Bill Gates Foundation Trust Invests in Private Prisons—Again

[BIG LEEMELONE]

Gates Foundation Trust Invests in Private Prisons—Again

Ruth McCambridge
July 26, 2019
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“Warwick Street, Leamington Spa – Serco speed camera,” Elliot Brown
July 23, 2019; Bloomberg
The Bill & Melinda Gates Foundation Trust has just upped its investment in Serco, a UK private prison group, adding nearly 200,000 shares. As the mega-foundation’s separate investment arm, the Trust now holds 3.74 million shares worth about £5.3 million ($6.6 million), admittedly a sum that pales in comparison to the total assets of around $48 billion.
Serco runs a half-dozen private for-profit prisons in the UK, which holds a bigger proportion of inmates in for-profit prisons than any other country except Australia. Serco also has a 10-year contract with the government to “provide services” services for asylum seekers.

Apparently, the addition was made by an outside asset manager, and the foundation was quick to disavow any decision-making in the investment, though it says it regularly reviews the portfolio “for performance and fit.”

“The endowment that funds the Bill & Melinda Gates Foundation is independently managed by a separate entity, the Bill & Melinda Gates Foundation Trust,” the spokesperson said. “Foundation staff have no influence on Trust investment decisions, and no visibility into the trust’s investment strategies or holdings, other than what is publicly available via required public disclosures, such as the annual tax return (Form 990).”

But if this investment does not rise to the investment manager’s attention, what kind of guidance is he getting about screening? After all, reports Gizmodo, the Gates Foundation has been called out for private prison investment before.

This isn’t the first time the foundation’s trust has profited from private prisons: a Mother Jones report detailing the charity’s 2012 tax returns found that the charity’s investment arm invested $2.2 million in private prison company The GEO Group, Inc., $2.4 million in a UK-based private security company that operates juvenile detention centers in the US, and $2.5 million in a military contractor.

At the time, a spokesperson for the foundation told the Seattle Globalist the $2.2 million private prison investment was a drop in the bucket compared to the $25 billion the charity had spent helping others in its last 15 years.
“We understand the passion of people standing up for injustice,” the spokesperson reportedly said in response to calls for the foundation to pull its investment from the GEO Group. “That is what motivates us all at the foundation every day.”

—Ruth McCambridge
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ABOUT THE AUTHOR

Ruth McCambridge
Ruth is Editor in Chief of the Nonprofit Quarterly. Her background includes forty-five years of experience in nonprofits, primarily in organizations that mix grassroots community work with policy change. Beginning in the mid-1980s, Ruth spent a decade at the Boston Foundation, developing and implementing capacity building programs and advocating for grantmaking attention to constituent involvement.



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By Martin Levine
February 12, 2020

 

[BIG LEEMELONE]

The Gates Foundation Is Filling Its Coffers With Profits From Private Prisons



Melanie Ehrenkranz


7/23/19 4:19PM


•


Filed to PRIVATE PRISONS


For soulless ghouls who view the bottom line as superior to basic human rights, for-profit prisons are an apt investment, one that the investment arm of the Bill and Melinda Gates Foundation just increased its stake in.


As first reported by Bloomberg, the Bill and Melinda Gates Foundation Trust—a separate organization from the Bill and Melinda Gates Foundation that manages the charity’s endowment assets— just added about 200,000 shares to Serco Group Plc, which operates private prisons and detention centers across the UK, Australia, and New Zealand. This reportedly brought the shares to 3.74 million, which amounts to about $6.6 million.

In a statement emailed to Gizmodo, a spokesperson for the Bill and Melinda Gates Foundation emphasized that the trust operates independently from the foundation itself and that the foundation had no role in the Serco investment.
“The endowment that funds the Bill & Melinda Gates Foundation is independently managed by a separate entity, the Bill & Melinda Gates Foundation Trust,” the spokesperson said. “Foundation staff have no influence on Trust investment decisions, and no visibility into the trust’s investment strategies or holdings, other than what is publicly available via required public disclosures, such as the annual tax return (Form 990).”

A spokesperson for the Bill & Melinda Gates Foundation Trust confirmed the Serco investment to Gizmodo and further clarified that “a review showed the Serco shares were added to the fund’s portfolio without prior approval by an outside asset manager, who was given discretion over individual investments.” The spokesperson added that “the Trust evaluates its holdings regularly, both for performance and fit.”
This isn’t the first time the foundation’s trust has profited from private prisons: a Mother Jones report detailing the charity’s 2012 tax returns found that the charity’s investment arm invested $2.2 million in private prison company The GEO Group, Inc., $2.4 million in a UK-based private security company that operates juvenile detention centers in the US, and $2.5 million in a military contractor.

At the time, a spokesperson for the foundation told the Seattle Globalist the $2.2 million private prison investment was a drop in the bucket compared to the $25 billion the charity had spent helping others in its last 15 years. “We understand the passion of people standing up for injustice,” the spokesperson reportedly said in response to calls for the foundation to pull its investment from the GEO Group. “That is what motivates us all at the foundation every day.”
“We recognize the good that you do in the world, just as we recognize that earning a return on your investment is essential to your theory of change,” more than two dozen human rights groups wrote in a letter to Bill Gates after the news broke in 2014 that his foundation was funding the GEO Group. “But none of your good deeds makes financially enabling the promotion of policies that terrorize children and separate families any less harmful to America’s immigrant communities.”

Serco was fined £19.2m this year for fraud and false accounting attributed to its electronic tagging system for criminals. There have also reportedly been at least 34 reports of sexual assault at Serco immigration detention facilities from 2009 through 2013. And in 2015, documents obtained by the Guardian indicated that the company was lobbying US lawmakers and officials to establish contracts to detain migrant families in the US.
While the Gates Foundation’s assertion that several million is a blip compared to all of the money the charity has funneled into less morally bankrupt causes is factually correct, it’s an egregiously weak argument for having any stake in an institution most credible for locking people up and abusing them.
​

Update 2:20pm ET, July 24: Added statements from both the Bill and Melinda Gates Foundation and the Bill and Melinda Gates Foundation Trust, both of which clarified the operation separation between the two organizations.

​

 

[htg designs]

Dude been a **** boy... Not news

 

[BIG LEEMELONE]

Bill Gates Says He's Fighting Climate Change While Cashing in on Oil

The billionaire's investment portfolio includes millions of shares of companies contributing to the climate crisis.

www.vice.com

Bill Gates Says He's Fighting Climate Change While Cashing in on Oil
The billionaire's investment portfolio includes millions of shares of companies contributing to the climate crisis.
By Geoff Dembicki

The world’s second richest man, whose net worth is around $105 billion according to Forbes, is currently working on a book called How to Avoid a Climate Disaster: The Solutions We Have and the Breakthroughs We Need, which comes out next February. And Gates is spending hundreds of millions of dollars on technologies like a solar oven that creates cement, steel and glass without releasing emissions. When people talk about billionaires who have used their wealth to benefit humanity, Gates is usually at the top of the list, and he's using his fortune to support the battle against the climate crisis.

