Q&A: Behind the Bill & Melinda Gates Foundation II

William Gates, Sr., co-chair, and David Bley, director, Pacific Northwest Program ,talk about the Gates Foundation’s beginnings, the millions it’s investing in Washington, why investing in education and solving family homelessness is a Foundation focus—and what’s up next.

How did you get involved with the Foundation?
WG: “That is all a product of 12 years or so ago when Bill and Melinda decided to start a foundation and it’s a thing with a life of it’s own, which has moved from a fairly simple, not terribly focused or particularly thought-out plan— just a plan to have a foundation and respond to requests and make judgments and make gifts.”

The impetus was the fact that my son and his wife have been giving money to charity for many, many years, including years before they were married and having a foundation was just a sort of a step in progression and it had some mechanical advantages. In fact, it would have been a foundation a lot sooner than it was except that Bill didn’t want to have another entity to deal with. But in the mid-90s, he and I got talking about this, and I was winding down practicing law and offered to give some time to them to help with their charitable demands. And he said, ‘That’s great dad,’ and he said, ‘I think it’s time to start a charitable foundation.’”

“It’s grown by a multiple of about 280. That’s a lot of change. That’s what it takes to get from $100 million to $28 billion.”

DB: “Actually we’re above $35 billion now.”

How does the local program work?
WG: “It started with no defined program of any kind, but as we went along, we began to have categories and at one point there was a Pacific Northwest program; now there’s a United States program of which the Pacific Northwest program is a part of it.

DB: “So, here in Washington state we’ve invested over $1.1 billion dollars since the inception of the foundation…. I’ve been given a budget this year of about $38 million dollars. That includes both past commitment as well as the new commitments we’re going to make. But that only captures a portion of our overall grant making because while my team’s out there making its grants, we also have an education team that’s investing in school districts all across Washington state, primarily aimed at high school reform and we’ve got another program, the libraries program that invested into public libraries across the state and we have the early learning program that committed $90 million to improve early learning opportunities for very young children, from zero to 5.”

“Just to confuse you even further, if you really think about all of the foundation’s money flowing through entities that are here in Washington state….then the grant sums are over $2 billion. “For example, a big institution that has grown up around our work is PATH, right here in Seattle, and that’s one of our major conduits for actually doing the work in the third world. So there’s been enormous effect on employment and what are now community institutions that exist…largely because of a lot of priorities the foundation has.”

“The audaciousness of the problems we’ve chosen to tackle—these are really difficult problems….. In my world, the smaller world of the Pacific Northwest, we’ve said we’re going to substantially reduces family homelessness in this state, and we invested $40 million in that in the year 2000 with great impact. We, unfortunately, have not ended family homelessness, but we’ve helped 1,500 families, 2,500 kids. Those are specifically single mom’s who came to us, frequently unemployed and the majority are now employed. Those that had work have seen their incomes go up by about 30 percent. The kids, because they were homeless, were on average in three to four schools per year because their families kept moving. Now they’re stable and they average one school per year, just like other families.”

Why the focus on family homelessness?
WG: “There’s a process of going from just being a mailbox to which people send letters asking for money and a place that sits and thinks about ‘what do we want to do with our money?’ And of course that’s largely a function of how large a foundation is. It doesn’t have to get very large before you start to make some decisions about things you want to accomplish and things to you that seem to you to be important.

And the family homelessness thing is a perfect example. It’s just something that touched Bill and Melinda’s heart. The idea of a family living in a two-door car for a week on end—they thought that’s just something that’s not acceptable and we’ve got some money here and we ought to spend some money to reduce the amount of that that’s going on in the world. It’s a charitable urge. I like to think about the fact that because of some check we wrote, there’s a woman and three kids that aren’t going to sleep in a car tonight.

DB: “A very timely example, tonight I’ll be in Yakima for three days with the US program leadership team, we’re on a retreat to assess how we’re doing….Yakima is one of two communities where we’re focusing on early learning in the state. The other one is White Center, which is just outside the city limits, just south of the city. White Center right now has the highest concentration of extreme poverty in the Seattle Metro area and Yakima is one of the poorest communities in Washington state, and in East Yakima, where we’re focusing our work is a community that’s extremely impoverished.

