Despite 20% drop in assets, Gates Foundation to spend more this year

In his first letter as full-time philanthropist, Bill Gates took stock of his foundation's progress and said he remains optimistic despite economic problems that could linger for five to 10 years and push back the timeline for reaching global health and development goals.

The Bill & Melinda Gates Foundation lost one-fifth of its assets in 2008, he said. Nevertheless, Gates said he will spend more this year, about $3.8 billion, or 7 percent of foundation assets, compared with $3.3 billion last year.

He highlighted progress on improving education and health and called for perseverance. The recession hasn't changed his own philanthropic goals, Gates said, but "it's just made them harder to achieve in a particular time frame."

As he adjusts from the business of Microsoft to heading the world's largest private philanthropy, Gates decided to write an annual letter at the suggestion of his friend, investor Warren Buffett.

Pablo Eisenberg, senior fellow at the Center for Public & Nonprofit Leadership at Georgetown University, called it "a good first step," but added, "I would hope he would expand it to be a two-way conversation, and to meet with folks, including grass-roots organizations."

Because of the tax benefits nonprofits receive, "Bill Gates' money is tax-related money, so he should have a high measure of accountability," Eisenberg said. "He ought to be speaking to a number of outsiders, not just his advisory committee."

Though the foundation may be attempting to be more open, it's still not held accountable for the way it spends its billions, added University of Washington global health professor Amy Hagopian.

"It's a one-sided communication," she said. "We're all at the mercy of what's on Bill Gates' mind today," without any of the oversight that goes into shaping priorities at the World Health Organization.

In a call with reporters Monday, Gates conceded that major progress on many fronts is closely linked to the overall economy.

"Raising economies up is the primary way we get literacy, good governance, lower population growth, better health outcomes," he said.

"Economic success has been this phenomenal thing. Whenever that clock of increased economic success is turning slower or even briefly goes into a period where it's going backwards, it's really a very negative thing," he said.

Gates pointed to milestones in efforts to fight various diseases, including a malaria vaccine that will go into the last phase of human trials this year, a dramatic increase in the number of people being treated for HIV/AIDS since 2003, and a more aggressive effort to eradicate polio that will take him to northern Nigeria next month.

When he attends the World Economic Forum in Davos, Switzerland, this week, Gates said, he'll urge governments in Europe to continue their funding to treat and stamp out such diseases.

In his letter, Gates called technology "a personal passion" for himself and his wife, Melinda, and that projects like building health clinics or roads "are better left to governments."

Gates acknowledged that rickety health systems in the developing world can block new vaccines and medicines from reaching the people who need them, but his foundation has done little to bolster that capacity, Hagopian said.

It's understandable Bill and Melinda Gates focus much of their work on technology and drug development, Hagopian said. But the foundation could play a more powerful role in encouraging governments and international organizations to pay more attention to crumbling health systems.

"Otherwise, their vaccines are going to be wasted," she said. "There are not enough health workers by a longshot to deliver the new vaccines and the new technologies that might be developed."

Gates said he would encourage foundations to spend more this year than the minimum 5 percent of assets, but he didn't support a law requiring them to boost spending.

"It's excellent that in tough times he's going to give more," said Eisenberg. "He could give 10 percent for that matter. It would be nice if he could say to his colleagues, 'All you foundations should give 7 percent.' "

Addressing education, Gates said it was surprising the U.S. economy has been so strong considering the education system has so poorly prepared the bottom half of students, and has been focused on helping the top 20 percent succeed.

The crisis highlights "the importance of investing in a broader set of kids so they're not dropouts and have a chance to go to college," he said.

Asked about criticism that his foundation is not transparent enough in its operations, he said, "at the end of the day the goal is to save lives," not to "use glass for all of our walls."

He said the Gates Foundation is making an effort to share its success stories and failures, but he feels lucky some of the transparency requirements that apply to governments don't apply to his foundation.

"This letter is my best effort to share my frame of mind," he said. "I do think this letter is an act of being open and transparent."

Times reporter Sandi Doughton contributed to this report. Kristi Heim: 206-464-2718 or kheim@seattletimes.com