The biggest impact of the Gates divorce may have nothing to do with the Gates Foundation

The biggest impact of the Gates divorce may have nothing to do with the Gates Foundation

2021-05-04 22:20:00

Divorce is usually a private affair that concerns a family, with little impact on the general public.

But the split between Bill and Melinda Gates could have far-reaching implications for global health and American life, as they are the nation's largest charitable donors – a sign, as sure as any, of just how pivotal those billionaire philanthropists play. play in our society.

In the immediate aftermath of the surprise announcement, everyone from billionaire critics to former Gates Foundation executives was looking for an explanation of what this could mean for the world's foremost philanthropy. To some, the divorce suggested that major strategic changes could take place in the years to come, with entire nonprofit sectors and hundreds of billions of dollars at stake. For others, the Gates' divorce was not that different from other couples – a reflection of the ironclad legal commitments they had already entered into, and the family's commitment to work together.

"I think the real story here isn't that the divorce itself has an impact, but the public's reaction to the news," said Megan Tompkins-Stange, a professor at the University of Michigan who has studied the Gates Foundation closely. "There was widespread fear and concern on the part of the foundation's current beneficiaries, which in itself illustrates the extent to which the actions of the Gates are causing ripple effects in the rest of the philanthropic sector."

The fear surrounding Gates's divorce isn't surprising when you consider what happened when Jeff Bezos and MacKenzie Scott announced their split in 2019. While we didn't know then, the philanthropic world was eventually transformed by their $ 36 billion divorce settlement. . What's different with this divorce from Seattle tech billionaire is us know that this deal will somehow resonate in the world of mega charity because of their track record as major donors.

Bill and Melinda Gates founded a charity fund that today manages approximately $ 50 billion on behalf of the Foundation – that money is irrevocably donated and cannot be diverted. But there is one more an estimated $ 150 billion or so of Gates' wealth currently outside the walls of the Foundation, an amount that will presumably be divided among the couple in an announced divorce settlement.

Now that the money is at their individual – rather than collective – whims, it is possible that fortune will end up financing other work than it previously would. When the Gateses got off to a flying start with the Giving Pledge ten years ago, the couple wrote that they "committed the vast majority of our assets to the Bill & Melinda Gates Foundation." We don't know if that will still be the case after the divorce.

So in some ways, the bigger story is the money that has yet to be divided among the Gates Foundation, and which can currently be found in places like Cascade Investments, the Gates family's personal investment store.

This money, Gates insiders speculate, could in theory have gone to the Gates Foundation over the next few decades, but now it could go to outfits like Pivotal Ventures, Melinda Gates' personal investment company focused on gender equality; or Gates Ventures, her husband's investment store.

A former director of the Gates Foundation, who was given anonymity to give a candid opinion, wondered if over time Melinda Gates would focus more of her energies on Pivotal and less on their jointly-run foundation.

The Gates Foundation itself shows a calm face: The $ 50 billion philanthropy said both Bill and Melinda Gates would remain custodians of the foundation. "They will continue to work together to shape and approve foundation strategies, advocate for the foundation's problems and determine the overall direction of the organization," a spokesperson told Recode.

But while that may be true now, divorces are complicated, and even an initially amicable split can become bitter or tense over time. So it is impossible to know exactly how the coming years, or decades, will turn out.

“Even if they both clearly run the foundation, I don't see a scenario where it won't turn into the things he cares about and the things she cares about,” said another former director, describing there as being already there. a "huge, complex field of landmines between the Foundation, Pivotal and Gates Ventures."

Even people who used to work closely with the Gates couple disagree about the effects of the divorce on the foundation. When asked how important this would be to the Gates Foundation, on a scale from 1 to 10, a former director graded it with at least a 7. Another previous Gates assistant gave it a 3. One-third was even more optimistic and said that when it comes to the program, the impact is a 0 or a 1.

Major changes could come, one insider said, but not until the Gateses are no longer engaged in what is sure to be a complicated legal process. In the meantime, at least some of the former executives predict that internal day-to-day affairs could become more paralyzed if the couple struggles to work together, especially for people like Gates Foundation CEO Mark Suzman, who runs the board.

But when it comes to the nonprofits themselves that depend on the generosity of the Foundation? There may be fear, but less drama than meets the eye.

For now, the dominant feeling in Gates's job is a gloomy sadness for their mentors.


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