But the Microsoft co-founder has also profited from some of the world’s dirtiest fossil fuels. The Bill & Melinda Gates Foundation Trust owns $11 billion worth of shares in Berkshire Hathaway, the conglomerate run by his friend Warren Buffett, whose investments in coal-burning utilities and other polluting activities in 2018 released emissions equivalent to burning 21 billion gallons of gasoline, according to Bloomberg.
The Gates Foundation Trust also owns 17 million shares—worth $1.54 billion as of February—of Canadian National Railway Company, which in recent years has become a major transporter of oil from Canada’s tar sands, one of the world’s most climate-damaging oil sources. The Gates Foundation declined to comment about how these investment decisions, which are made by Gates’ wealth manager Michael Larson, fit with the billionaire’s goal of fighting the climate emergency, directing VICE to contact Gates' investment company, which did not respond.

“It’s frustrating to me when I see Bill Gates held up as this hero of climate change when you know that he’s benefitting from all of these investments that are directly contributing to climate change,” said Justin Mikulka, a contributor to the climate outlet Desmog and author of Bomb Trains, about the oil-by-rail industry Gates’ money helps support.


Gates, via his foundation’s trust, has a portion of his vast fortune invested in 14 publicly traded companies. Of those, the largest investment by far is in Berkshire Hathaway, which is roughly 50 percent of the trust’s portfolio. The Gates Foundation Trust owns more than 50 million shares of Berkshire, a sprawling company that owns brands like Dairy Queen, Fruit of the Loom, and GEICO. It is a sizable supporter of renewable energy. But Berkshire is also heavily invested in coal-burning utilities—so much so that the company was responsible directly or indirectly for 189 million tons of greenhouse gas emissions in 2018 according to the emissions monitoring group CDP, more than the entire state of New York.


The Gates Foundation Trust’s investment in Canadian National Railway Company, or CN Rail as it is also known, has an even more clear connection to climate. “The main thing with the rail industry is people don’t understand how closely it is linked to the fossil fuel industry,” Mikulka said.


Last year, CN Rail’s shipments of oil grew from 150,000 barrels per day in April to 200,000 barrels in June, a surge that resulted in the company earning a record CAD $4 billion in revenues. CN Rail’s oil business is doing so well because the pipelines that transport oil from the tar sands in northern Canada to international markets are mostly full, and new pipelines have faced delays and opposition from indigenous people and climate activists.

​

Shipping oil by rail is more expensive for tar sands producers, but better for them than not being able to transport their oil at all. Oil rail shipments grew 88 percent across the U.S. in 2018, due in large part to shipments from Canada. And CN Rail this year expects “significant year-over-year growth in crude carloads.” So the Gates Foundation Trust’s investment is helping fuel expansion of an industry whose 81 million tons of emissions in 2018 are equivalent to Paris’s annual emissions.


One of the most obvious steps Gates could take if he is truly serious about fixing the climate emergency would be directing his foundation’s trust to divest from its investments in Berkshire Hathaway and CN Rail. But that is not a tactic the billionaire is enthusiastic about.


“If you think divestment alone is a solution, I worry you’re taking whatever desire people have to solve this problem and kind of using up their idealism and energy on something that won’t emit less carbon—because only a few people in society are the owners of the equity of coal or oil companies,” Gates said in 2015, not mentioning that his foundation’s endowment is invested in companies that burn coal and transport oil.


Last year he repeated this argument, telling the Financial Times that “Divestment, to date, probably has reduced about zero tonnes of emissions.”


That is not a consensus view however. Banks and other institutions cutting off support for coal could be making it more difficult for the industry to expand. Others think Gates is missing the larger point of divestment—to weaken the influence of fossil fuel companies. But in any case, reporting on Gates and his comments on climate hardly ever mentions his financial links to industries and companies that are horrible for the climate.


“Most of the headlines you see about Bill Gates will be that his latest solar venture is making good progress or that he’s supporting somewhat controversial climate change solutions like geoengineering,” Mikulka said. “But rarely do you see the fact that he’s profiting and has been for a long time from things like supporting the Canadian tar sands industry.”

 

[BIG LEEMELONE]

Lol, did Bill take your woman or something? Big PlayStation fan?

You want to discuss the articles?

 

[kingkoopa]

You don't become a billionaire with morals or ethics.

I swear Oprah got hitters to this day.

 

[slaughterx]

Really not much to discuss about your almost 1 year old article... seems like you just have some kind of personal vendetta.

 

[BIG LEEMELONE]

Really not much to discuss about your almost 1 year old article... seems like you just have some kind of personal vendetta.

You read the articles and feel that there's not much to discuss about them?

 

[slaughterx]

Cliffnotes from your original article that will be a year old in 2 months... Bill Gates filling his coffers with private proson prfit, because that 6.6 mil is gonna break you when you have 150 bil.

You actually remind me of a conspiracy theory friend of mine who is convinced that Bill Gates is developing a "vaccine" to kill off half yhe population. It's silly **** reslly and there us nothing to discuss.

 

[BIG LEEMELONE]

Cliffnotes from your original article that will be a year old in 2 months... Bill Gates filling his coffers with private proson prfit, because that 6.6 mil is gonna break you when you have 150 bil.

You actually remind me of a conspiracy theory friend of mine who is convinced that Bill Gates is developing a "vaccine" to kill off half yhe population. It's silly **** reslly and there us nothing to discuss.

Thanks for your contribution to the thread.

 

[BIG LEEMELONE]

www.latimes.com/news/la-na-gatesx07jan07-story.html%3f_amp=true

Dark cloud over good works of Gates Foundation
BY CHARLES PILLER, EDMUND SANDERS AND ROBYN DIXON
JAN. 7, 2007
12 AM

Ebocha, Nigeria — Justice Eta, 14 months old, held out his tiny thumb.

An ink spot certified that he had been immunized against polio and measles, thanks to a vaccination drive supported by the Bill & Melinda Gates Foundation.

But polio is not the only threat Justice faces. Almost since birth, he has had respiratory trouble. His neighbors call it “the cough.” People blame fumes and soot spewing from flames that tower 300 feet into the air over a nearby oil plant. It is owned by the Italian petroleum giant Eni, whose investors include the Bill & Melinda Gates Foundation.

Justice squirmed in his mother’s arms. His face was beaded with sweat caused either by illness or by heat from the flames that illuminate Ebocha day and night. Ebocha means “city of lights.”

The makeshift clinic at a church where Justice Eta was vaccinated and the flares spewing over Ebocha represent a head-on conflict for the Gates Foundation. In a contradiction between its grants and its endowment holdings, a Times investigation has found, the foundation reaps vast financial gains every year from investments that contravene its good works.

In Ebocha, where Justice lives, Dr. Elekwachi Okey, a local physician, says hundreds of flares at oil plants in the Niger Delta have caused an epidemic of bronchitis in adults, and asthma and blurred vision in children. No definitive studies have documented the health effects, but many of the 250 toxic chemicals in the fumes and soot have long been linked to respiratory disease and cancer.

“We’re all smokers here,” Okey said, “but not with cigarettes.”

The oil plants in the region surrounding Ebocha find it cheaper to burn nearly 1 billion cubic feet of gas each day and contribute to global warming than to sell it. They deny the flaring causes sickness. Under pressure from activists, however, Nigeria’s high court set a deadline to end flaring by May 2007. The gases would be injected back underground, or trucked and piped out for sale. But authorities expect the flares to burn for years beyond the deadline.

