Does Gates Foundation Give Till It Hurts?

Dayo Olopade looks into the Bill and Melinda Gates Foundation's simultaneously accelerated and old-fashioned approach to philanthropic giving in the American Prospect.

There are no stunners in here. During my brief stay at the L.A. Times, the paper devoted vast resources to a Pulitzer fishing trip attempting to find the Gates Foundation's sordid underbelly, and failed. But Olopade makes a fresh point: That the Foundation's biggest weakness may be its traditional, grant-based approach to do-gooderism, which mostly ignores microlending, "social entrepreneurship" and other market-oriented approaches to charity:

The concept is catching on quickly. Echoing Green, a foundation working with social entrepreneurs, reports that over 37 percent of its partners have structured their ventures as "hybrid organizations" operating in both the private and public sector. Just as 1298 saw India's lack of emergency response as a chance to turn a profit, a company called M-Via uses mobile phones to circulate remittances from global migrants to their relatives back home. Plagued by poor lighting and inspired by the Avon model for selling cosmetics, hundreds of East African women now make money selling solar lamps in rural areas. Business schools have begun to offer classes in social entrepreneurship, and even the U.S. government has jumped on the bandwagon, convening a major summit on entrepreneurship and offering cash prizes for projects with social missions. "The mainstream is going to shift profoundly in the next several decades," says John Elkington, an advocate of corporate social responsibility. "Most entrepreneurs will fail, and fail repeatedly—but they'll eventually create change."

Jacqueline Novogratz, CEO of Acumen, agrees that such for-profit ambitions can mean the difference between short-term poverty relief and long-term economic opportunity. "Money really isn't the issue," she says. Rather, "it's finding individuals with the capacity to do the work,"—dynamic local partners who will lift a venture to its feet. The proliferation of charity work in poor nations can actually make that task more difficult. "By the time the NGOs are done with them, there isn't an ounce of entrepreneur left," says one information-technology entrepreneur in Ethiopia.

Bill Gates gave a much-discussed speech at the 2008 World Economic Forum in favor of "creative capitalism," defined as "an approach where governments, businesses, and nonprofits work together to stretch the reach of market forces so that more people can make a profit, or gain recognition, doing work that eases the world's inequities." But in practice, there hasn't been much capitalism at the Gates Foundation. Less than 2 percent of its funding goes to for-profit efforts. "In the case of supporting small to medium-sized businesses and ventures, it has not been Gates that is the market mover," says Kempner, who works with a network of development entrepreneurs at the Aspen Institute.

In 2009 Olopade charitably sat down with three sad middle-aged men for an appearance on the Reason TV talk show.