Philanthropy Gates Style

by Dr. Mae-Wan Ho: Geneticist, Biophysicist and Director of the not-for-profit Institute of Science in Society.

The world’s biggest philanthropic foundation is reaping huge profits investing in companies responsible for causing the problems it tries to solve; its grant-giving is also doing more harm than good in undermining health and agricultural systems, distorting national and global priorities, and preventing the necessary paradigm change that could help secure the future of the planet.

Dark clouds over good works

Bill & Melinda Gates, with Warren Buffet
The Gates Foundation, the world’s largest, richest philanthropic organisation founded by Bill and Melinda Gates in 2000, and doubled in size by Warren Bufflett in 2006, is “dedicated to bringing innovations in health and learning to the global community” in order to enhance healthcare and reduce extreme poverty. It is indeed famous for giving hundreds of millions to good causes.

But an investigative report published in the LA Times at the beginning of 2007 found that the Gates Foundation “reaps vast financial gains every year from investments that contravene its good works”. These investments go to companies responsible for causing the problems the Foundation tries to solve.

Investments in oil companies outstrip grants that counteract problems caused by the companies

For example, while children in the poorest countries like Nigeria are benefiting from a vaccination drive supported by the Foundation, they suffer serious respiratory diseases blamed on fumes and soot spewing from flares of the oil plants whose investors include the Bill & Melinda Gates Foundation.

A local physician in Enocha in the Niger Delta says hundreds of flares at oil plants in the area have caused an epidemic of bronchitis in adults, and asthma and blurred vision in children. Although no definitive studies have documented these health impacts, many of the 250 toxic chemicals in the fumes and soot have been linked to respiratory disease and cancer. The oil plants in the region find it cheaper to burn nearly 1 billion cubic feet (~28.3 million m3) of gas each day and contribute to global warming rather than selling it.

The LA Times found that while Gates Foundation has donated $218 million to polio and measles immunization and research worldwide, it has also invested $423 million in Eni, Royal Dutch Shell Exxon Mobil Corp., Chevron Corp and Total of France, the companies responsible for most of the flares that blanket the Niger Delta in a level of pollution beyond anything permitted in US or Europe.

Local leaders blame oil extraction for fostering some of the very diseases that the Foundation is combating. Oil workers and soldiers protecting them attract prostitution, contributing to a surge in HIV and teenage pregnancy, both targeted by the Gates Foundation in its efforts to reduce suffering and poverty. Oil bore holes fill with stagnant water and become ideal breeding ground for mosquitoes that spread malaria, and investigators for the health commissioner for Rivers State, Dr. Nonyenim Solomon Enyidah, cite an oil spill clogging rivers as a cause of cholera; the Foundation is fighting both malaria and cholera. The toxic by-products of the flares such as benzene, mercury and chromium undermine immunity to disease making children more susceptible to polio and measles.

The same story is repeated in Durban, South Africa where the Gates Foundation has sponsored research on vaginal gels to protect against HIV (but see Concentrating Exclusively on Sexual Transmission of HIV is Misplaced, SiS 34 for failures of anti-HIV gels), where children suffer respiratory diseases from industrial polluters, the worst among which a Mondi paper mill and a giant Sapref oil refinery. The Sapref plant has had dozens of oil spills, flares, pipeline ruptures and explosions since 1998, and together with the Mondi plant, pump thousands of tonnes of foul-smelling chemicals into the air annually, according to their own monitoring.

But the Gates Foundation is a major shareholder in the companies that own the polluting plants. As of September 2006, the Gates Foundation holds $295 million worth of stocks in BP and as of 2005, $35 million worth of stocks in Royal Dutch Shell, which co-own Sapref with BP. The Foundation also held $39 million investment in Anglo American, which owns Mondi paper mill.

The Gates Foundation has held large investments in all three companies since at least 2002, and has seen the worth of BP shares shot up by about 83 percent, Royal Dutch shell shares by 77 percent and Anglo American shares about 255 percent. It has reaped much more in financial gains from investments in the polluters than it has given to the Durban microcide study to fight AIDS, which amounted to $20 million.

