Question

Instruction: please summarize this entire case study in three pages. (The Bill & Melinda Gates Foundation)

The Bill & Melinda Gates Foundation Growing up in Seattle, William H. Gates III was a slender, intense boy with a messy room and a dazzling mind. At age seven or eight he read the entire World Book Encyclopedia. At his family’s church the minister challenged young congregants to earn a free dinner by memorizing the Sermon on the Mount, a passage covering Chapters 5, 6, and 7 in the Book of Matthew. At age 11 young Bill became the only one, in 25 years of the minister’s experience, ever to recite every word perfectly, never stumbling, never erring. 1 Yet Christianity itself never attracted Gates. Years later he would remark, “There’s a lot more I could be doing on a Sunday morning,” an incongruous conviction for one who would become devoted to serving the poor. 2 His brilliance, however, was lasting. At private Lakeside prep school he was a prodigy, often challenging his teachers in class. Obsessed with computers in their then-primitive form, he stayed up all night writing code, a routine that would stay with him. He also read biographies of great historical figures to enter their minds and understand how they succeeded. After high school he attended Harvard University hoping to find an atmosphere of exciting erudition. Instead, he grew bored and left to pursue a fascination with computers. At age 19, Gates founded Microsoft Corporation with his Lakeside School friend Paul Allen. As its leader he was energetic, independent, and confrontational. He developed the reputation of a fanatical competitor willing to appropriate any technology and crush market rivals. He built a dominant business and by 1987, at age 31, he was a billionaire. Microsoft’s stock took flight, making more billions for Gates. However, even as he became the world’s richest man he remained absorbed in running the corporation.

References :1 James Wallace and Jim Erickson, Hard Drive: Bill Gates and the Making of the Microsoft Empire (New York: HarperBusiness, 1992), pp. 6–7. 2 Garrison Keillor, “Faith at the Speed of Light,” Time, July 14, 1999, p. 25.

He put little energy into charity, thinking it could wait until he grew old. But the world expected more. Requests for good deeds and contributions poured in. Gates responded with the help of his father, who worked in a home basement office handling his son’s donations. In 1994, Gates formalized his giving by creating the William H. Gates Foundation and endowing it with $94 million. His father agreed to manage it from the basement. Eventually, this arrangement evolved into the Bill & Melinda Gates Foundation, which included the name of his wife and was run by a professional staff from its new headquarters in Seattle. A foundation is essentially an organization with a pool of money for giving to nonprofit and charitable causes. It is not taxed if it gives out at least 5 percent of its funds each year. Bill Gates gave his foundation $16 billion in Microsoft stock in 2000. Since then he has given more. Today the Foundation is endowed with $37 billion, making it the world’s largest. It has two parts. One part decides what projects to fund. So far, more than $25 billion has been given out. The other part manages the endowment by investing the money to make it grow. The Gateses are deeply involved in the foundation’s work, which is based on a pair of “simple values” that inspire them. One is that “all lives—no matter where they are being led—have equal value,” and the other is that “to whom much is given, much is expected.” Giving is tightly focused on three areas—global health, poverty in developing nations, and U.S. public education. Because the foundation’s endowment is unprecedentedly large, more than the gross domestic products (GDPs) of 107 countries, its goals are ambitious. One is to correct market signals that cause modern medicine to neglect diseases of the poor, thus failing to value all lives equally. Pursuing this goal, the foundation has spent more than $3.8 billion on basic vaccinations for newborns in countries with low GDPs, preventing so far an estimated 3.4 million deaths. 3 It purchases such massive amounts of vaccines that prices fall, allowing doses for millions more children. It spends billions more to create new vaccines for tropical parasitic diseases and to fight a resurgence of polio in Africa. Bill Gates is characteristically intense, impatient, and direct in the quest to save lives. Learning that the global health staff was paying big travel grants for people to fly to meetings, he issued a curt memo about “rich people flying around to talk to other rich people.” He lectured the staff: “Our net effect should be to save years of life for well under $100, so, if we waste even $500,000, we are wasting 5,000 years of life.”

References: 4 Bill Gates at 31, already a billionaire. Source: © Ed Kashi/CORBIS. 3 Statement of Helen Evans, “State of the World’s Vaccines and Immunization Report 2009,” GAVI Alliance, October 31, 2009, at www.gavialliance.org. 4 Quoted in Andrew Jack, “Gates Foundation: Smaller Funds, Hard Decisions,” FT.com, September 30, 2009, at www.ft.com.