WG: “These are two communities which were already somewhat organized, so there was something to rely on in going in there to getting something started…A substantial childcare center is being built now in White Center, next spring in Yakima.”

DB: “It’s a 10 year demonstration.”

WG: “Childcare activity is a significant potential recipient for the early learning work, because there are kids who are parked for the day….and they’re in the management of some intelligent, currently not very deeply trained people. The potential for using that setting for helping kids get started reading, do their numbers and that kind of thing, of course, is just obvious…”

DB: “The way that this foundation looks at our work in the United States generally, is we try to identify what are the greatest inequities. What’s really preventing people from seizing opportunities that most Americans can take advantage of? And there’s a lot of science behind the early learning work that is underway right now. Real science, meaning scientists, researchers and biologists who are looking at how the brain develops. It became very clear, one, that education is the best strategic lever that we’ve filled as a foundation to affect inequity in opportunity….. we began to learn more and more that at the very earliest years of a kid’s development, that if they don’t get certain opportunities then, they’re so far set back that they’re not ready to learn in kindergarten. If they’re not ready to learn in kindergarten, they fall further and further behind every subsequent grade; finally they start attending the high schools where we’re focusing a lot of reform.

“It’s a lot more than passing the WASL…what we’re saying at the high school level is the measure of success there is college-ready. So for a 1-year-old, the test of success is kindergarten-ready; at high school it’s college-ready. Now we’re actually launching work at the college level where the test of success is college completion. And you can’t get to college completion if kids are laboring under the disadvantages that they currently are, 0 to 5. So there’s a real logic to a way our work over time has informed itself and evolved.”

How do you improve the education system?
WG: “The problem with public education, or a couple or three basic ones, is that we’ve settled too cheap …. we haven’t set our goals high enough and there is a clear need for schools to compete with one another. We see that in higher education so vividly. I’ve said many times of all the industries in this country the most competitive is the higher-education industry and those people get up in the morning to hire the best teachers, and find the best students and become as favored by their alumni as they possibly can for money-raising purposes. As a result of that, we have a fabulous higher education system in this country and it is largely a function of that very, very competitive thing going on. You know you got the US News & World Report comes out every year and you look for what happened to your school and that’s the essence of competition. And that isn’t happening in public education. I don’t for a minute suggest that the exact same model would work for public education, but there needs to be success and failure measured and publicized. That’s part of what’s going on in the No Child Left Behind philosophy; schools that aren’t doing the job—the world is informed about the fact that that school isn’t doing its job. And if we expect teachers to behave like professionals, then they’ve got to paid like professionals.

“Part of the incentives for teaching is to be assigned to a school that has smart kids. The majority of people who teach prefer not to be in some inner-city school that’s populated by poor kids. There’s no way to do that except with money.”

DB: “What we’ve tried to aim at is providing the resources and the ideas so that schools can improve and they become places to teach. And I think going forward, you’re going to see a lot emphasis here on getting the tools, the resources, the ideas so teachers can be more effective.”

“Our grant making is very disciplined and very focused. Most of the grant-making we do is around education. About 75 percent of our giving in the United States is around education reform to begin with. This state actually benefits from one thing that the rest of the country doesn’t, which is what we call our community grant making. We actually have a special initiative here in this state around things other than just education and it’s those things for family and children support so that they can have their basic needs met, so that they can get some extra encouragement and help outside of school as well. So we will do grant-making for after school activities, we’ll do grant-making around food banks. We’ll do grant-making around domestic violence. Anything that can help stabilize the family, with the theory being, one, we’re giving back to the community and, two, a stable family then enables the parents and kids to focus on really what matters, which is educational attainment….Here in Washington we’re committed to things that go just beyond the school room and the school house.”