The Gates Foundation also profited hugely from its holdings in the top 100 polluters in the United States as rated by the University of Massachusetts and the top 50 polluters in Canada, as rated by the trade publication Corporate Knights. Its investments in these companies total about $3.3 billion.

Investing and profiting from anti-HIV drugs while fighting AIDS

The Gates Foundation has awarded billions of dollars to fight AIDS, tuberculosis and malaria, more than $2 billion for AIDS alone, yet tens of millions of the afflicted in Africa cannot afford to pay for the patented drugs produced by the pharmaceutical giants.

In 2005, the Foundation held nearly $1.5 billion worth of stock in drug companies widely criticized for restricting the flow of key medicines to poor people in developing countries. On average, shares in those companies have increased in value about 54 percent since 2002.

Drug companies claim they need price protection for research and development, and in 1994, they lobbied hard and successfully for international Agreement on Trade-Related Aspects of Intellectual Property Rights, which made it harder for poor countries to buy cheap generics instead of brand-name drugs (see Whose Bird Flu Virus is It Anyways?, SiS 35).

Monica Harrington, a senior policy officer at the Foundation said the investment managers had one goal: financial returns “that will allow for the continued funding of foundation programs and grant making.” The LA times found that the Gates Foundation has holding in many companies that have failed tests of social responsibility because of environmental lapses, discrimination in employment, disregard for workers rights or other unethical practices. These include Conoco Phillips, Dow Chemical C., and Tyco International, ranked among the worst US and Canadian polluters; pharmaceutical companies that price drugs beyond the reach of AIDS patients the Foundation has pledged to treat. Some 41 percent of the Gates Foundation assets have been in companies that countered the Foundations stated goals or socially concerned philosophy.

Steal from the future

Paul Hawken, well-known author of The Ecology of Commerce, Natural Capital and other important works on socially beneficial and ecological sustainable investments, now directs the Natural Capital Institute. Hawkens refers to “the dirty secret” of many large philanthropic organisations that “donate to groups trying to heal the future, but with their investments, they steal from the future.”

Hawkens and others are especially critical of philanthropic organisations investing in a company purely for profit, without attempting to improve the company’s way of operating. The philanthropic organisations turn a blind-eye to socially and ecologically irresponsible practices.

At the Gates Foundation, blind-eye investing has been enforced by a ‘firewall’ that separates its grant-making side and its investment side. The Foundation recently announced a plan to formalise that firewall by moving its assets into a separate Bill & Melinda Gates Foundation Trust, its two trustees being Bill and Melinda Gates. The Trust will invest to increase the endowment while the Foundation gives grants.

Many philanthropic organisations are beginning to address contradictions between making grants to improve the world and making investments that harm it. Major organisations – such as the Ford Foundation, the John D. and Catherine T. MacArthur Foundation, the Rockefeller Foundation, and the Charles Stewart Mott Foundation - now consider social justice, corporate governance and environmental stewardship crucial in their investment strategies. Moreover, nearly one-third of philanthropic foundations take part in shareholder initiatives, voting their proxies to influence corporate behaviour. The Nathan Cummings Foundation, with an endowment of $481 million, has sponsored proxies to force corporations to address environmental sustainability and political transparency. Shouldn’t the Gates Foundation do the same?

After the scandal of its investment policy emerged in the LA Times report, the Foundation caused further consternation in its detailed statement responding to the investigation that no changes would be made. David McCoy, editor of Global Health Watch, was reported to have said that this exposes the hypocrisy of the Gates Foundation and the double standards that it employs. The Foundation’s enormous wealth is derived from the very distortions and injustices in the global political economy that keeps billions of people impoverished. As a private foundation, it is not really open to public scrutiny for accountability.

Grant-giving policy may do more harm than good by undermining health systems of poor countries

But even the grant giving activities of the Gates Foundation is not above reproach.

An article in the British Medical Journal (BMJ) published in 2007 criticised its “reluctance to embrace research, demonstration, and capacity building in health delivery systems”, which is “preventing the Gates’ grants from achieving their full potential.”

