Monday, Dec. 19, 2005
From Riches to Rags
Imagine a kinder, humbler Microsoft--one designed to spend money, not make it. That's the kind of philanthropy Bill and Melinda Gates have invented. The story of a very risky venture

"The man who dies rich dies disgraced." --ANDREW CARNEGIE

At least once a year, Bill and Melinda Gates like to take what they call a "learning tour" of the places that civilization has largely forgotten. On Dec. 6 in India, on the most recent of such visits, they left the five-star Taj Mahal Hotel in New Delhi, to which they had flown on their private jet the night before, and took a 20-minute drive to a slum colony in an area called Meera Bagh.

On the way there, through rickshaw traffic jams and past lumbering cows, a local doctor briefed them on the slum's 9,000 residents and five health-care workers. Melinda listened intently with her eyebrows raised, as she almost always does, while Bill interrupted to ask the kinds of questions you would expect from a capitalist billionaire. "Who owns the land?" (The doctor wasn't sure, but probably the government.) "How much do the health-care workers earn?" (Ten dollars a month.) "Is that a full-time job?" (No.)

Once they arrived, they strolled through the narrow alleys lined with staring children. Bill, in a black fleece pullover and khaki pants, stuck his hands in his pockets and squinted into the sunlight, not unlike a man walking down the fairway at Augusta. Several times they stopped to talk with families. In unit No. 774, they found Sushila and Suraj Naik, who live in the windowless space with their daughter Puja, 3, and a tiny new baby called Liza. The Naiks welcomed them, offering them the only seat in the unit--on the double bed that took up almost the entire room. The space was lit by a single bare lightbulb. Through an interpreter, the Naiks patiently answered all the Gateses' questions.

Sushila, dressed in a red sari, smiled broadly the whole time, showing improbably white teeth. Yes, her daughter Liza was born here in this room a month ago. Her husband is a carpenter. They pay $13 a month in rent. Melinda held Liza for a few minutes, and then she and Bill got up to go. "Very impressive," said Bill, using his default version of thank you. "Namaste [goodbye]," said Melinda, holding her palms together and bowing slightly.

After the Gateses returned to the hotel, I went back to Meera Bagh to talk to Sushila. She was giving her children a bath, but she stopped to play hostess to yet another foreign inquisitor. I sat on the bed, and she stood beside it, discreetly breast-feeding Liza while Puja, the toddler, hid under her sari.

I asked Sushila whether she knew the names of the people who had visited that morning. She said that she did not but that they were very nice. I told her the man in the khaki pants was the richest man in the world. Sushila smiled and said it didn't matter that he was the richest. All foreigners were rich compared with her, she said.

There are many places the Gateses could go together for an adventure. That they chose to come to India and Bangladesh to sit on concrete floors and talk about tuberculosis and diarrhea sets them apart from most globe-trotting billionaires. But their relationship with the developing world is even more complicated than that. As they tour hospitals and huts, they seem to delight in these escapades, not just because they are intellectually captivated by the scientific challenge of treating the diseases of the poor but also because they are convinced that they are living through a historic inflection point when medical breakthroughs could save the lives of millions. They see the Bill & Melinda Gates Foundation not as a solution but as a catalyst for this progress: pumping resources and rigor into the fight just when scientists are inventing new tools that could change everything. "This is a magic time in terms of the momentum we can get going," Bill says later from his hotel suite.

And beneath all those grand ambitions, there is another force at work: they get a kick out of sharing these pilgrimages as a couple--talking with transgendered sex workers in India or women who start businesses with micro loans in Bangladesh. In these situations, they prefer it if people don't know who they are. "We're just people from the moon, as far as they know," says Bill. Later, they spend hours talking about everything they've seen. Says Melinda: "That's a huge side benefit. We love doing this together."

