AMERICAN GIVING | Strengthening communities through generosity
11 February 2008
Microsoft Founder Urges "Creative Capitalism" To Fight Poverty
Bill Gates plans full-time focus on charitable foundation
Washington -- The man who helped make computers a part of modern life -- and in the process became the world's richest person -- is shifting his primary focus to dealing with the problems of the world's poor.
Bill Gates, co-founder and chairman of Microsoft Inc., will give up day-to-day leadership of the company in July and turn his attention to piloting the Bill and Melinda Gates Foundation, which he and his wife began in 2000, and pushing his concept of "creative capitalism."
"There are roughly a billion people in the world who don't get enough food, who don't have clean drinking water, who don't have electricity, the things that we take for granted," Gates said in a recent speech. Those problems reflect a situation he is determined to change -- both through the foundation and by enlisting the forces of the broader global economy.
The Gates Foundation, boasting a $37.6 billion endowment as of mid-2007, has directed its attention largely to improving health care and fighting poverty in the developing world, and boosting access to education and information technology in the United States.
Now, Gates has announced an ambitious goal of moving the corporate world toward "creative capitalism" -- an approach under which, he says, "governments, businesses and nonprofits work together to stretch the reach of market forces so that more people can make a profit, or gain recognition, doing work that eases the world's inequities."
Convinced that "there are two great forces of human nature: self-interest and caring for others," Gates used a speech to the World Economic Forum in Davos, Switzerland, in January to outline his vision of "a system where market incentives, including profits and recognition, drive those principles to do more for the poor."
Gates quoted, in support of his thesis, the 18th-century political economist Adam Smith, widely regarded as the father of capitalism.
Though Smith believed strongly in the value of self-interest for society, Gates said, he also wrote of "some principles in ... ([man's] nature, which interest him in the fortunes of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it."
Indeed, the recognition a company gets for its good works can have business value, Gates said in Davos. It "enhances a company's reputation, appeals to customers and attracts good people to an organization. In a market where profits aren't possible, recognition becomes a proxy for profit," he said.
Gates pointed out examples of what can be accomplished in the vital area of public health.
In one case, he said, the World Health Organization (WHO) determined that a meningitis vaccine would have to be priced at less than 50 cents a dose to achieve meaningfully wide use in Africa. The WHO then got India's Serum Institute -- which found a new way to make the vaccine for 40 cents a dose -- to agree to supply 250 million doses to public health systems over the next decade, while also being allowed to sell into the private sector.
Similarly, he reported, a Dutch company shared royalty-free rights to a cholera vaccine with manufacturers in developing countries while retaining the rights for the developed world. The result: a vaccine made in Vietnam that costs less than a dollar a dose.
This concept of "tiered pricing to offer valuable goods for the poor in a way they can afford" can be applied broadly throughout other critical industries, he said.
Gates used his Davos visit to announce his foundation's expanded foray into agriculture, pledging $306 million in grants to improve seeds, soil and market access for rice farmers, coffee growers and others in poor countries, largely in Africa and South Asia. "If we are serious about ending extreme hunger and poverty around the world, we must be serious about transforming agriculture for small farmers, most of whom are women," he told reporters.
Gates' own unmatched resources provide just a starting point for his and his foundation's philanthropic potential.
Financier Warren Buffett, chief executive officer of Berkshire Hathaway -- ranked as the world's second richest person behind Gates -- in 2006 committed much of his own wealth to the Gates Foundation, in the form of matching funds that effectively will double annual giving.
Gate has been supportive of rock star and social activist Bono and his Product Red initiative, under which companies share the proceeds of specially Red-branded merchandise with the Global Fund to Fight AIDS, Tuberculosis and Malaria.
Microsoft and Dell Inc. have become the latest companies to join the campaign. They jointly advised users by e-mail February 4 that they would contribute between $50 and $80 to the Global Fund for each purchase of a Red-branded Dell personal computer running Microsoft's Windows Vista. "$50 is enough to pay for almost four months of life-saving anti-retroviral treatment for one person suffering from AIDS," the e-mail said.
Gates has estimated that money generated by the Red campaign has been used to save more than 2 million lives.
At Davos, Bono said of Gates' impending transition to full-time philanthropy: "I think it is an extraordinary thing that this man has not just changed the world once, but has now set aside the next act of his life to change the world again."
