Bill and Melinda Gates Foundation pledging $2.5 billion. Good ... what return?

Dear Colleagues

I am sure a lot of people feel good when they hear that a wealthy foundation is giving a big amount of money to a good cause. I am sure that is what the Bill and Melinda Gates Foundation (BMGF) hoped when they recently announced a pledge of $1.5 billion over five years to "Women and Children". This is the article where I learned of this ... the text is at the end of this post: http://philanthropy.com/article/Melinda-Gates-Announces/65801/?sid=&utm_source=&utm_medium=en

Microsoft has been a pretty impressive company ... over the past 30 years it has earned good profits, and many would argue that the PC revolution that was the foundation for Microsoft's business was a pretty good thing. But it was never a philanthropy ... it was a hard-nosed business that thrived and took no prisoners!

I come from the corporate world myself and as a corporate CFO worked very hard for my employer to earn good profits ... and for our company to do the right thing for all the stakeholders ... and I think we did quite well at getting the balance right. We operated in a lot of very poor countries ... and I was able to contrast our impact on communities with the impact of the local government and the international official relief and development assistance (ORDA) community. Bottom line ... our business approach had more impact on the betterment of local life that the welfare based assistance coming from the ORDA community.

It is good to see a big number ... $1.5 billion is a big number ... but the really big question is what is there going to be to show for this in five years time. When this amount of money is spent in the corporate world there is an expectation that there will be profit benefits that are in the range of $2.5 to $5.0 billion over this time period. So the question is what sort of return the BMGF will be getting by putting this money into a philanthropic effort to help women and children ... what is going to be the value increment to society from this expenditure?

Though there has been talk about metrics around the ORDA community for a very long time ... the practical reality is that most of the talk is about disbursement and very little is about accomplishment. The metrics of the ORDA community is dysfunctional at many levels ... and there is neither performance metrics nor a basis for accountability. One thing is for sure ... the money will get disbursed and get consumed ... but we will never know whether or not there will be a reasonable return on the resources consumed.

This particular announcement is about money that will be disbursed in the future ... so clearly it is not yet possible to get performance metrics and accountability for something that is yet to happen. But what about the moneys that have been disbursed last year, and the year before last ... going back years, perhaps. Mostly, there are little or no datasets that show the cost efficiency and the cost effectiveness of relief and development expenditures. How convenient!

In time I expect that BMGF will get some reliable metrics about performance ... but the fact that this is happening slowly is a big concern. I expect "government" and the big established ORDA institutions to be slow in this regard ... but not an organization that should be very up-to-speed about metrics and performance like BMGF / Microsoft! I have tried to find some rational explanation, and have concluded that BMFG has been advised a lot by economists and scientists with experience in the ORDA community ... and rather little by hard nosed accountant types who like to follow the money and see resources converted into tangible value in the communities where there are needy beneficiaries.

I am optimistic that there will be progress in the improvement of metrics in due course ... but I am disappointed at the speed improvement in metrics is being achieved.

Peter Burgess
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Bill & Melinda Gates Foundation ... June 7, 2010
Melinda Gates Announces $1.5-Billion Foundation Pledge for Women and Children
By Caroline Preston

The Bill & Melinda Gates Foundation will spend $1.5-billion over the next five years to improve maternal and child health, family planning, and nutrition programs in poor countries, Ms. Gates announced at a conference in Washington on Monday.

Challenging the notion that high maternal and child death tolls are unavoidable, she urged leaders of governments and other institutions around the world to make women’s and children’s health a higher priority.

“The death toll is so huge and has persisted for so long, it’s easy to think we’re powerless to do much about it,” said Ms. Gates. “The truth is, we can prevent most of these deaths—and at a stunningly low cost—if we take action now.”

She emphasized the importance of fashioning health programs for women and children that tackle multiple needs, including family planning, prenatal care, safe childbirth, and nutrition.

“The Gates Foundation is joining many others in the global health community in working toward a more integrated approach to women’s and children’s health,” said Ms. Gates. “Women and children have a continuum of needs, and we must design health programs accordingly.”

To oversee its more-integrated approach, the Seattle fund recently formed a family-health division, bringing together employees who work on mother's and children's health with those who work on family planning and nutrition.

Gary L. Darmstadt, who directs the division, said the new pledge will complement the foundation's investments in developing and delivering vaccines.

"The foundation's approach has traditionally been more disease oriented," he said. "We're looking at women's and children's issues in a more holistic way and trying to really look at it from the ground up."

Also new will be the program's intensive focus on a few countries, he said.

Much of the money will support programs in India, Ethiopia, and other nations that have relatively high maternal and child mortality rates as well as lawmakers and community leaders committed to reducing them, he said.

An initial $94-million will go to efforts in India and $60-million to Ethiopia. Additional grants will be announced over the next year.

The new investments will support efforts to train health workers to provide multiple services, identify effective methods for expanding access to family-planning services, and develop treatments such as simplified antibiotics for infections in newborns.

Child and maternal health programs that already receive Gates money include Save the Children's Saving Newborn Lives effort and an initiative at Columbia University called Averting Maternal Death and Disability.

Charles Lyons, a former Gates official who now leads the Elizabeth Glaser Pediatric Aids Foundation, called integrating child and maternal health services "the smart thing to do."

"The international community, the health community, and the rest of the world just increasingly understands what we have to accomplish and the need to focus on strengthening health systems," he said. "The Bill and Melinda Gates Foundation is a very important leader and voice in relation to global health and this is a further example of their commitment to drive toward impact."