In its six-year existence, the Gates Foundation has accomplished a fraction of what it aims to do. But already it has helped save at least 700,000 lives in poor countries through its investments in vaccinations. In the U.S., its library project has brought computers and Internet access to 11,000 libraries. And it has sponsored the biggest privately funded scholarship program in history, sending 9,048 high-achieving minority students to college. It is the largest foundation in the world, with an endowment of $29 billion. Each year it spends almost the same amount as the World Health Organization (WHO). In public health in particular, to which the foundation devotes 60% of its funds, "it's the most important organization in the world," says former President Jimmy Carter. The Carter Center, which has been working to eradicate guinea worm disease since 1986, received a pledge of $25 million from the foundation this year. "We've been intimately acquainted with their method of operation, the thorough investigation they do before they make a decision, their willingness to take a chance, their willingness to stick to something once it's begun and the extremely high competence of their top people," says Carter. "They know what they're doing."

But all that pales in comparison to what the foundation has done for the public imagination. For decades, the field of global health had languished, and there was a consensus that little could be done to change the fate of the poorest of the poor. Jim Kim, until recently director of WHO's department of HIV/AIDS, refers to that dark period as BGF (Before the Gates Foundation). Now, says Kim, "the Gates Foundation has made global health cool."

In 2003 President George W. Bush announced a five-year, $15 billion HIV/AIDS treatment and prevention initiative, the largest commitment ever by a single nation to an international health effort. "It would have been outlandish to even consider that the U.S. government would do something like that before," Kim says. This year European nations pledged an astonishing $4 billion over 10 years to immunize children in poor countries--dwarfing the Gateses' $1.5 billion contribution. "When the history of global health is written," says Dr. William Foege, a former head of the Centers for Disease Control and Prevention (CDC) who now advises the foundation, "the tipping point will be two people: Bill and Melinda Gates."

Both Gatses guard their privacy closely, barring reporters from their plane and their home in Seattle. Melinda, in particular, has resisted the attention that comes with their wealth. For the first nine years of their marriage, she declined almost all media interviews. She quit her job at Microsoft after she had their first child in 1996. "I wanted to have some privacy in our community," she says. "When I took the kids to a preschool event, a mommy-and-toddler event, say, I could be like all the other moms."

Only after their youngest child, Phoebe, turned 1 did Melinda begin to go public. "Bill and I both felt it was important that people know we're both behind the foundation," she says. And the more she traveled in the developing world, the harder it was to keep quiet. "I was very moved. I felt that I had a role to give some voice to the voiceless."

Their friends and the staff at the Gates Foundation go to great lengths to emphasize that Melinda and Bill are equals. "She is not a junior partner in any way, shape or form. Bill likes that," says Warren Buffett, a close friend (and the second richest man in the world, for those who are counting). Says Sylvia Mathews, the foundation's chief operating officer: "We joke and say Bill and Melinda have 21/2 degrees: she has two; he has a half." (Melinda, 41, has a bachelor's degree in computer science and economics and a master's in business from Duke University. Bill, 50, dropped out of Harvard at the end of his sophomore year to run Microsoft.)

But despite what anyone says, it's clear that the big decisions still get made by Bill Gates. At a quarterly review of grants at the offices in Seattle, he sits at the head of the table, with Melinda on his left and his father on his right. Nervous staff members direct their presentations to him, not Melinda--who drinks a Snapple and seems like the most relaxed person in the room. Bill flings out questions in his trademark squeaky voice, with an expression on his face that suggests more curiosity than concern. "How are they going to prioritize?" he asks about a potential grantee. "Are they going to have a theme? Are they heart, lung, cancer, infections--what are they?" he asks, his voice arcing higher with each question.

On their trips to the developing world, however, the dynamic changes. Talking to women in hovels about condom use, Bill sits with his hands in his lap, nodding robotically, while Melinda leans forward to ask questions and hold babies. On the first day of their trip, after flying all night to Dhaka, Bangladesh, from Seattle, the Gateses visited a place known as the Cholera Hospital, where they are helping fund groundbreaking research on pneumonia. On their tour, they walked into a room full of 30 crying babies and their mothers. All the babies had cholera, and they were lying on gurneys with holes in the center so that diarrhea would land in a bucket below.

Standing before the festering multitudes, a doctor urged them to go ahead and pick out a family to talk to. "Do you want to go first?" Melinda quietly asked Bill. "No," he answered under his breath, his smile frozen on his face. Melinda strode forward, knelt beside one mother and reached out to help give the baby medicine. Then the doctor sprayed her hands with sanitizer, and they moved on to the next encounter.

