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Warren Buffet Gave Bill Gates $30 Billion: Here’s How It’s Paying Off

Bill and Melinda Gates use their annual letter this year to explain to Warren Buffet where his money is going–from more vaccination to better contraception–and the impact global aid is having around the world.

Warren Buffet Gave Bill Gates $30 Billion: Here’s How It’s Paying Off
[Photo: Daniel Acker/Bloomberg/Getty Images]

It’s been 10 years since Warren Buffet pledged the Bill & Melinda Gates Foundation roughly $30 billion in Berkshire Hathaway stock—essentially doubling the size of its endowment. In their annual letter, out this week, Bill and Melinda Gates have offered a progress report, written as an open letter to Buffet, to share what’s working and how the money was spent.

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“It was the biggest gift anyone’s ever given for anything,” says Bill Gates in an interview with Co.Exist. But the money came with a catch, as Gates puts it, “to try for very high impact even if it involved a substantial risk.”

That’s a tall order considering the foundation was already working in a risky area–global health, a root cause of global poverty–both of which many wealthy givers still ignore. According to Giving USA, only 4% of all philanthropic money goes to international affairs, which includes global health, disaster relief, and foreign aid.

[Photo: Gates Letter]

The crux of the letter is twofold. First, Bill and Melinda want to make the case that they truly have had incredible success in improving humanity: The rate of global poverty has been cut in half since 1990, but, it turns out, fewer than 1% of the population realizes that. Second, they want to make it clear that while they may have catalyzed some of those gains, they can’t be solely responsible for them. At its core, the foundation relies on interdependent partnerships with other NGOs and especially governments that provide foreign aid to implement their solutions.

“In fact, you know, you can get fairly cynical about the whole thing if you think we’re just standing in place,” Gates says. “So you know not only is it this upbeat message for Warren but it’s an attempt to say why the last 15 years–and particularly the last 10 years–have been so amazing in terms of this kind of [eradicating] inequality.”

Despite the massive shifts in global leadership recently, continued success will depend on new leaders maintaining their support. For perspective, the Gates Foundation spends about $5 billion a year on its programs, while the U.S. spends roughly $30 billion on foreign aid, about one-third of which is earmarked for health-related causes. If that sounds like a lot, it isn’t: Proportionately speaking, it’s less than 1% of the country’s total budget, according to the Center for Global Development. And that is a far smaller portion of overall funding than places like Norway and Sweden traditionally give, according to the Organisation for Economic Co-operation and Development.

Despite who is in charge around the world, however, these amounts generally stay steady. “If they don’t maintain that, then there will just be more in death,” Gates says, listing off causes like HIV, malaria, overpopulation, and reproductive complications. “I mean, it will turn the clock backwards in terms of the progress we’ve made.” (The presence of Trump–and the potential for a new global order ruled by nationalism and isolationism–looms silently over the entire discussion.)

The biggest challenge the group faces may be to prove that their ambitious efforts are working. As Bill and Melinda write to Buffet in the letter: “Of course, philanthropy isn’t like business. We don’t have sales and profits to show you. There’s no share price to report. But there are numbers we watch closely to guide our work and measure our progress.”

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For one thing, the childhood mortality rate has dropped by half since 1990. That means 122 million more kids under the age of five have been given the chance to live. This factor, along with allowing women more reproductive control over when and how often they get pregnant, has been shown to radically improve nearly all aspects of life in developing countries.

[Image: Gates Notes]

At-risk children are surviving in part because of a vaccine development and access partnership called Gavi, the Vaccine Alliance, which incentivizes rich governments to fund and develop vaccines that can be used widely. About 86% of children worldwide, the highest portion ever in history, now receive vaccines. One great breakthrough is called the pentavalent, a single shot that protects against diphtheria, tetanus, whooping cough, hepatitis B, and a type of influenza that causes meningitis and pneumonia for less than a dollar. And for every dollar spent on vaccines, communities see a $44 increase in economic gains.

As the foundation studies its successes, it becomes easier to spot more challenges. For instance, 1 million babies still die on the day they’re born (3 million pass within their first week). In terms of overall deaths, that percentage has ticked up as older kids live longer. Three major contributors are sepsis, asphyxiation, and prematurity but by digging into where and how those deaths occur, the foundation has also found some hope.

Different places throughout the developing world, the report notes, aren’t being impacted the same way. Rwanda is far less devastated than Malawi. By studying the birth procedures and equipment that’s working well in places that are thriving, the organization has been able to make strong recommendations for what hospitals can fund and adopt elsewhere.

One of the key findings in the report is that “poverty is sexist.” The more men oppress women, limiting their choices and control over their bodies, the worse off their communities tend to be. In many parts of the developing world, women have suffered from a lack of contraception, causing them to have kids earlier and more often than expected. That endangers and impoverishes them and their children. As the foundation finds new ways to make contraception available, however, women are taking advantage of it at a record rate.

“It took decades to reach 200 million women [with contraceptives]. It has taken only another 13 years to reach 300 million—and the impact in saving lives is fantastic,” the report notes. Logically, some of the advancements seem to take men entirely out of the decision-making process: One happens to be a small, transportable birth control shot, which women can self-administer. All this progress, though is threatened by the recent reinstatement of the “global gag rule,” which denies funding to NGOs that give advice about abortion. The Trump administration has decided to make the rule exceptionally more far reaching than the George W. Bush administration did, meaning $9.5 billion in foreign aid is now dependent on global health organizations changing their policies to continue to receive funding.

[Photo: Gates Notes]

The foundation has had success because they literally place a high value on experimentation. On average, interventions can cost up to $1,000 per life saved, Gates says. That can mean investing millions—even billions over time—before the payoff will reach a broad enough population. “We have things in terms of new vaccines or measles campaigns, or raising vaccine coverage rates that are at that threshold,” he says. “It sets a pretty high threshold, so that we’re coming into areas that not many people are working on and the market can’t work on. And it is a lot easier to measure things nowadays than it used to be.”

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The goal is to demonstrate success, and then seek partners. “Overwhelmingly, the rich governments have put in dramatically more than we have,” he adds. “So helping to keep that [relationship] strong and direct it . . . is something we can do and critical to the results that we report.”

After generations, the world is close to eradicating polio. While the amount of people still suffering are minimal compared to other diseases, it’s a victory that Gates would like to see his group help achieve this year, both for health and symbolic value. Part of Bill’s and Melinda’s success depends on being able to tell stories with happy endings. As Gates puts it, “When we’re sitting here saying in many of these areas, ‘Hey things are going well, let’s do more,’ the whole let’s-do-more thing doesn’t make any sense if you don’t think there’s some great progress taking place.”

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