The Gates Foundation has awarded a total of $6 billion to global health projects since 2000, with very little to show for the money. On the contrary, its “vertical programmes” and “disease specific funding strategies” damage health systems in developing countries, according to Professor David Sanders, director of the School of Public Health at the University of Western Cape, South Africa. They lead to “fragmentation of health systems and distortion of government health priorities.”

Sanders said: “Even if governments develop coherent policies and integrated plans it is quite difficult to hold that line when your big funders – with more money than those countries’ overall health budgets – want to focus on single diseases, often using a single technology rather than a more comprehensive approach.”

Bill and Melinda Gates see “breakthrough technologies” as key instruments in global health, and could certainly benefit research (though not necessarily the right kind of research that would benefit society), and explained their policy to BMJ as follows: “Effective and affordable health tools aren’t available for many diseases. For this reason, we have focused a significant portion of our grant-making on discovering and developing new vaccines, drugs, and other tools that could save millions of lives.”

But the biggest problem is not lack of technology but systems to implement it, Sanders pointed out. Health systems have been seriously weakened by years of underfunding as a result of economic crises and “structural adjustment” (aimed precisely at dismantling publicly funded health systems). The huge funds injected by donors such as the Gates Foundation to single diseases has simply exacerbated the problem.

One of the starkest examples is the Global Alliance for Vaccines and Immunisation (GAVI), established with a grant from the Gates Foundation in 2001 when worldwide immunisation rates had fallen and stagnated, in Africa, at a miserable 50 percent. But GAVI’s primary aim was to entice the drug industry to produce more and new vaccines while old proven vaccines could not be delivered.

Anne-Emanuelle Birn, Canada chair in international health at the University of Toronto, said that because the Foundation only partly funds most initiatives, and selectively picks good performers, its decisions influence other donors’ choices about where to put the money, and hence affect global health priorities even more profoundly than it should.

Much the same criticism, and more in depth, has come from Laurie Garrett, Senior Fellow for Global Health at the Council on Foreign Relations, writing in Foreign Affairs, and raising the possibility that charities operating in sub-Saharan Africa – the Gates Foundation prominent among them – may be doing more harm than good by destabilizing the healthcare systems that they inject so much resource into. Notably, there is a scarcity of healthcare workers, especially acute in the least developed countries, as many of their health workers have been lured to rich developed countries to make up for the shortage there. Non-government AIDS programmes such as those operated by the Gates Foundation compete with local health systems for skilled healthcare providers. The foreign organisations frequently bring their employee’s effective wages to a hundred times what they could earn at government-run clinics.

Operations set up by aid organizations thus attract the scarce supply of medical professionals, diverting resources from standard clinics and potentially reducing the care available to the local population, with the result that the countries move backwards on other general health indicators such as prenatal care and maternal health.

Instead of setting a hodgepodge of targets aimed at fighting single diseases, Garrett calls on the world health community to focus on achieving two basic goals: increased maternal survival and increased overall life expectancy.

There is also disturbing evidence that grants are given to private industry even when the innovation and research had been developed and funded entirely by the public sector (Gates Philanthropy, Stem Cells for Mending Damaged Heart, SiS 35)

Green Revolution for Africa as the Green Revolution is widely blamed for environmental and social devastation in much of the world

The Gates Foundation funding policy for sustainable agriculture in Africa is equally misguided.

Towards the end of 2006, the Alliance for a Green Revolution in Africa (AGRA) was created with an initial budget of $150 million, $100 million from the Bill & Melinda Gates Foundation and $50 million from the Rockefeller Foundation. AGRA was a response to the call of African leaders for a new path to prosperity by spurring the continent’s agricultural development, and it would also firm up the vision laid out in the African Union Comprehensive Africa Agriculture Development Programme (CAADP), which seeks a 6 percent annual growth in food production by 2015 through increased use of new technology and inputs such as fertiliser.

AGRA intends to help small-scale farmers and their families in Africa get out of poverty and hunger through sustainable growth in farm productivity and incomes. To do that, it will breed new seeds, get small farmers to use them with more fertiliser and pesticide input, train more African crop scientists, and develop an agri-business, a network of African agro-dealers as conduits of “seeds, fertilizers, chemical and knowledge” to smallholder farmers.