When I ask whether there is a formal division of labor between the two, Bill demurs. "It's like saying, Who is raising our children?" After Bill speaks at the World Economic Forum in Davos, Switzerland, they spend an hour dissecting the politics and personalities. When Melinda goes to Africa, she calls Bill to share her stories.

And when they travel together, they make each other laugh. "Take the arrival at the airport in Bangladesh," says Bill. Given that there was a string of terrorist bombings in the days before their arrival, the military was out in force. And the tarmac was festooned in decorations to welcome the Gateses--including, bizarrely, a massive oil portrait of each. "She saw the army," says Bill, laughing. "She said, 'Hey, there's an army out here.' And I said, 'Yeah, wait until you see the picture of you. It's not too good.' It was just gigantic! You know, Mao would have been so jealous!" Some couples have ballroom dancing. The Gateses have saving the world. And they like to do it the uncomfortable way, by looking straight into lives they know nothing about. Paul Farmer, a public-health pioneer, has been host to them both in Haiti. "I think they, unlike many people, have allowed themselves to remain open to the pain that a lot of people experience," he says. "Watching them listen, really listen, and wait for the answers and study people's faces and pay attention, I was very impressed."

Back in Seattle, though, the Gateses show less patience. They run the foundation like a business. They are remarkably fluent in the science of public health ("I suspect Bill Gates knows more about the molecular biology of mosquitoes than 95% of the doctors in the world," says Kim). And both use the language of business to describe the human experience. "There is no better return on investment than saving the life of a newborn," Melinda told reporters at a November press conference.

Melinda is in the foundation office about two days a month. Bill is still busy being chairman of Microsoft, but they are both in regular contact with the staff, and they each spend about 15 hours a week on foundation business.

So far, the foundation has been able to exact a rare level of accountability from its grantees. In India the foundation runs an HIV/AIDS-prevention program that is headed by Ashok Alexander, formerly a senior partner at consulting firm McKinsey & Co. He calls the 200,000 sex workers served by the program "customers" and the clinics "franchises." In the past year, he has cut off funding to three nongovernmental organizations because they did not meet agreed-upon milestones. "People are not used to being terminated for nonperformance, strange as it may seem," Alexander says.

At the headquarters in Seattle, the staff has deliberately developed a culture of self-criticism--or "friction," as they call it. The main sources are Bill and Melinda. "We'll have friction here until the day those two die," says COO Mathews. Presenting to them, says Greg Shaw, director of the Pacific Northwest program, is like arguing in front of the Supreme Court. "They really go after where you feel most vulnerable."

It's easy to forget that Gates was considered a philanthropic deadbeat just over a decade ago. By 1992 he had given away more than $21 million, mostly to local charities and schools. But since he was worth $8 billion, the local papers were not impressed. Even his parents were concerned. Before Bill and Melinda were married in 1994, Mary Gates, his mother, gave a letter to Melinda in which she stressed the great opportunities the two would have, as well as the responsibilities. "From those to whom much is given, much is expected," she wrote.

They had not raised their son to be ungenerous. Mary had worked as a teacher until her children were born. Then, as a mother of three, she served on the boards of several charitable organizations in Seattle. She was the first woman to chair the board of United Way International. After she was appointed to the University of Washington board of regents, she led a successful movement to divest the school's investments in South Africa. Bill Gates Sr., a prosperous lawyer, was also active in United Way and the University of Washington.

"Mom and Dad would talk about the things they were doing," Bill said at an annual staff meeting at the foundation in November. "I remember giving Mom a hard time at the table [over one United Way decision]. There was a whole competition over payroll deduction--a fascinating set of issues," he said, smiling.

But Bill's plan was to wait 20 or 30 years, until he had retired, to create a foundation. "He was one of the busiest people in the world," says his father, known to everyone at the foundation as "Senior." "He didn't want to have another entity to worry about." But solicitations were pouring in--and piling up, unanswered. "Anybody who had an eye out for a dollar was mailing letters to the richest man in the country," his father says.

