The strength of this independent sector, which includes churches and synagogues as well as direct charitable spending by businesses, leads some conservative politicians to justify cutting back on government aid programs to the poor. Former House Speaker Newt Gingrich, for one, was outspokenly in support of such an approach.

But more than one study exists to document that -- large as this private sector may be -- it cannot offset cuts in federal social spending. So when it comes to providing a social safety net, government remains the agency of last resort for the nation's most needy.

What this not-for-profit sector can do, however, is to complement government programs and reach with greater nimbleness and precision into local communities to meet specific local needs that government programs are unable to reach. Gifts by foundations and corporations also enrich the quality of life in the communities that they reach.

Gates, who some estimates make the world's wealthiest person, has only recently entered this domain. He set up the William H. Gates Foundation only five years ago and the Gates Learning Foundation just two years ago. But, as with his development of Microsoft, the world's computer software giant, he has moved quickly to make them a major player among the nation's philanthropic institutions. His recent gifts increased the assets of the first foundation to $5.2 billion in Microsoft stock. The Gates Learning Foundation now operates with $1.3 billion in the giant software company's shares.

At the rate Microsoft stock continues to increase in value, it is not far-fetched to imagine that the world's putative wealthiest man may soon control charitable foundations to match. Still, Bill Gates has a way to go to reach the top.

Henry Ford's creation, the venerable Ford Foundation, reports current assets of $10.7 billion in assets. According to Foundation Center figures, Ford now ranks second to the less well-known Lilly Endowment, which has more than doubled its asset base from $6.8 billion in 1996 to $15.3 billion today.

But here in the nation's northwest corner, the recent philanthropic coming-of-age of Bill Gates is very welcome, according to Anne Farrell. She directs a much smaller, community-based philanthropy called The Seattle Foundation, which stands to gain money to support some of its local programs from Gates' foundations. Farrell tells the "Puget Sound Business Journal" that "we've always considered ourselves underendowed -- without a Rockefeller Foundation or a Carnegie, which were formed at the time of the industrial revolution.

"But now," she continues, "we're at the moment in time in this community where that catch-up is going to happen very quickly."