The announcement brought strong criticisms from many civil society organisations and commentators. GRAIN - an international NGO for sustainable management and use of agricultural biodiversity – was swift in its condemnation:” It is incredible that this simplistic line of thinking is still followed after so many years of Green Revolution debate. The whole question of the tremendous environmental damage caused by the Green Revolution model of agricultural development relying on the lavish use of water, fertilizer and pesticides is completely ignored and pushed aside. The soil erosion and degradation caused by the use of chemical fertilizer and pesticides, and the resulting destruction of agricultural productivity in Africa are not even mentioned. Instead, the old mantra of new seed and more fertilizer is repeated. The explosive question of genetically engineered crops is cleverly avoided in the propaganda which doesn’t mean that it’s not there: both the Gates and Rockefeller foundations are amongst the most active supporters of genetic engineering in Africa.”

The threat of genetic engineering may have receded somewhat as Kofi Annan, former UN secretary general now chair of AGRA, was reported to have said in July 2007: “We in the alliance will not incorporate GMOs in our programmes. We shall work with farmer using traditional seeds known to them.” But all the signs are that Bill Gates is a real enthusiast for genetic engineering biotechnology, and has invested heavily in it since the early 1990s (see Box).

GRAIN also criticised AGRA for totally ignoring the central role of local communities, their traditional seed systems and indigenous knowledge, and rather than building on local knowledge and biological diversity, it has decided to replace it with “improved varieties”.

The failure of the Green Revolution is precisely that technological advances in crop genetics for seeds that respond to external inputs go hand in hand with increased socio-economic inequality and greater food insecurity; which has been growing more dramatic recently. [Editor's Note: On this point, see our recent posts "WTO Kills Farmers", and "Return to Organic Cotton & Avoid the Bt-Cotton Trap"].

Under pressure from international and bilateral trade instruments, especially under the World Trade Organization and the impending Economic Partnership Agreements with the European Union, African governments are increasingly opening up their markets to competition against the heavily subsidised food and other agricultural produce dumped into their countries by the US and the EU. Earlier structural adjustment programmes imposed by the world's financial institutions, such as the World Bank and the International Monetary Fund, had already forced African governments to dismantle public agricultural research and extension programmes and to drop all protection and incentives for their small farmers. The same African governments are then forced by the same agencies to devote their most fertile land to the growing crops for export to the North, thus pushing small farmers off their land and food production altogether.

Many of the measures now destroying African farming are being supported, if not instigated, by the very corporations whose charity foundations are now coming to Africa’s rescue with further technology programmes of the Green Revolution, and possibly worse: the reliance on the private sector as the main vehicle to deliver the goods and control the process. A substantial part of the funding for AGRA is earmarked for seed companies and agro-dealers to get the seeds and the chemicals to the farmer. This approach fits well with Rockefeller’s agricultural programmes in Africa, a major element of which is the development of private seed companies. And Bill Gates’ vision for Africa follows the same line.

Gates and biotechnology

Bill Gates has publicly declared himself “very excited” in biotechnology as an area to invest in, and has done so at least since the early 1990s, beginning with the recruitment of Leroy Hood, developer of automatic gene sequencing machines, from Caltech to the University of Washington, Seattle, in 1991 with a gift of $12 million to the University to create a new department in its medical school. This was followed by a combination of not-for-profit programmes and for profit investments in biotechnology.

Not-for-profit projects include the Bill and Melinda Gates Children’s Vaccine Program focusing on vaccines that protect children against respiratory, diarrhoea and liver disease, the Program for Appropriate Technology in Health (PATH), an institution dedicated to improving the health of women and children throughout the world, with 19 offices in 14 countries, and designated as a Collaborating Centre for the World Health Organisation in three areas: research in human reproduction, AIDS, and hepatitis B vaccination, and GAVI, the Global Alliance for Vaccines and Immunisation, established in 2000 with an initial grant of £750 million by the Gates Foundation, and a further $750 million in 2005.