The Gates Foundation has poured $218 million into polio and measles immunization and research worldwide, including in the Niger Delta. At the same time that the foundation is funding inoculations to protect health, The Times found, it has invested $423 million in Eni, Royal Dutch Shell, Exxon Mobil Corp., Chevron Corp. and Total of France — the companies responsible for most of the flares blanketing the delta with pollution, beyond anything permitted in the United States or Europe.

Indeed, local leaders blame oil development for fostering some of the very afflictions that the foundation combats.

Oil workers, for example, and soldiers protecting them are a magnet for prostitution, contributing to a surge in HIV and teenage pregnancy, both targets in the Gates Foundation’s efforts to ease the ills of society, especially among the poor. Oil bore holes fill with stagnant water, which is ideal for mosquitoes that spread malaria, one of the diseases the foundation is fighting.

Investigators for Dr. Nonyenim Solomon Enyidah, health commissioner for Rivers State, where Ebocha is located, cite an oil spill clogging rivers as a cause of cholera, another scourge the foundation is battling. The rivers, Enyidah said, “became breeding grounds for all kinds of waterborne diseases.”

The bright, sooty gas flares — which contain toxic byproducts such as benzene, mercury and chromium — lower immunity, Enyidah said, and make children such as Justice Eta more susceptible to polio and measles — the diseases that the Gates Foundation has helped to inoculate him against.


Investing for profit
AT the end of 2005, the Gates Foundation endowment stood at $35 billion, making it the largest in the world. Then in June 2006, Warren E. Buffett, the world’s second-richest man after Bill Gates, pledged to add about $31 billion in installments from his personal fortune. Not counting tens of billions of dollars more that Gates himself has promised, the total is higher than the gross domestic products of 70% of the world’s nations.

Like most philanthropies, the Gates Foundation gives away at least 5% of its worth every year, to avoid paying most taxes. In 2005, it granted nearly $1.4 billion. It awards grants mainly in support of global health initiatives, for efforts to improve public education in the United States, and for social welfare programs in the Pacific Northwest.

It invests the other 95% of its worth. This endowment is managed by Bill Gates Investments, which handles Gates’ personal fortune. Monica Harrington, a senior policy officer at the foundation, said the investment managers had one goal: returns “that will allow for the continued funding of foundation programs and grant making.” Bill and Melinda Gates require the managers to keep a highly diversified portfolio, but make no specific directives.

By comparing these investments with information from for-profit services that analyze corporate behavior for mutual funds, pension managers, government agencies and other foundations, The Times found that the Gates Foundation has holdings in many companies that have failed tests of social responsibility because of environmental lapses, employment discrimination, disregard for worker rights, or unethical practices.

One of these investment rating services, Calvert Group Ltd., for example, endorses 52 of the largest 100 U.S. companies based on market capitalization, but flags the other 48 for transgressions against social responsibility. Microsoft Corp., which Bill Gates leads as board chairman, is rated highly for its overall business practices, despite its history of antitrust problems.

In addition, The Times found the Gates Foundation endowment had major holdings in:

• Companies ranked among the worst U.S. and Canadian polluters, including ConocoPhillips, Dow Chemical Co. and Tyco International Ltd.

• Many of the world’s other major polluters, including companies that own an oil refinery and one that owns a paper mill, which a study shows sicken children while the foundation tries to save their parents from AIDS.

• Pharmaceutical companies that price drugs beyond the reach of AIDS patients the foundation is trying to treat.

Using the most recent data available, a Times tally showed that hundreds of Gates Foundation investments — totaling at least $8.7 billion, or 41% of its assets, not including U.S. and foreign government securities — have been in companies that countered the foundation’s charitable goals or socially concerned philosophy.

This is “the dirty secret” of many large philanthropies, said Paul Hawken, an expert on socially beneficial investing who directs the Natural Capital Institute, an investment research group. “Foundations donate to groups trying to heal the future,” Hawken said in an interview, “but with their investments, they steal from the future.”

Moreover, investing in destructive or unethical companies is not what is most harmful, said Hawken and other experts, including Douglas Bauer, senior vice president of Rockefeller Philanthropy Advisors, a nonprofit group that assists foundations on policy and ethical issues. Worse, they said, is investing purely for profit, without attempting to improve a company’s way of operating.

Such blind-eye investing, they noted, rewards bad behavior.

At the Gates Foundation, blind-eye investing has been enforced by a firewall it has erected between its grant-making side and its investing side. The goals of the former are not allowed to interfere with the investments of the latter.

The foundation recently announced a plan to institutionalize that firewall by moving its assets into a separate organization, the Bill & Melinda Gates Foundation Trust. Its two trustees will be Bill and Melinda Gates. The trust will invest to increase the endowment, while the foundation gives grants.

“We’ve been operating under these principles for many years,” said Harrington, the foundation policy officer. “But having an official separation makes it even more clear.”

With the exception of tobacco companies, asset managers do not avoid investments in firms whose activities conflict with the foundation’s mission to do good.

“Because we want to maintain a focus on the programmatic work,” Harrington said in a written response to Times questions, “we have made it a policy to not comment on individual investment holdings.”

Finally, the foundation does not invest any portion of its endowment in companies specifically because they advance its philanthropic mission.

Much of the rest of philanthropy, however, is beginning to address contradictions between making grants to improve the world and making investments that harm it. According to recent surveys, many foundations, including some of the nation’s largest, have adopted at least basic policies to invest in ways that support their missions.

Major foundations that make social justice, corporate governance and environmental stewardship key considerations in their investment strategies include the Ford Foundation, worth $11.6 billion, the nation’s second-largest private philanthropy; the John D. and Catherine T. MacArthur Foundation; the Rockefeller Foundation; and the Charles Stewart Mott Foundation.

Moreover, nearly one-third of foundations participate directly in shareholder initiatives, voting their proxies to influence corporate behavior. A few have become shareholder activists. In recent years, for instance, the Nathan Cummings Foundation, with an endowment of $481 million, has sponsored proxies to force corporations to address environmental sustainability and political transparency.

Harrington said the Gates Foundation’s investment managers vote proxies, but declined to give any specifics. The foundation would not make its chief investment manager, Michael Larson, available for an interview. In May, Harrington told the Chronicle of Philanthropy that the Gates Foundation did not get involved in proxy issues.

At the Charles Stewart Mott Foundation, on the other hand, Michael J. Smith, its chief investment officer, said voting proxies to improve corporate behavior had become a fiduciary necessity.

“Companies that have good governance are generally well-managed,” he said, “and have a good record of profitability.”

Even the relatively tiny Needmor Fund, with a $27-million endowment, screens its investments to bar companies with poor environmental records, antagonism to worker rights or tolerance for repressive governments.

Leadership, however, is open to the Gates Foundation. It has unique power to move the debate, said Bauer, of Rockefeller Philanthropy Advisors. If Gates adopted mission-related investing, Bauer said in an interview, the shift in the world of philanthropy would be “seismic.”

The foundation did not respond to written questions about whether it might change its investment policies.


