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Gates may change direction of philanthropy

The Bill and Melinda Gates Foundation's focus on creative capitalism, combining business and philanthropy to effect change, brings out critics on both sides of debate

While it's too early to tell if Bill Gates will impact philanthropy as he has the technology industry, his support of creative capitalism has the potential to change how people engage in philanthropic efforts.

Gates leaves his full-time duties as Microsoft chairman on Friday to focus on The Bill and Melinda Gates Foundation, the philanthropic organization he founded in 2000 with his wife. It boasts the largest philanthropic endowment in the US, at US$38.8 billion, according to the foundation's 2007 financial report.

Megan Sather, a Gates Foundation spokeswoman, said that rather than focus on specific projects right away, Gates will first work to raise global awareness of some of the foundation's key issues. They include health care -- especially providing vaccinations for rare diseases that affect children and helping to stop the spread of AIDS in Africa -- and bringing food and sustainable methods of agriculture to some of the world's poorest nations.

Gates also will continue to support research and projects that help solve the problems of the poorest people while also supporting business development in the places where they live, a method that's come to be known as "creative capitalism."

Gates first publicly outlined his support for creative capitalism and his views on it in a speech in January at the World Economic Forum.

The idea of creative capitalism combines business interests with philanthropic interests and is related to social entrepreneurship, which seeks the same goals.

Proponents of creative capitalism believe that one can help fulfill the basic human needs of the world's poorest people by also helping them to build successful businesses around the fulfillment of those needs.

Creative capitalism also challenges businesses to view philanthropy as a business; rather than make charitable contributions indiscriminately, business leaders should think about their company's own needs and make philanthropic investments that could also benefit them financially.

While Gates is not the first person to support creative capitalism, he is now intrinsically linked to it, said Barbara Leopold, coordinator, international fellows program for Center on Philanthropy at the City University of New York. "He is seen as someone pushing this," she said.

Because of this connection, how Gates uses his support of creative capitalism "could create a shift" in how people engage in philanthropy, or "add yet another element, another possibility for how people go about thinking about effecting change," Leopold said.

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Creative capitalism also has more weight with support from someone like Gates because of his own tremendous success in business, she added.

"It's not just anyone who is talking about it, but someone who has the entrepreneurship know-how and whose business sense can make you sit up and take notice," Leopold said.

At the same time Gates has the potential to be a leader in effecting change, the Gates Foundation has run afoul of critics because of its methods that are linked to the ideas of creative capitalism.

Though its ultimate goal is to provide basic needs to many of the world's poor, the foundation supports long-tail projects in agriculture and medical research as much as it puts food and important vaccinations immediately into the hands of people who need them.

This approach has been criticized because it sometimes sacrifices people's short-term needs for a long-term goal, Leopold said.

That Gates would employ this strategy in his philanthropy is not surprising, given his business style. At Microsoft, he used a similar tactic of investing in products that had long-term potential to lead markets, even if they didn't bring in short-term revenue.

But while "thinking long-term is probably good and strategically it's a good way to go," Leopold said, others who think it's better to invest in saving human lives now rather than investing for the future do not agree.

The foundation's business investments also have been called into question, most notably in an article by the Los Angeles Times last year that exposed some of the less socially responsible places the foundation was investing its endowment money.

According to the LA Times, the Gates Foundation had investments in companies ranked as some of the worst environmental polluters in the US and Canada, and also in pharmaceutical companies that price drugs beyond the reach of AIDS patients the foundation is trying to treat.

These investments drew ire from critics for running counter to the foundation's interest in providing affordable health care and promoting health among the economically challenged.

"It's the idea of talking the talk but not walking the walk," Leopold said.

Still, Gates' commitment to the foundation's and his own personal interest in solving basic needs of billions of people is beyond reproach.

Time and again, in public speeches and interviews, he has stressed his interest in making the world a better place through a rethinking of philanthropy so that it does not just engage in charity, but also empowers the people it's helping to effect long-term change on their own.

This is something Gates -- with his wealth, business acumen and one of the world's keenest minds -- is in a unique position to actually achieve on a global scale.

Whether his work at The Bill and Melinda Gates Foundation will not only have this effect but also transform the way people direct their philanthropic efforts in the future is a question that will only be answered well into the next stage of Gates' already influential career.