The Gates Foundation & Policy Coherence

The ongoing series of reports in the LA Times about whether the investment practices of the Bill & Melinda Gates Foundation conflict with its grantmaking goals rings some familiar bells: It is the private philanthropy version of the "policy coherence" debates that regularly make an appearance at the OECD/DAC, among development advocacy groups and - yes - in our own research and analysis here at the Center for Global Development. CGD's Commitment to Development Index is, at its heart, a means to capture the indisputable fact that the impacts of wealthy countries (and, by extension, wealthy individuals) come not just from development aid and philanthropic good works, but also from their economic policies, with trade and investment being among the most important.

In the public policy sphere, the incoherence - doing lots of good with the one hand, and not so much good with the other - is relatively easily explained by the effects of politics: Many constituencies wield influence and so when their interests do not align, politicians and political institutions often respond with a set of policies that can act at cross purposes. The push for greater public policy coherence is a noble one where progress can be made, but it will always be an uphill battle. In the private domain, however, where only a few individuals are responsible for decisionmaking, the potential for genuine coherence is far greater.

Is it too much to expect that foundations, which exist to promote public well-being, would think as carefully about the impact of their investments as they do about their gifts? In response to the LA Times investigation, the Gates Foundation has issued a public statement on their investment strategy, and it is certainly not alone in separating its philanthropy from the management of its endowment; this is standard practice for many foundations. But as the biggest and richest of the lot, the Gates Foundation is a natural target for special scrutiny. What they decide to do, if anything, will likely have important implications for others.

UPDATE: According to an interview with the Seattle Times, the Gates Foundation is planning to systematically review the social impact of its investments, with the LA Times weighing in on the broader significance of this decision. The Gates Foundation subsequently revised its original public statement (linked to above) to reflect these plans.

Full disclosure: The Center for Global Development receives financial support from the Bill & Melinda Gates Foundation, as well as other foundations, governments, corporations and individuals.