Life in ‘Cancer Valley’
AT a clinic in Isipingo, a suburb of the South African port city of Durban where the HIV infection rate is as high as 40%, Thembeka Dube, 20, was getting a checkup.

Dube had volunteered for tests of a vaginal gel that researchers hope will be shown to protect against HIV. The tests are part of a study conducted by the New York-based Population Council, and funded by a $20-million grant from the Bill & Melinda Gates Foundation.

Dube’s boyfriend won’t use condoms. She hoped the tests would show she could use the microbicidal gel, called Carraguard, and stop worrying about AIDS.

Research into prophylactics such as Carraguard can fight AIDS by empowering women, Bill Gates told the International AIDS Conference in Toronto in August. “Whether the woman is a faithful married mother of small children, or a sex worker trying to scrape out a living in a slum … " he said, “a woman should never need her partner’s permission to save her own life.”

Two days before Gates spoke, Kyrone Smith was born only a few kilometers from the Isipingo clinic. At the same time the Gates Foundation was trying to help Dube, it owned a stake in companies that appeared to be hurting Kyrone.

At six weeks, his lungs began to fail. Kyrone struggled to cry, but he was so weak that no sound came out — just husky, labored breaths.

His mother, Renee Smith, 26, rushed him to a hospital, where he was given oxygen. She feared it would be the first of many hospital visits. Smith knew from experience.

“My son Teiago was in and out of hospital since the age of 3,” she said. “He couldn’t breathe nicely…. There are so many children in this area who have the same problems.”

Two of the area’s worst industrial polluters — a Mondi paper mill and a giant Sapref oil refinery — squat among the homes near Isipingo like sleepy grey dragons, exhaling chemical vapors day and night.

The Sapref plant, which has had two dozen significant spills, flares, pipeline ruptures and explosions since 1998, and the Mondi plant together pump thousands of tons of putrid-smelling chemicals into the air annually, according to their own monitoring.

In 2002, a study found that more than half of the children at a school in nearby Merebank suffered asthma — one of the highest rates in scientific literature. A second study, published last year, found serious respiratory problems throughout the region: More than half of children aged 2 to 5 had asthma, largely attributed to sulfur dioxide and other industrial pollutants. Much of it was produced by companies in which the Gates Foundation was invested.

Asthma was not the only danger. Isipingo is in what environmental activists call “Cancer Valley.” Emissions of benzene, dioxins and other carcinogens were “among the highest levels found in any comparable location the world,” said Stuart Batterman at the University of Michigan, a coauthor of both studies.

The Gates Foundation is a major shareholder in the companies that own both of the polluting plants. As of September, the foundation held $295 million worth of stock in BP, a co-owner of Sapref. As of 2005, it held $35 million worth of stock in Royal Dutch Shell, Sapref’s other owner. The foundation also held a $39-million investment in Anglo American, which owns the Mondi paper mill.

The foundation has held large investments in all three companies since at least 2002. Since then, the worth of BP shares has shot up by about 83%, Royal Dutch Shell shares by 77% and Anglo American shares about 255%. Dividends have padded the foundation’s assets by additional millions of dollars.

The foundation has gotten much more in financial gains from its investments in the polluters than it has given to the Durban microbicide study to fight AIDS.

Sapref said it had cut sulfur dioxide emissions by two-thirds since 1997 and spent more than $64 million over 11 years on environmental initiatives. It said lead in its gasoline and sulfur in its diesel fuel were reduced a year ago. Plant officials said: “Sapref does not accept any responsibility for any health issues in South Durban.”

Mondi said that its Merebank paper mill had cut “chemical oxygen demand,” a key pollutant, in 2005, and that it was cutting its sulfur dioxide emissions. But by the company’s own estimate, the mill still releases about three times the combined amount of sulfur dioxide produced by Mondi plants in five other nations, and the other plants operate at nearly six times the capacity. Merebank uses a coal-fired power plant, while the others burn cleaner fuel.

Just as the Gates Foundation investments in Mondi, BP and Royal Dutch Shell have been very profitable, so too have its holdings in the top 100 polluters in the United States, as rated by the University of Massachusetts, and the top 50 polluters in Canada, as rated by the trade publication Corporate Knights, using methods based on those developed by the university.

According to the foundation’s 2005 figures, it held a $1.4-billion stake in 69 of those firms. They included blue chips, such as Chevron Corp. and Ford Motor Co., as well as lesser-known companies such as Lyondell Chemical Co. and Ameren Corp.

At the same time, the foundation held a $2.9-billion stake in firms ranked by the investment rating services as among the worst environmental stewards, including Dominion Resources Inc. and El Paso Corp.

Without double-counting companies flagged by both the University of Massachusetts and the rating services, the combination totals an investment of about $3.3 billion.

The Gates Foundation did not respond to written questions about its investments in companies that were high polluters or those rated as poor environmental stewards.


Drugs out of reach
NEARLY every morning, a 56-year-old retired soldier named Felix makes a short trek from his house on the outskirts of Lagos, Nigeria, to a factory to purchase a 40-cent block of ice.

Felix has a pressing, private reason to get the ice: He needs it to keep his medicine from melting.

Two years ago, Felix’s wife died from AIDS, and he learned he was HIV-positive.

He told his six children, now 16 to 24 years old, but no one else. He was afraid of the stigma of HIV. He agreed to be interviewed only if he was identified by his first name alone. “I thought the world had come to an end for me,” Felix said. “Everyone believes that once you have it, you’re a living ghost.”

He took antiretroviral drugs and felt better. But his treatment was interrupted frequently because he could not afford the cost: $62 a month. His pension as a former staff sergeant was $115 a month, and the money came sporadically.

Worse, his body soon stopped responding to the drugs. His kidneys began to fail, and his count of immune cells crucial to fight off infections plummeted.

In May, Felix began taking Kaletra, a second-line AIDS drug — needed when the first round of treatments fail.

His health rebounded, but it came at a cost.

Gel capsules of Kaletra melt in Nigeria’s sweltering climate, where temperatures often top 100 degrees. Felix kept his Kaletra in a small chest filled with ice.

Each day, he had to go get more ice. And each day, he had to take Kaletra precisely at 10 a.m. and 10 p.m. These things made it difficult for him to work, even at odd jobs.

A new version of Kaletra does not require refrigeration. But his physician, Dr. T.M. Balogun, who helps run the AIDS program at Lagos State University Teaching Hospital, told him not to get his hopes up.

The hospital is helped by the Nigerian government, which gets money from the Global Fund to Fight AIDS, Tuberculosis and Malaria. The fund has been awarded $651 million by the Gates Foundation. Yet the hospital does not offer the new Kaletra. It is too expensive.

In August, private pharmacists said they could sell it for $246 a month. But that was far out of Felix’s reach.

Kaletra is made by Abbott Laboratories. As of this September, the Gates Foundation held $169 million in Abbott stock. In 2005, the foundation held nearly $1.5 billion worth of stock in drug companies whose practices have been widely criticized as restricting the flow of key medicines to poor people in developing nations.

On average, shares in those companies have increased in value about 54% since 2002. Investments in Abbott and other drug makers probably have gained the foundation hundreds of millions of dollars.