In 2006 Bill Gates’ friend Warren Buffett, chairman of Berkshire Hathaway and, at the time, the world’s second-richest man, decided to give most of his wealth away and made a bequest of 10 million shares of Berkshire Hathaway to the Gates Foundation. He believed Bill and Melinda Gates were doing such a superior job he could do no better and, rather than manage billions of dollars of giving on his own, he left his legacy in their hands. At the time, his gift was worth $31 billion, a sum that roughly doubled the Gates endowment. It arrives in annual installments of between $1 billion and $2 billion. The Gates Foundation confronts enormous social problems. Poverty and disease defy solution. Spending large sums in poor nations is a challenge. Corruption diverts funds. Agencies lack capacity. When infant lives are saved by vaccination, more people live to seek ordinary care. Some nations struggle to provide even the most basic care due to shortages of doctors and nurses. Thus, children are saved from diphtheria only to die in large numbers from common diarrhea. 5 Improving education is another nightmare. After spending $1 billion over six years to make small high schools better, an analysis showed that attendance, graduation rates, and test scores on basic subjects were lower than at similar schools not funded by the Gates Foundation. 6 Despite its magnificence, the Gates Foundation attracts critics. It is directed by only three trustees–Bill and Melinda Gates and Warren Buffet–putting its multibilliondollar expenditures in the hands of just two families. 7 It has been called an elitist, antidemocratic institution subsidized by taxpayers (through its tax exemptions) but having no accountability to society. 8 Suspicions are raised that its grants, being so big, shape the world’s health agenda and distort research priorities, for example, by overemphasizing vaccines for tropical diseases as opposed to other forms of treatment. 9 However, the Gateses and Warren Buffet want to extend the example set by their philanthropy. In 2009 they arranged a series of small, confidential dinners attended by fellow billionaires. Guests were asked to pledge the majority of their wealth to charity, either during their lifetime or at death, each one determining which causes to fund. Over the next year this initiative was formalized in a “Giving Pledge” joined by 40 billionaires. 10 Their pledges are moral commitments; they are not monitored or enforced as legal contracts. The Gateses and Buffet hope to spread the initiative to other nations. Their goal is to divert wealth from the very rich to enlarge the scope of global philanthropy for generations to come.

References :5 Laurie Garrett, “The Challenge of Global Health,” Foreign Affairs, January/February 2007. 6 The National Institutes of High School Transformation, Evaluation of the Bill & Melinda Gates Foundation’s High School Grants Initiative: 2001–2005 Final Report (Washington, DC: American Institutes for Research, 2006), pp. 9–10. 7 Pablo Eisenberg, “The Gates-Buffett Merger Isn’t Good for Philanthropy,” Chronicle of Philanthropy, July 20, 2006, p. 33. 8 “Philanthropic World Voices Mixed Reaction on Buffett’s Gift to Gates Fund,” Chronicle of Philanthropy, July 20, 2006, p. 12, comment of Rick Cohen. 9 David McCoy, et al., “The Bill & Melinda Gates Foundation’s Grant-Making Programme for Global Health,” The Lancet, May 9, 2009, p. 1652. 10 Carol J. Loomis, “The $600 Billion Challenge,” Fortune, July 5, 2010.

Philanthropy is one method for converting wealth to social value. Bill Gates and Warren Buffet follow a long tradition of rich capitalists who make fortunes, then later in life spend their wealth on works of kindness. In this chapter we will expand on the subject of philanthropy. First, however, we look at how managers implement social responsibility efforts within their firms. Social responsibility, like any other corporate goal, must be systematically planned, organized, and carried out. We will set forth a model of how this can be done

Answer 1

THE BILL AND MILINDA GATES FOUNDATION

Gates III was a slender, intense boy with a messy room and a dazzling mind who at the age of seven or eight read the entire World Book Encyclopedia. When the minister at his church challenged young congregants to earn a free dinner by memorizing the Sermon on the Mount, a passage covering Chapters 5, 6, and 7 in the Book of Matthew. At age 11 he became the only one, in 25 years of the minister’s experience, ever to recite every word perfectly, never stumbling, never erring. Years later he realized that“There’s a lot more he could be doing on a Sunday morning,” an incongruous conviction for one who would become devoted to serving the poor and His brilliance, however, was lasting. At private Lakeside prep school he was a prodigy, often challenging his teachers in class.

He was Obsessed with computers in their then-primitive form and stayed up all night writing code, a routine and also he would read biographies of great historical figures to enter their minds and understand how they succeeded. After high school he attended Harvard University hoping to find an atmosphere of exciting erudition. Instead, he grew bored and left to pursue a fascination with computers.

