Yellow Pages
SEATTLE — The Bill & Melinda Gates Foundation may be the world’s richest charitable foundation — both in assets and payouts — but that hardly shields it from the economic downturn.
Between January 2008 and April 2009, the foundation’s assets dropped from $39 billion to $27.5 billion. Jeff Raikes, the organization’s new CEO, says his mission includes figuring out how to keep the money flowing to needy people around the world without spending down the endowment too quickly.
“My role is to help us strike that right balance,” Raikes said in a recent interview with The Associated Press.
The federal government requires charitable foundations to pay out 5 percent of their assets each year. Because assets are falling, many foundations announced at the end of last year they would cut their donations to charitable causes in 2009.
The Seattle-based Gates Foundation, which has been giving out more money each year since its inception, announced that while it wouldn’t reduce distributions in 2009, growth of the distributions would slow.
In 2008, the foundation, started by Microsoft Corp. co-founder Bill Gates and his wife in 1994, gave away $3.5 billion, up from $3.2 billion in 2007.
In the past decade, it has given away $20.1 billion, mostly in global health, global development and U.S. education.
The foundation’s endowment would be in worse shape without a major contribution from investor Warren Buffett, who gave the foundation’s trust about $1.8 billion worth of Berkshire Hathaway stock last year. The foundation also received $10.4 million in individual donations in 2008.
Still, the Gates Foundation maintains a solid hold on the No. 1 spot worldwide.
The world’s second-largest foundation is London’s Wellcome Trust, which had a $19.8 billion endowment at the end of 2008. Wellcome Trust is the largest foundation in the United Kingdom and gives away about $977 million a year.
In the United States, the second-largest charitable foundation is the Ford Foundation, which reported an $11 billion endowment in fiscal 2008.
Raikes said the economy is going to be a big challenge for foundations.
“First of all, we believe very strongly that the people who will be most impacted by the global economic crisis are the people we are working to serve,” he said.
Many foundations have announced short-term grants to help feed the hungry, including a recent $10 million grant to the United Nation’s World Food Program by the Gates Foundation.
Will governments maintain programs that help the poor? Raikes expects the answer will be “maybe.” For example, the British government has announced it will stick to its commitment on international aid; Italy is stepping back. The Obama administration has indicated the United States will meet its commitments, but the outflow of money may slow.
Nearly two-thirds of charitable foundations in the United States expect to decrease their grants in 2009, according to the Foundation Center, a national authority on philanthropy since 1956.
Giving by U.S. foundations grew 2.8 percent in 2008 to an estimated $45.6 billion, the New York-based center reported.
Raikes said the economic crisis has sharply focused Bill Gates’ attention on the foundation.
“He saw the impact to the foundation of the change in investment returns far better than I did and was a great collaborator with me on what we needed to do,” he said.
Raikes, a former Microsoft executive, has worked with Gates for about 28 years. He speaks reverentially about Gate’s leadership style.
“When you’ve got a crisis, when you’ve got a big challenge, great leaders rise to the occasion. He rose to the occasion and was tremendously helpful to me in taking that on,” he said.
Nearly a year ago, Gates stepped away from his daily duties at Microsoft to focus on his philanthropy. Melinda Gates also has stepped up her time commitment to the foundation.
Raikes joined the foundation in September as its second CEO, succeeding Patty Stonesifer, another former Microsoft executive.
By DONNA GORDON BLANKINSHIP
Associated Press Writer