Drug makers say they need price protection for research and development. “Our global needs and global systems are in conflict,” Miles White, Abbott’s chief executive, wrote in the Financial Times last year. “This threatens to harm one goal, innovation, in the name of another, access to medicine.”

In 1994, however, the drug makers, with other research-intensive businesses, lobbied hard and successfully for the international Agreement on Trade-Related Aspects of Intellectual Property Rights, which made it harder to move from costly brand-name drugs to cheap generics. The agreement protected new-drug monopolies for 20 years or more.

This meant no low-priced generic for Kaletra. The pact locked in Abbott as its sole supplier, and Abbott set prices for the world.

Under pressure from activists, Abbott and other companies cut prices for key AIDS drugs in poorer nations. In Guatemala and Thailand, the new Kaletra costs $2,200 per patient per year, plus taxes and fees — a fraction of the more than $8,000 it costs in the United States. In poorer Nigeria, the official price was $500 a year.

But this was still too costly for most patients, including Felix.

The industry’s approach “has the effect of making medicines available only to a narrow spectrum of a rich elite in a developing country,” said Brook Baker, an intellectual property expert at Northeastern University.

He called it “pharmaceutical apartheid.”

Drug companies say critics overlook billions of dollars’ worth of drugs they donate to developing nations. Abbott says it has given AIDS drugs to 25,000 patients, along with millions of test kits, and has underwritten a major project to improve AIDS services in Tanzania.

In emergencies, critics welcome donated drugs. The problem, they say, is that donations scare away generic suppliers. Donations, said Ellen ‘t Hoen, who directs a drug-access program for Doctors Without Borders, “remove the prospect of any stable supply.”

And when the free drugs are gone, patients die.

Most medicines are reliably profitable. In the most recent quarter, Abbott posted a gross profit margin of 59% of sales, and recently paid its 331st consecutive quarterly dividend. A congressional analysis shows that during the first six months of 2006, the 10 largest drug companies earned $39.8 billion in profits.

The Gates Foundation’s top priority is stopping AIDS, Bill Gates told the International AIDS Conference in August. Since its inception, the foundation has donated more than $2 billion to fight the disease.

The foundation did not respond to written questions about the problems of patients who cannot obtain needed AIDS drugs due to pharmaceutical company policies.

Meanwhile, the foundation holds its grant recipients to a far higher standard than the drug companies on which it bets large portions of its endowment. Its grant form says it expects recipients “to exercise their intellectual property rights in a manner consistent with the stated goals of the Bill & Melinda Gates Foundation to promote the … availability of inventions for public benefit in developing countries at reasonable cost.”

Some critics say the foundation’s failure to use its own investments “to promote … public benefit in developing countries at reasonable cost” might trace back to the source of most of its money — Microsoft — which Bill Gates serves as chairman.

Microsoft monopolies in computer operating systems and business software depend upon the same intellectual-property and trade-law approaches favored by drug companies.

“The Gates Foundation is in a position to change the dynamic, to make sure that drugs get first to the places they are most needed,” said Daniel Berman, deputy director in South Africa for Doctors Without Borders. “But it conflicts with the interests of Microsoft.”

In response to written questions, Harrington, the Gates Foundation policy officer, said the foundation tried to guarantee that grantee discoveries made in partnership with for-profit companies trickled down to people in developing nations.

“The foundation’s goal is to help ensure that new scientific knowledge is broadly shared … and that lifesaving health advances are created and made available and affordable to those most in need,” she said. “We also recognize that private industry needs adequate incentives to develop new drugs.”

The foundation’s pharmaceutical company investments, Harrington said, “are completely separate from what’s being done on the programmatic side to help spur the development and delivery of drugs/vaccines.”

 

[BIG LEEMELONE]

Bill Gates Gives to the Rich (Including Himself)

His renowned charitable activities seem to serve mainly private interests, namely his own.

www.thenation.com

Bill Gates’s Charity Paradox
A Nation investigation illustrates the moral hazards surrounding the Gates Foundation’s $50 billion charitable enterprise.
By Tim Schwab
MARCH 17, 2020

Last fall, Netflix premiered a three-part documentary that promises viewers a rare look at the inner life of one of history’s most controversial businessmen. Over three hours, Inside Bill’s Brain shows us a rare emotional side to Bill Gates as he processes the loss of his mother and the death of his estranged best friend and Microsoft cofounder, Paul Allen.

Mostly, though, the film reinforces the image many of us already had of the ambitious technologist, insatiable brainiac, and heroic philanthropist. Inside Bill’s Brain falls into a common trap: attempting to understand the world’s second-richest human by interviewing people in his sphere of financial influence.

In the first episode, director Davis Guggenheim underlines Gates’s expansive intellect by interviewing Bernie Noe, described as a friend of Gates.

“That’s a gift, to read 150 pages an hour,” says Noe. “I’m going to say it’s 90 percent retention. Kind of extraordinary.”

Guggenheim doesn’t tell audiences that Noe is the principal of Lakeside School, a private institution to which the Bill & Melinda Gates Foundation has given $80 million. The filmmaker also doesn’t mention the extraordinary conflict of interest this presents: The Gateses used their charitable foundation to enrich the private school their children attend, which charges students $35,000 a year.

The documentary’s blind spots are all the more striking in light of the timing of its release, just as news was trickling out that Bill Gates met multiple times with convicted sex offender Jeffrey Epstein to discuss collaborating on charitable activities, from which Epstein stood to generate millions of dollars in management fees. Though the collaboration never materialized, it nonetheless illustrates the moral hazards surrounding the Gates Foundation’s $50 billion charitable enterprise, whose sprawling activities over the last two decades have been subject to remarkably little government oversight or public scrutiny.


While the efforts of fellow billionaire philanthropist Michael Bloomberg to use his wealth to win the presidency foundered amid intense media criticism, Gates has proved there is a far easier path to political power, one that allows unelected billionaires to shape public policy in ways that almost always generate favorable headlines: charity.

When Gates announced in 2008 that he would step away from Microsoft to focus his efforts on philanthropy, he described his intention to work with and through the private sector to deliver public-goods products and technologies, in the same way that Microsoft’s computer software expanded horizons and created economic opportunities. Describing his approach by turns as “creative capitalism” and “catalytic philanthropy,” Gates oversaw a shift at his foundation to leverage “all the tools of capitalism” to “connect the promise of philanthropy with the power of private enterprise.”

The result has been a new model of charity in which the most direct beneficiaries are sometimes not the world’s poor but the world’s wealthiest, in which the goal is not to help the needy but to help the rich help the needy.

Through an investigation of more than 19,000 charitable grants the Gates Foundation has made over the last two decades, The Nation has uncovered close to $2 billion in tax-deductible charitable donations to private companies—including some of the largest businesses in the world, such as GlaxoSmithKline, Unilever, IBM, and NBC Universal Media—which are tasked with developing new drugs, improving sanitation in the developing world, developing financial products for Muslim consumers, and spreading the good news about this work.

The Gates Foundation even gave $2 million to Participant Media to promote Davis Guggenheim’s previous documentary film Waiting for Superman, which pushes one of the foundation’s signature charity efforts, charter schools—privately managed public schools. This charitable donation is a small part of the $250 million the foundation has given to media companies and other groups to influence the news.

