Allison Fine has written an articulate rant about what she calls "outrageous behavior" by the Gates Foundation.
On January 9th, the Los Angeles Times, after exhaustive research, published a story on the conflicts between some Gates grants for positive social change and their investments to make their endowment grow. For instance, the article explains that Gates is investing in an Italian oil company, Eni, that spews “250 toxic chemicals in the fumes and soot have long been linked to respiratory disease and cancer.” This is the same part of the world where the Gates Foundation grants millions of dollars on vaccinations to immunize children against deadly diseases like polio and measles.
She goes to describe the foundation's response to the story which was to initially say they'd review it and then to refute the story and would not be changing their investment policies. Allison quotes Patty Stonisfer the Foundation’s CEO, “It would be naive to think that changing the foundation's investment policy could stop the human suffering blamed on the practices of companies in which it invests billions of dollars."
Allison goes on to describe why this behavoir is so appalling -- you can hear her screaming! She lays out four points why hte Foundation's decision not to do anything about its investment policies is specious and cowardly.
Given the Foundation’s resources and ability to hire anyone from anywhere with the necessary expertise to review their investments, it is mind boggling to believe that finding socially conscious companies to invest in - to at least avoid companies that are specifically and actively counteracting their grantmaking efforts, would be too difficult or distracting for them. Even if the criteria aren’t perfect initially, at least try to develop some guidelines that don’t cancel out the intended good works of the Foundation’s grants.
She goes on to say this:
This behavior by Gates is a naked illustration of the lack of accountability by foundations in general. Foundations have very few obligations but to spend 5% of their assets on average annually. As long as they don’t give it to specific political candidates, they can give to just about any nonprofit or for profit organization, or any individual. In addition to no accountability on the grantmaking side, the foundation is a self-described “passive investor”. This is an organization with three board members, all family members (plus Warren Buffet soon) and no shareholders. Their only constituents are grantees - and no less powerful group of people or organizations exist than those that depend on a foundation for funds. Think about this another way. A foundation with assets larger than 120 countries, can do just about whatever it wants with tax exempt funds - and no one can do a darn thing about it.
She ends with a great question:
What does it take for the foundation and nonprofit community to finally take a stand on appalling behavior like this?
Lucy Bernholtz of the Philanthropy 2173 Blog offers her recommendations on how to change philanthropy here.
What Allison and many others have to remember is that the Gates Foundation is not spending their money. They are free, just like you and me, to spend it as they see fit. Leave them alone.
Posted by: Jeff | January 18, 2007 at 11:31 AM
Jeff, I appreciate the concern that you and others express about interfering with the private investment choices of the Gates', however, I do want to clarify the issue.
When the Gates family endowed their foundation with billions of dollars, that money went from the private pockets into the coffers of a public entity. Even though it's called a private foundation, those funds are no longer private. They are only to be used for public purposes. Even if the foundation went out of business, the funds would stay public to be used by a government agency or other public entity for the public good.
Even with that said, I also want to say that I am not advocating that Gates has to become a table pounding activist shareholder. It would be nice for the rest of us if they pushed BP to clean up the ground and air they're polluting, but not necessary. What is important is that they not invest in companies that counteract their grantmaking. And they only reason they do this is because they think all investing is the same -- to make money. But it isn't ifyour goal is to improve social conditions for people living in the direst poverty. Their investing goals are to sustain the endowment in order to grant more money -- and they can do this without making the world dirtier, poorer, and unhealthier.
Posted by: AHFINE | January 19, 2007 at 08:22 AM