For profit investments made by Bill Gates include $50 million in Corixa Corporation in 1995, GlaxoSmithKline acquired the company in 2005, and Gates received a payout of $300 million. Darwin Molecular Corporation was established by Gates and others in 1992, and acquired by Chiroscience R&D/Celltech in 1996. ICOS Corporation was founded in 1990 with Gates as one of the largest shareholders. Rosetta Inpharmatics, inc., established in 1996 by Gates and others, and was acquired by Merck in 2004 for $540 million.

GlaxoSmithKline and Merck are major vaccine developers, dovetailing nicely with Gates’ not-for-profit programmes promoting vaccines.

According to the African Centre for Biosafety, the Gates Foundation is currently supporting at least eight genetic engineering projects relevant to Africa totalling US$75 million, involving academics or companies in USA, UK, Germany or Australia, and only one of which has explicitly named collaborators in African countries. The funding is equally split between four projects aimed at genetic engineering insect vectors that transmit malaria, Trypanosomiasis and Dengue, and four aimed at producing “nutritionally enhanced” crop plants using a combination of selective breeding and genetic modification.

ISIS has warned of the dangers of transgenic mosquitoes and other insects since 2001 (Two Takes on Malaria, ISIS News 11/12; Stop Release of GM Insects! ISIS News, 9/10; Terminator insects unleash genome invaders with wings, ISIS Report), pointing out that simple cost-effective measures against malaria such as insecticide-treated bed nets have been neglected. Professor Chris Curtis from the London School of Hygiene and Tropical Medicine in the UK has expressed similar views regarding the recent announcement of the creation of a transgenic mosquito that resist infection by the malaria parasite.

We have also warned against GM crops for food and feed in general (GM Food Nightmare Unfolding in the Regulatory Sham, ISIS scientific publication), and those enhanced in single nutrients are additionally hazardous because many of the nutrients are known to be toxic in overdose (GM Crops and Microbes for Health or Public Health Hazards? SiS 32).

Stealing the future, preventing the very paradigm change needed for sustainability and an end to poverty and inequality

Corporate charities have been taking over the role of publicly funded development programmes. Development aid is shrinking, while private fortunes, and the need to give money away through corporate philanthropy, are booming. AGRA is the latest in a series of large private charities donating to Africa. George Soros pledged US$50 million for the Millennium Villages Project to help rural villages in Africa out of poverty. Bill Clinton’s foundation had pledged fertilizers and irrigation systems support to Rwandan farmers. And before that, another US ex-president, Jimmy Carter, teamed up with a Japanese tycoon to launch the “Sasakawa 2000” project to bring seeds and fertilizers to Africa. Charity foundations of companies such as Dupont, Syngenta and Monsanto have been penetrating the international agriculture research system for a while, bringing the threat of GM crops, despite Kofi Annan’s disavowal on behalf of AGRA.

The Gates Foundation is currently worth over US$66 billion, more than the gross domestic products of 70 percent of the world’s nations. It gives away some 5 percent of its worth every year to avoid paying most taxes, leaving the other 95 percent for investments. Thus, it has an influence on global policies far exceeding any national or international organisation.

Corporate charities such as the Gates Foundation will ultimately determine whether we survive global warming as both energy and food production are failing to keep up with consumption. We are running out of time and resources, including intellectual and human capital, now squandered by the misguided policies of the corporate charities.

Through a combination of aggressive investments in the most socially exploitative and environmentally destructive companies to reap the greatest profits, and a largesse in grant-giving that in reality serves to promote the same private enterprises, the Gates Foundation and other major philanthropic corporations are stealing our very future. They are locking the world in the destructive, unsustainable status quo that has brought our planet to the brink of extinction and, worst of all, preventing the necessary paradigm change that could save us, when we have all the means at our disposal (Which Energy?, ISIS publication; How to Beat Climate Change & Be Food and Energy Rich - Dream Farm 2, SiS 35).

Note: An illustrated and fully referenced version of this article is posted on ISIS members’ website. Details here.

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  • Posted on Aug. 20, 2007. Listed in:

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