“It’s been a quite unprecedented development, the amount that the Gates Foundation is gifting to corporations…. I find that flabbergasting, frankly,” says Linsey McGoey, a professor of sociology at the University of Essex and author of the book No Such Thing as a Free Gift. “They’ve created one of the most problematic precedents in the history of foundation giving by essentially opening the door for corporations to see themselves as deserving charity claimants at a time when corporate profits are at an all-time high.”

McGoey’s research has anecdotally highlighted charitable grants the Gates Foundation has made to private companies, such as a $19 million donation to a Mastercard affiliate in 2014 to “increase usage of digital financial products by poor adults” in Kenya. The credit card giant had already articulated its keen business interest in cultivating new clients from the developing world’s 2.5 billion unbanked people, McGoey says, so why did it need a wealthy philanthropist to subsidize its work? And why are Bill and Melinda Gates getting a tax break for this donation?

These questions seem especially pertinent in light of the fact that the donation to Mastercard may have delivered financial benefits to the Gates Foundation; at the time of the donation, in November 2014, the foundation’s endowment had substantial financial investments in Mastercard through its holdings in Warren Buffett’s investment company, Berkshire Hathaway. (Buffett himself has pledged $30 billion to the Gates Foundation. )

The Nation found close to $250 million in charitable grants from the Gates Foundation to companies in which the foundation holds corporate stocks and bonds: Merck, Novartis, GlaxoSmithKline, Vodafone, Sanofi, Ericsson, LG, Medtronic, Teva, and numerous start-ups—with the grants directed at projects like developing new drugs and health monitoring systems and creating mobile banking services.

drugs and health monitoring systems and creating mobile banking services.


A foundation giving a charitable grant to a company that it partly owns—and stands to benefit from financially—would seem like an obvious conflict of interest, but judging from the sparse rules that Congress has written governing private foundations and the IRS’s light enforcement of them, many in the federal government do not appear to see it that way.
The Gates Foundation did not respond to specific questions about its work with the private sector, nor would it provide its own accounting of how much money it has given to for-profit companies, saying that “many grants are implemented through a mixture of non-profit and for-profit partners, making it difficult to evaluate exact spending.”
At business-friendly events, however, Bill Gates openly promotes his foundation’s work with companies. In speeches delivered at the American Enterprise Institute and Microsoft in 2013 and ‘14, he trumpeted the lives his foundation was saving—in one speech he said 10 million, in another 6 million—through “partnerships with pharmaceutical companies.”
Yet the foundation is doing more than simply partnering with companies: It is subsidizing their research costs, opening up markets for their products, and bankrolling their bottom lines in ways that, by and large, have never been publicly examined—even as you and I, dear reader, are subsidizing this work.



Bill Gates frequently boasts about having paid more taxes—$10 billion—than anyone else. That may or may not be true; the Gates Foundation would not release his tax forms or provide any substantiating information. But he may also end up avoiding more taxes than anyone else, through charitable giving.
By Bill and Melinda Gates’s estimations, they have seen an 11 percent tax savings on their $36 billion in charitable donations through 2018, resulting in around $4 billion in avoided taxes. The foundation would not provide any documentation related to this number, and independent estimates from tax scholars like Ray Madoff, a law professor at Boston College, indicate that multibillionaires see tax savings of at least 40 percent—which, for Bill Gates, would amount to $14 billion—when you factor in the tax benefits that charity offers to the superrich: avoidance of capital gains taxes (normally 15 percent) and estate taxes (40 percent on everything over $11.58 million, which in Gates’s case is a lot).
Madoff, like many tax experts, stresses that these billions of dollars in tax savings have to be seen as a public subsidy—money that otherwise would have gone to the US Treasury to help build bridges, do medical research, or close the funding gap at the IRS (which has resulted in fewer audits of billionaires). If Bill and Melinda Gates don’t pay their full freight in taxes, the public has to make up the difference or simply live in a world where governments do less and less (educating, vaccinating, and researching) and superrich philanthropists do more and more.
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“I think people often confuse what wealthy people are doing on their own dime and what [they’re] doing on our dime, and that’s one of the big problems about this debate,” Madoff notes. “People say, ‘It’s the rich person’s money [to spend as they wish].’ But when they get significant tax benefits, it’s also our money. And so that’s why we need to have rules about how they spend our money.”
Naturally, Big Philanthropy has special interest groups pushing back on the creation of such rules. The Philanthropy Roundtable defends the wealthiest Americans’ “freedom to give,” describing itself as fighting the “increasing pressures from some public officials and advocacy groups to subject private philanthropies to more uniform standards and stricter government regulation.”


The nonprofit group receives funding from influential right-wing billionaires, including hundreds of thousands of dollars from the private foundation of Charles Koch. And it gets substantial funding from the Gates Foundation: nine grants from 2005 to 2017, worth $2.5 million, mostly for general operating expenses. A spokesperson for the foundation says these donations are aimed at “mobilizing voices to advocate for public policies that further enable charitable giving.”
At a certain point, however, the Philanthropy Roundtable seems primarily to serve the private interests of billionaires like the Gateses and Koch who use charity to influence public policy, with limited oversight and substantial public subsidies. It’s unclear how the Philanthropy Roundtable’s work contributes to the Gates Foundation’s charitable missions “to help all people live healthy, productive lives” and “to empower the poorest in society so they can transform their lives.”
While there is no credible argument that Bill and Melinda Gates use charity primarily as a vehicle to enrich themselves or their foundation, it is difficult to ignore the occasions where their charitable activities seem to serve mainly private interests, including theirs—supporting the schools their children attend, the companies their foundation partly owns, and the special interest groups that defend wealthy Americans—while generating billions of dollars in tax savings.
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Philanthropy has also delivered a public relations coup for Bill Gates, dramatically transforming his reputation as one of the most cutthroat CEOs to one of the most admired people on earth. And his model of charity, influence, and absolution is inspiring a new era of controversial tech billionaires like Mark Zuckerberg and Jeff Bezos, who have begun giving away their billions, sometimes working directly with Gates.

Gates was already one of the richest humans on earth in 2008, but he was also an embattled billionaire, still licking his wounds from a series of legal battles around the monopolistic business practices that made him so extravagantly wealthy—and that compelled Microsoft to pay billions of dollars in fines and settlements.
Gates did not respond to multiple requests for interviews, but in a recent Q&A with The Wall Street Journal, he revisited his legal face-off with antitrust regulators, saying, “I can still explain to you why the government was completely wrong, but that’s really old news at this point. For me personally, it did accelerate my move into that next phase, two to five years sooner, of shifting my focus over to the foundation.”

Gates’s view of Microsoft as the victim of overzealous antitrust regulations may help explain the laissez-faire ethos driving his charitable giving. His foundation has given money to groups that push for industry-friendly government policies and regulation, including the Drug Information Association (directed by Big Pharma) and the International Life Sciences Institute (funded by Big Ag). He has also funded nonprofit think tanks and advocacy groups that want to limit the role of government or direct its resources toward helping business interests, like the American Enterprise Institute ($6.8 million), the American Farm Bureau Foundation ($300,000), the American Legislative Exchange Council ($220,000), and organizations associated with the US Chamber of Commerce ($15.5 million).

