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The world’s largest charitable foundation is getting even bigger — but it could soon lose a key leader.
The Bill and Melinda Gates Foundation will add new members to its board of directors, and the Gateses have added another $15 billion to its endowment, the foundation announced Wednesday.
But Melinda French Gates’ days with the foundation may be numbered. The foundation also announced that under the couple’s divorce agreement French Gates will resign as co-chair and trustee, if after two years either decides they can no longer work together.
“In such a case, French Gates would receive personal resources from Gates for her philanthropic work,” the announcement read. “These resources would be completely separate from the foundation’s endowment, which would not be affected.”
Phil Buchanan, president of the Center for Effective Philanthropy and author of “Giving Done Right: Effective Philanthropy and Making Every Dollar Count,” said he hopes the Gates Foundation will find trustees with deep knowledge of the nonprofit world.
“Oddly, many foundations seem to under-estimate the importance of knowledge of philanthropy and the nonprofit sector and over-estimate the utility of business expertise in developing their boards,” told MarketWatch.
“I would hope the Gates Foundation will avoid this trap and also that the board will reflect a level of diversity that is consistent with the geographies and fields of focus of the Foundation,” he added.
At just over 20 years old, the Gates Foundation’s vast resources make it a powerful player in the world of philanthropy.
The Gates Foundation has a global reach, and has been involved in efforts to eradicate life-threatening diseases such as malaria and HIV. In the U.S. the Gates Foundation has played an influential role in shaping national education policy, including the Common Core set of academic standards.
The foundation recently announced a $2.1 billion contribution to advance gender equality. Separately, Melinda French Gates said in 2019 that her own philanthropic LLC, Pivotal Ventures, would spend $1 billion over 10 years to advance women and girls in the U.S.
Divorce raises questions
Until recently the powerful foundation, which handed out $5.1 billion in grants worldwide in 2019, had only three board members: the Gateses and Berkshire Hathaway
BRK.A,
CEO Warren Buffett. Buffett has contributed annually to the foundation since 2006, donating nearly $33 billion in all.
News of the couple’s divorce raised questions about the future of the foundation’s governance, as did the news earlier last month that Buffett was stepping down from the board.
“By expanding the number of trustees, our governance and decision-making will similarly evolve. The new trustees will bring fresh perspectives, insight, and expertise to help guide the foundation and act as an additional resource to the Executive Leadership Team,” wrote Gates Foundation CEO Mark Suzman in a letter to staff.
Suzman did not say how many board members the foundation would add. The foundation will announce the new trustees in 2022, Suzman said.
Generally speaking, foundation board members oversee a foundation’s priorities and grantmaking and often have final say on whether a foundation will grant money to a specific nonprofit.
“As the largest foundation in the world, the governance of the Gates Foundation matters very much both substantively in terms of sound decision-making and symbolically for what signal it sends about institutional philanthropy and its oversight and accountability,” Buchanan said.
$65 billion endowment
The Gates Foundation’s endowment — the pool of money it uses to fund its chosen causes — is now $65 billion, Suzman said Wednesday. That includes a $15 billion contribution to the foundation that Bill Gates and Melinda French Gates announced Wednesday, “their single largest contribution since 2000 — when they transferred $20 billion in Microsoft
MSFT,
stock to the foundation.”
By comparison, the second-largest foundation in the U.S., the Ford Foundation, has an endowment of $14 billion and made $560 million in grants in 2019. Foundations are legally required to spend 5% of their endowments on grants each year. The Gates Foundation paid out roughly 10% of its endowment in 2019.