Bill Sr. was painfully aware of the complaints about his son's indifference. In 1994, not long after Mary died, as he was waiting in line to see a movie with Bill and Melinda, he volunteered to help them start answering the requests. His son agreed. "I was willing to start early because I had someone I trusted to carry it out," Bill says. So they set up the William H. Gates Foundation in Bill Sr.'s basement rec room. He used his home address, until the post office complained about the volume of mail.

At first, Bill and Melinda focused their international giving on population control and reproductive health. But soon they learned that better health leads to smaller populations. In 1998, Bill Sr. came across a progress report from the International AIDS Vaccine Initiative, a small nonprofit organization, based in New York City, working to speed the search for a vaccine. In the margins, he wrote a note to Bill and Melinda: "I don't know what we can do about this. But if this isn't what philanthropy is for, I don't know what is." Bill sent back a one-word reply: "Agreed." And so the foundation issued its largest grant to date: $1.5 million.

Soon afterward, one of the foundation's advisers gave Bill a copy of a 1993 World Bank Development report. Today it reads like a blueprint for the Gates Foundation. Using just the kind of steely analysis that Bill loves, the 329-page document explained how many millions of people in poor countries die from diseases that already have cures. Then it listed the most cost-effective methods of preventing those deaths: from immunization to AIDS prevention to nutrition, all of which would become major investment areas for the foundation. Finally, he had found what every well-meaning billionaire wants: a formula to make a guaranteed difference. One weekend, Melinda and Bill pored over the report. "We could go down the list and see what was killing children around the world," says Melinda. "Very quickly, we came to the point that this was something we wanted to do."

And so, in 1999, the same year Bill became worth $100 billion (on paper) and one year into an epic antitrust suit brought against Microsoft by the U.S. government, they endowed the Bill & Melinda Gates Foundation with an initial $17 billion. They folded the old foundation into the new one and persuaded Bill Sr. to move out of his basement and into a real office. Patty Stonesifer, a former Microsoft executive who had been running the Gateses' library project, joined him to lead what was suddenly the biggest philanthropy in the country.

"When you write the check, you think, Hmm, that's a lot of zeros," Bill admitted to PEOPLE that year. But by then, he and Melinda had Jennifer, then 3, and Rory, just 7 months. And parenthood was changing them in ways they were just beginning to understand. "Melinda and I talked about the things we believed in for our own kids. You want them safe and healthy," he said at the time. "Jennifer wakes up at night, and I lie down to help her get back to sleep. She puts her feet on top of mine and watches to see if I'm awake. She's just a thrill."

The worst thing they could do for their kids, they decided, would be to leave them all their money. Bill had read a 1986 FORTUNE story about the perils of inherited wealth, and it confirmed what he had noticed at his 矇lite private high school in Seattle. "The ones who were the wealthiest weren't the most motivated," he says. He has had long talks on the subject with other rich people, like Buffett and Katharine Graham (who inherited the Washington Post). "Warren has often said that you want to give your kids enough so that they don't have to worry, but not so much that they don't feel the need to work and contribute," says Bill. "It's not clear that's not a paradox, but it's a good thought." The bulk of his $46.5 billion fortune will go to the foundation, but he says he and Melinda have not decided how much to leave their children. "Our thinking will evolve," he says.

Once the Gateses committed to working on global health, the foundation began to grow much faster than anyone anticipated, Stonesifer recalls--just as the U.S. library program had in the years prior. "Bill and Melinda had said, 'Well, how many libraries should we do?' I said, 'Well, what if we did all of them?' And they said, 'Yeah, what if we did all of them?'" she remembers. Today the wall above her desk is covered with a map of all the libraries the foundation has provided with computers, Internet access and librarian training.

Until she quit in 1996, Stonesifer was the highest-ranking female executive at Microsoft, and she got generous stock options to go with it. As a result, she has chosen to forgo a salary at the foundation. But she runs it with the ferocity of a Wall Street titan. When she met with Senator Jesse Helms on Capitol Hill, he called her a spark plug--twice. "None of us knew much about health," she says. "We just kept finding people whom we trusted. And we learned and learned. We used the same skills we'd applied to business prospects." At one point, baffled by the organ


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