Between 2011 and 2014 the Gates Foundation gave roughly $100 million to InBloom, an educational technology initiative that dissolved in controversy around privacy issues and its collection of personal data and information about students. To Diane Ravitch, a professor of education at New York University, InBloom illustrates the way Gates is “working to push technology in classrooms, to replace teachers with computers.”
“That affects Microsoft’s bottom line,” Ravitch observes. “However, I’ve never made that argument…. [The foundation] is not looking to make money from this business. They have an ideological interest in free markets.”

Education isn’t the only area where Gates’s ideological interests overlap with his financial interests. Microsoft’s bottom line is heavily dependent on patent protections for its software, and the Gates Foundation has been a strong and consistent supporter of intellectual property rights, including for the pharmaceutical companies with which it works closely. These patent protections are widely criticized for making lifesaving drugs prohibitively expensive, particularly in the developing world.

“He uses his philanthropy to advance a pro-patent agenda on pharmaceutical drugs, even in countries that are really poor,” says longtime Gates critic James Love, the director of the nonprofit Knowledge Ecology International. “Gates is sort of the right wing of the public-health movement. He’s always trying to push things in a pro-corporate direction. He’s a big defender of the big drug companies. He’s undermining a lot of things that are really necessary to make drugs affordable to people that are really poor. It’s weird because he gives so much money to [fight] poverty, and yet he’s the biggest obstacle on a lot of reforms.”

Doing well while doing good: The Gates Foundation’s sprawling work with for-profit companies has created a welter of conflicts of interest. (Pius Utomi Ekpei / AFP via Getty Images)

The Gates Foundation’s sprawling work with for-profit companies has created a welter of conflicts of interest, in which the foundation, its three trustees (Bill and Melinda Gates and Buffett), or their companies could be seen as financially benefiting from the group’s charitable activities.
Buffett’s Berkshire Hathaway has billions of dollars in investments in companies that the foundation has helped over the years, including Mastercard and Coca-Cola. Bill Gates long sat on the board of directors at Berkshire, announcing his departure just last week, and he and his foundation together hold billions of dollars of equity stake in the investment firm.

The foundation’s work also appears to overlap with Microsoft’s, to which Gates, in recent years, has devoted one-third of his workweek. (Gates announced last week he would be stepping down from the company’s board, but remain involved with the company as a technology advisor). The Gates Foundation’s $200 million program to improve public libraries partnered with Microsoft to donate the company’s software, prompting criticism that the donations were aimed at “seeding the market” for Microsoft products and “lubricating future sales.” Elsewhere, Microsoft is investing money studying mosquitoes to help predict disease outbreaks, working with the same researchers as the foundation. Both projects involve creating sophisticated robots and traps to collect and analyze mosquitoes.

“The foundation and Microsoft are separate entities, and our work is wholly unrelated to Microsoft,” a Gates Foundation spokesperson says.
In 2002, The Wall Street Journal reported that Gates and the Gates Foundation’s endowment made new investments in Cox Communications at the same time that Microsoft was in discussion with Cox about a variety of business deals. Tax experts raised questions about self-dealing, noting that foundations can lose their tax-exempt status if they are found to be using charity for personal gain. The IRS would not comment on whether it investigated, saying, “Federal law prohibits us from discussing specific taxpayers or organizations.”


Gates is notoriously secretive about his personal investments, however, making it difficult to understand if he stands to gain financially from his foundation’s activities or the extent to which he does if this happens.

“It’s hard to draw the line between a) Microsoft; b) his own personal wealth and investment; and c) the foundation,” says consumer advocate Ralph Nader, one of Microsoft’s fiercest critics in the 1990s. “There’s been very inadequate media scrutiny of all that.”
The foundation’s clearest conflicts of interest may be the grants it gives to for-profit companies in which it holds investments—large corporations like Merck and Unilever. A foundation spokesperson said it tries to avoid this kind of financial conflict but that doing so is difficult because its investment and charitable arms are firewalled from one another to keep their activities strictly separate. Bill and Melinda Gates are trustees of both entities, however, making it difficult to draw a sharp line between the two.

And in some places, the Gates Foundation explicitly marries its investing and charitable activities. Gates’ “strategic investment fund,” which the foundation says is designed to advance its philanthropic goals, not to generate investment income, includes a $7 million equity stake in the start-up company AgBiome, whose other investors include the agrochemical companies Monsanto and Syngenta. The foundation also gave the company $20 million in charitable grants to develop pesticides for African farmers. Similarly, the foundation has a $50 million stake in Intarcia and an $8 million investment in Just Biotherapeutics, to which it gave $25 million and $32 million in charitable grants, respectively, for work related to HIV and malaria. At one point, the foundation held a 48 percent stake in an HIV diagnostic company called Zyomyx, to which it previously awarded millions of dollars in charitable grants.

A league of their own: Bill Gates Sr. (left) and his son prepare to throw out the first pitch for the Seattle Mariners in 2013. (Elaine Thompson / AP)
Asked about these apparent conflicts of interest, the foundation says that grants and investments “are simply two tools the foundation uses as appropriate to further its charitable objectives.”

When Gates began his foundation in 1994, he put his father, Bill Gates Sr., in charge. A prominent lawyer in Seattle, Gates Sr. was also a civic leader and, later, a public advocate on issues related to income inequality.
Working with Chuck Collins, an heir to the Oscar Mayer fortune who gave away much of his inheritance during his 20s, Gates Sr. helped organize a successful national campaign in the late 1990s and early 2000s to build political power around preserving the estate tax, the taxes levied against the assets of the wealthy after they die.

In interviews Gates Sr. gave at the time (he has Alzheimer’s disease now and was not contacted for an interview), his advocacy work seemed designed not to generate tax revenues but to inspire philanthropy.
“A wealthy person has an absolute choice as to whether they pay the [estate] tax or whether they give their wealth to their university or their church or their foundation,” he told journalist Bill Moyers.
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That’s because when the rich give away their wealth, they reduce the assets that the estate tax targets. But such an arrangement, whereby the wealthiest Americans get to decide for themselves whether they want to pay taxes or donate their money to charity—including to groups that influence government policy—sounds like a peak example of tone-deaf privilege. In many respects, that’s how the tax system works for the superrich.

“The richer you are, the more choice you have between those two,” says Collins, who today works on income inequality at the nonprofit Institute for Policy Studies.
For some billionaire philanthropists, it may be less of a choice than an entitlement. Buffett and Gates have recruited hundreds of millionaires and billionaires to sign the Giving Pledge, a promise to donate most of their wealth to charity, which some signatories explicitly cite as an alternative to paying taxes.
According to Collins, Bill Gates Sr. had a nuanced view that included limiting billionaires’ tax benefits.