Why so?
DB: “Because of the family’s long-standing commitment to their home town and home state. This is where they were born and raised and where Bill and Melinda was raised and they feel a special obligation here in Washington state…So that’s what distinctively different about our work in Washington state, is the breadth of our giving, we’re more comprehensive as it relates to meeting family and childrens’ needs here.”

Can you give some example of responsive community giving?
DB: “A great example is a grant we just approved to the Southern Sudanese Association. So these are new refugees and immigrants from the Sudan that have settled in Seattle. As you can imagine, they’ve got pretty intense needs both adjusting to a new society and a new culture, but also their incomes are very very low. The founder of this [organization] was one of the Lost Boys of the Sudan. He somehow made it to Seattle, but that’s an example of a community institution that we feel is worthy of support…. [they] have any need you can think of: food and housing to not speaking English and not having the cultural background to succeed in our schools. So this is comprehensive support at the community level.


Do you ever get over-whelmed by the need?
DB: “If you weren’t fundamentally optimistic about our ability to solve problems, I doubt Bill and Melinda and Bill Sr. would have created this foundation. I wake up every morning excited actually. It is very difficult though to pick and choose between 100 great ideas and know you can only maybe fund one of them.”

How do you decide who gets money?
DB: “We have two different ways of thinking about it, and the vast, vast bulk of the money in this foundation goes out into strategies. Very formal strategies that are very carefully thought out, very disciplined around high school reform or around community colleges or around malaria. It’s not a dart board. They come in with a very specific notions of what the problem is and what the set of solutions are and then we invite people, invite non-profit partners and government, to come in and joint-venture with us on these solutions. And then the smaller community responsive grant making that’s unique to Washington state.

“I get to sit around a table like this with my team and we sift through hundreds of proposals and ideas…we want to solve the hardest things. Whose needs are really not being met? Who is being ignored, like the Sudanese, not because anybody’s against them but because nobody knows about them? Who’se got an idea that actually makes sense? Is there some logic to the solution that this person is proposing to us? Do they have other partners who are going to fund the other 80 percent we’re not going to fund? And who’s done it before? We spend a lot of time doing our due diligence.”

WG: “The thing a lot of people don’t understand is that when you sit down and thoughtfully, intellectually, conscientiously decide the things you’re concerned about and that you’re going to devote your resources to, is that you’re also deciding not to do other things. The fact of the matter is that the other things comprise about 99.5 percent of the things that you might have decided to do. …. For instance, we have very little to do with environmental causes….In the last analysis, these are the things that bother Bill and Melinda the most that we’ve decided to do. At the same time, there’s this huge array of important good things to do, which we are not doing.”

Why the Global Health focus?
WG: “I think it’s fair to say that Bill and Melinda saw it as the biggest inequity in the world.”

What are the biggest problem here?
WG: “In terms of national problems, clearly the problem of public education would be the one that has the highest level of concern and attention and the biggest dollar commitment. Locally, it’s the family in troubles issue, mom and three kids in the back of a car.

“Our society doesn’t work perfectly. It never will probably, but one thing that does help it work better is a large philanthropic sector and I haven’t the slightest doubt that this area is way better off than it would be if there were no Gates Foundation and no United Way and no Paul Allen and so forth.”

How does your foundation work compare to your early law career?
WG: “This is lots easier. It’s just more rewarding. Never in a million years did I dream that’d we’d be sitting here having this conversation. I’d just be retired.

Can you ever retire?
WG: “I don’t know. I don’t have any thoughts about doing so.”

What’s ahead for you in 2009?
WG: “In terms of my personal time, other than the speaking, which is quite diverse, I will unquestionably spend more of my time… dealing with the early learning and public education problems which I see as being very inter-related.”

DB: “Continuing work with family homelessness state-wide and families in crisis, so they can take advantage of education reform and early learning opportunities. We made a $40 million investment in the year 2000, and we made that last grant into that commitment at the beginning of this year, and we are in the process of rolling out a new commitment that’s at least as large as they last one, going forward. Specifically family homelessness, in Seattle, King, Pierce and Snohomish counties…the public launch will be the first quarter of next year.”