Bill Gates can remove Melinda French Gates from foundation in two years
Bill Gates and Melinda French Gates have sometimes referred to the foundation they created together as their “fourth child”. If, over the next two years, they fail to find a way to work together following their planned divorce, Mr Gates will be granted full custody.
It was one of the most important lessons in a series of announcements about the future of the world’s largest charitable foundation made on Wednesday by its CEO, Mark Suzman, eclipsing a $ 15 billion injection of resources. which will be added to the 50 billion dollars previously accumulated in its endowment over two decades.
“They agreed that if after two years either of them decides they cannot continue working together, Melinda will step down as co-chair and administrator,” Suzman said in a message to Bill employees Wednesday. and Melinda Gates. Foundation. If that happened, he added, Ms. French Gates would “receive personal resources from Bill for her philanthropic work” separate from the foundation’s endowment.
The money at stake underscores the bizarre mix of public importance – in global health, poverty reduction and gender equality, among other important areas – and private business that accompanies any initiative taken by the former. philanthropic couple, even after the announcement of their separation. The foundation plans to add directors outside of their inner circle, a step towards better governance that philanthropy experts have been advocating for years.
When they announced their divorce in May, Mr Gates and Ms French Gates stressed the importance of the work being done by the foundation they had built and said they “continue to share a belief in this mission.” In Wednesday’s announcement, everyone echoed those sentiments.
“These new resources and the evolution of the foundation’s governance will support this ambitious mission and vital work for years to come,” Gates said in a statement.
Ms. French Gates stressed the importance of expanding the board. “These governance changes bring more diverse perspectives and experiences to the foundation’s leadership,” she said in a statement. “I deeply believe in the foundation’s mission and remain fully engaged as co-chair in its work. “
Immediately after the divorce was announced, it was not clear how they would share control of the institution. Wednesday’s announcement indicated that if they can’t resolve their differences, Microsoft co-founder Mr. Gates will remain in control, as he is essentially buying his ex-wife from the foundation.
Mr. Suzman said he did not know how much Ms. French Gates would get if that was the case. But any payment would most likely be significant.
Public records show billions of dollars in shares have already been transferred to Ms French Gates’ name since the divorce was announced. It pursues its own priorities through a separate organization known as Pivotal Ventures. Mr. Gates also has his own group, Gates Ventures.
Less than a year ago, the Gates Foundation was run by Mr. Gates, Ms. French Gates, his father and one of his closest friends, billionaire investor Warren E. Buffett. It was a remarkable concentration of power for one of the most influential institutions in the world, a private $ 50 billion foundation that works around the world.
The restructuring announced Wednesday could begin the process of making the Gates Foundation more responsive to those its mission is to help and loosen the grip on the reins its founders have held for more than two decades.
“We try to do this in a very careful and deliberate way, thinking long term,” Mr. Suzman said in an interview.
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In a broader sense, the planned changes to the Gates Foundation reflect the tensions within philanthropy as a whole – between the wishes of the rich and powerful donors who provide millions if not billions of dollars and the nonprofits using these funds to feed, shelter and care for those in need.
“Governance issues predate separation and divorce, just as these issues affect all family foundations,” said Rob Reich, co-director of the Center on Philanthropy and Civil Society at Stanford.
Two former senior officials of the Gates Foundation asked for extended advice in an article a few weeks after the divorce announcement, including “a president who is not the CEO of the foundation, the founder or a family member of a founder.”
“Since founders receive a substantial tax benefit for their donations, assets overseen by the board should be considered public property, with the board held accountable to a standard of fiduciary care,” wrote Alex Friedman. , the former CFO. , and Julie Sunderland, former director of the foundation’s Strategic Investment Fund.
The Gates Foundation is trying to fight Covid-19, eradicate polio and reshape the fight for gender equality, even as its two co-chairs extricate themselves from a 27-year marriage. The foundation has more than 1,700 employees and provides grants in countries around the world. Since 2000, the foundation has awarded grants totaling over $ 55 billion, much of it from Mr Gates and Ms French Gates, but tens of billions have also come from Mr Buffett, managing director of Berkshire Hathaway.
Yet, significantly, the future of such an influential institution, which touches the lives of millions of people through its grant recipients, is decided in a separation agreement between two billionaires.
Mr Buffett’s announcement last month that he was stepping down as the foundation’s third trustee made it clear that the divorce had triggered significant changes. Mr Suzman promised at the time that governance changes would be announced this month, with many observers predicting that a new roster of independent directors would be revealed.
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Details of what that might look like remained few in number on Wednesday, with neither the names of the board nominees nor even the ultimate number of new directors being released. Mr. Gates and Ms. French Gates will approve changes to the foundation’s governance structures by year-end and new directors will be announced in January, the statement said.
At the center of the impending changes is Mr Suzman, a 14-year veteran of the Gates Foundation, who was appointed chief executive just as the spread of Covid-19 in the United States was becoming apparent. Born in South Africa, Mr. Suzman, trained at Harvard and Oxford, was a Financial Times correspondent in London, South Africa and Washington before going to work for the United Nations. He joined the foundation in 2007 to work on global development policy before claiming the top post last year.
Mr Suzman said in an interview that he heard that Mr Gates and Ms French Gates would only divorce about 24 hours before the news broke. He said they started talking about possible governance changes “almost immediately” after that.
He said he was in regular contact with the two. “I have three-way conversations with them,” Mr. Suzman said. “We have regular three-way email exchanges and other discussions. “
He noted that the practical leadership of Mr. Gates and Ms. French Gates meant that the changes would take some time to be implemented.
“The degree and depth of engagement of our Co-Chairs and Trustees goes far beyond what a traditional board does and how it does it,” he said in the interview. “So we’ll need some time to think about how we balance this with the people we hire. “
Mr. Suzman will work with Connie Collingsworth, director of operations and legal director of the foundation, to manage the process. Final decisions regarding new directors and changes to the foundation’s governance documents will be made by Mr. Gates and Ms. French Gates. It’s a reminder that, at least for now, power remains concentrated in the former couple.