At age 19, Gates founded Microsoft Corporation with his Lakeside School friend Paul Allen. He developed the the reputation of a fanatical competitor willing to appropriate any technology and crush market rivals.As its leader he was energetic, independent, and confrontational. He built a dominant business and by 1987, at age 31, he was a billionaire. Microsoft’s stock took flight, making more billions for Gates. However, even as he became the world’s richest man he remained absorbed in running the corporation

In 1994 Gates with the help of his father, who worked in a home basement office handling his son’s donations formalized his giving by creating the William H. Gates Foundation and endowing it with $94 million. His father agreed to manage it from the basement. Eventually, this arrangement evolved into the Bill & Melinda Gates Foundation, which included the name of his wife and was run by a professional staff from its new headquarters in Seattle. It was essentially an organization with a pool of money for giving to nonprofit and charitable causes as the based on the two simple values that inspires them i.e."all lives—no matter where they are being led—have equal value,” and the other is that “to whom much is given, much is expected". It is not taxed if it gives out at least 5 percent of its funds each year. Bill Gates gave his foundation $16 billion in Microsoft stock in 2000. Since then he has given more. Today the Foundation is endowed with $37 billion, making it the world’s largest. It has two parts. One part decides what projects to fund. So far, more than $25 billion has been given out. The other part manages the endowment by investing the money to make it grow.

Giving is tightly focused on three areas—global health, poverty in developing nations, and U.S. public education. Because the foundation’s endowment is unprecedentedly large, more than the gross domestic products (GDPs) of 107 countries, its goals are ambitious. Pursuing the goal to correct market signals that cause modern medicine to neglect deseases of the poor,thus failing to value all lives equally,the foundation has spent more than $3.8 billion on basic vaccinations for newborns in countries with low GDPs, preventing so far an estimated 3.4 million deaths. It purchases such massive amounts of vaccines that prices fall, allowing doses for millions more children and also it spends billions more to create new vaccines for tropical parasitic diseases and to fight a resurgence of polio in Africa. Bill Gates is characteristically intense, impatient, and direct in the quest to save lives. Learning that the global health staff was paying big travel grants for people to fly to meetings, he issued a curt memo about “rich people flying around to talk to other rich people.” He lectured the staff: “Our net effect should be to save years of life for well under $100, so, if we waste even $500,000, we are wasting 5,000 years of life.”

In 2006 Bill Gates’ friend Warren Buffett, chairman of Berkshire Hathaway and, at the time, the world’s second-richest man, decided to give most of his wealth away and made a bequest of 10 million shares of Berkshire Hathaway to the Gates Foundation as he believed Bill and Melinda Gates were doing such a superior job he could do no better and, rather than manage billions of dollars of giving on his own, he left his legacy in their hands. At the time, his gift was worth $31 billion, a sum that roughly doubled the Gates endowment. It arrives in annual installments of between $1 billion and $2 billion.

The Gates Foundation confronts enormous social problems. Poverty and disease defy solution. Spending large sums in poor nations is a challenge. Corruption diverts funds and sometimes gencies lack capacity. When infant lives are saved by vaccination, more people live to seek ordinary care. Some nations struggle to provide even the most basic care due to shortages of doctors and nurses. Thus, children are saved from diphtheria only to die in large numbers from common diarrhea. Improving education is another nightmare. After spending $1 billion over six years to make small high schools better, an analysis showed that attendance, graduation rates, and test scores on basic subjects were lower than at similar schools not funded by the Gates Foundation.

Despite its magnificence, the Gates Foundation attracts critics. It is directed by only three trustees–Bill and Melinda Gates and Warren Buffet–putting its multibilliondollar expenditures in the hands of just two families. It has been called an elitist, antidemocratic institution subsidized by taxpayers (through its tax exemptions) but having no accountability to society. Suspicions are raised that its grants, being so big, shape the world’s health agenda and distort research priorities, However, the Gateses and Warren Buffet want to extend the example set by their philanthropy. In 2009 they arranged a series of small, confidential dinners attended by fellow billionaires and guests were asked to pledge the majority of their wealth to charity, either during their lifetime or at death, each one determining which causes to fund. Over the next year this initiative was formalized in a “Giving Pledge” joined by 40 billionaires. Their pledges are moral commitments and are not monitored or enforced as legal contracts. Their goal is to divert wealth from the very rich to enlarge the scope of global philanthropy for generations to come.

Philanthropy is one method for converting wealth to social value. Bill Gates and Warren Buffet followed a long tradition of rich capitalists who make fortunes, then later in life they spent their wealth on works of kindness. However, it shows us how managers implement social responsibility efforts within their firms. Social responsibility, like any other corporate goal, must be systematically planned, organized, and carried out in order to help out successfully as it happened with Gates foundation.