“He said to me…it’s a problem that his son is going to give—at the time, it was like $80 billion—to the foundation and never have to pay taxes on any of that wealth,” Collins recalls. “His view was that there should be a cap on the lifetime amount of wealth that could be given to charity where you get a deduction.”
Around the time that Collins and Gates Sr. were putting pressure on Congress to make sure the wealthy pay their fair share of taxes, the younger Gates was running a multinational company aggressively looking for tax breaks. According to the assessor’s office for King County, which includes Seattle, Microsoft has filed 402 appeals on its property taxes. Likewise, a 2012 Senate investigation examined Microsoft’s aggressive use of offshore subsidiaries to save the company billions of dollars in taxes. And The Seattle Times reported that Microsoft spent decades creating lucrative, tax-reducing barriers around corporate profits.

Bill Gates, nevertheless, has managed to become a leading—and seemingly progressive—public voice on tax policy. Every year around tax time, he and Buffett make media appearances decrying how little they pay in taxes, calling on Congress to raise taxes on the wealthy. At times, however, they advocate policies that may not actually touch their wealth, such as promoting the estate tax, which they will likely avoid through charitable donations.

Gates, along with a growing chorus of billionaires, has also used his public platform to push back on a proposed wealth tax, supported by both Elizabeth Warren and Bernie Sanders. A wealth tax would take a percentage of a billionaire’s assets every year, limiting the accumulation of wealth—and possibly the amount of money spent on philanthropy. Gates counters that charity work reduces income inequality.
“Philanthropy done well not only produces direct benefits for society, it also reduces dynastic wealth,” he wrote on his blog, GatesNotes.

When the Gates foundation has faced criticism in regard to its endowment—including investments in prisons, fast food, the arms industry, pharmaceutical companies, and fossil fuels—conflicting with its charitable mission to improve health and well-being, Gates has pushed back in black-and-white terms, calling divestment a “false solution” that will have “zero” impact.

The Gates Foundation’s investments are not an insignificant part of its charitable efforts. Its $50 billion endowment has generated $28.5 billion in investment income over the last five years. During the same period, the foundation has given away only $23.5 billion in charitable grants.

In 2007, in one of the few investigative journalism series ever published about the foundation, the Los Angeles Times profiled the foundation’s investments in mortgage lenders involved in subprime loans and for-profit hospitals accused of performing unneeded surgeries. The Times also noted the foundation’s investments in chocolate companies that depend on cocoa production using child labor.

The Gates Foundation spokesperson says it “does not comment on specific investment decisions or holdings,” but did note that the “sole purpose” of its endowment is “to provide income to support the Foundation’s mission and to be capable to do so over the long term.”

The Gates Foundation’s endowment currently has an $11.5 billion stake in Berkshire Hathaway, which in turn has $32 million invested in the chocolate company Mondelez, which has been criticized in relation to the use of child labor. The foundation made $32.5 million in charitable donations to the World Cocoa Foundation, an industry group whose members include Mondelez, for a project to improve farmer livelihoods. The project doesn’t appear to address child labor.

The tax reform act of 1969 created special rules to limit the influence that wealthy philanthropists could exercise through private foundations—in theory ensuring they produce public benefits rather than serve private interests.

In practice, these rules give wealthy donors like Bill and Melinda Gates enormous latitude in their philanthropic activities. For example, when it comes to self-dealing, the IRS prohibits only the most egregious conflicts of interest, such as foundations awarding grants to companies controlled by board members. Likewise, IRS rules broadly allow charitable donations to for-profit companies, as long as the foundations keep paperwork showing that the money was used to advance their charitable missions.

But because the Gates Foundation views market-based solutions and private-sector innovation as public goods, the line between charity and business can be indistinguishable. Sociologist Linsey McGoey says, “They’ve defined their charitable mission so broadly and loosely that literally any for-profit company could be said to be meeting the Gates Foundation’s general goal of improving social and global well-being.”

The IRS’s oversight of private foundations is constrained by recent budget cuts and its limited mandate to collect taxes from nonprofits like the Gates Foundation, which are largely free from paying them.
“If you’re the IRS commissioner and you’re given a finite sum to spend on the agency, and your job is to make sure the US Treasury has money in it, you are going to give a token nod to tax-exempt organizations,” says Marc Owens, a former director of the IRS’s tax-exempt division who is now in private practice. “One [IRS] agent looking at restaurants in Washington or New York City is going to generate a lot of money…. One agent looking at private foundations will probably pay their salary, but it’s not going to bring in tax dollars.”

Reputation repair: Bill and Melinda Gates leaving court after testifying in the 2002 Microsoft antitrust trial. They have become known as famous philanthropists rather than corporate predators. (Kenneth Lambert / AP)

According to IRS statistics, there are around 100,000 private foundations in the United States, housing close to $1 trillion in assets. However, foundations generally pay a tax rate of only 1 or 2 percent, and the IRS reports auditing, at most, 263 foundations in 2018.
State attorneys general can exercise oversight of private foundations, as the New York attorney general’s office did in 2018 when it investigated Donald Trump’s private foundation, which shut down amid allegations that he used it for his personal benefit. The Gates Foundation’s location in Seattle gives the state of Washington purview over its charitable work, but the state attorney general’s office there says it did not have full-time staff dedicated to investigating charitable activities until 2014, a decade after the foundation became the largest philanthropy in the world. The Washington AG’s office would not comment on whether it has ever investigated the Gates Foundation.
Bill Gates’s outsize charitable giving—$36 billion to date—has created a blinding halo effect around his philanthropic work, as many of the institutions best placed to scrutinize his foundation are now funded by Gates, including academic think tanks that churn out uncritical reviews of its charitable efforts and news outlets that praise its giving or pass on investigating its influence.

In the absence of outside scrutiny, this private foundation has had far-reaching effects on public policy, pushing privately run charter schools into states where courts and voters have rejected them, using earmarked funds to direct the World Health Organization to work on the foundation’s global health agenda, and subsidizing Merck’s and Bayer’s entry into developing countries. Gates, who routinely appears on the Forbes list of the world’s most powerful people, has proved that philanthropy can buy political influence.
Gates’s personal wealth is greater today than ever before, around $100 billion, and at only 64 years of age, he may have decades left to donate this money, picking up a Nobel Prize along the way or—who knows?—a presidential nomination. The same could be said of Melinda Gates, who, at 55, recently took a big step into public life with a highly publicized book tour.
But it’s also possible that a day of reckoning is coming for Big Philanthropy, Bill Gates, and the growing number of billionaires following his footsteps into charity.

Economists, politicians, and journalists continue to put a spotlight on billionaires who aren’t paying their fair share of taxes but who shape politics through campaign contributions and lobbying. Charity is seldom regarded as a tax-avoiding tool of influence, but if income inequality continues to gain attention, there is simply no way to avoid asking tough questions of Big Philanthropy. Do billionaire philanthropists have too much power, with too little public accountability or transparency? Should the wealthiest Americans have carte blanche to spend their wealth any way they want?

It may seem like a radical proposition to challenge the ability or desire of multibillionaires to give away their fortunes, but such scrutiny has a historical precedent in mainstream politics. One hundred years ago, when oil baron John D. Rockefeller asked Congress to provide him with a charter to start a private foundation, his ambitions were soundly rejected as an anti-democratic power grab. As Theodore Roosevelt said at the time, “No amount of charities in spending such fortunes can compensate in any way for the misconduct in acquiring them.”
Editor’s note: this post has been updated.