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Home / Washington Business - July/August 2006 / Up Front: The Gates-Buffett megamerger |
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Up Front: The Gates-Buffett megamerger |
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Written On: July/August 2006 |
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Written By: by Charles Henry Thomas |
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Billionaire Warren Buffett announced in June that he is donating $38 billion to the Bill and Melinda Gates Foundation in what some are calling a "megamerger" between the world’s two wealthiest people.
The Gates Foundation, which is luring Bill Gates away from the company he and Paul Allen founded, now has at least $60 billion to help solve education and world health problems.
Gates and Buffett were inspired by early American philanthropists John D. Rockefeller and Andrew Carnegie who gave away $7.6 billion and $4.1 billion respectively (measured in 2006 dollars) to fund libraries and medical research, train doctors, and help reduce world famine.
In choosing the Gates Foundation, Buffett said he was impressed by the their careful management and efficiency. The Gates Foundation thoroughly researches potential recipients, distributes money strategically, and closely monitors how that money is used. It builds benchmarks and deliverables into each grant, and programs that don’t perform lose their funding. That may sound harsh, but the goal is solving problems, not supporting ineffective bureaucracies.
This business-like approach is rapidly becoming the model for other charitable foundations. In contrast, many government efforts are still hampered by political meddling and bureaucratic bungling.
For example, many United Nations programs are under fire for waste, fraud and abuse. The U.S. Government Accounting Office reported last year that at least $500 million of the United Nations Oil for Food program in Iraq was wasted because of lax oversight and mismanagement. An internal United Nations report issued earlier this year charged that waste and fraud in peacekeeping procurement had cost the world body as much as $300 million over the past five years.
Government agencies take the lead in national disasters, but the private sector plays a major role, as well. U.S. corporations donated $750 million in the wake of the 9/11 attacks, $600 million to aid tsunami victims in South Asia, and $100 million in cash and millions more in goods and services to aid the victims of Hurricane Katrina.
Some critics will wonder whether a massive private foundation can actually do better and make a difference. Gates and Buffett are betting on it.
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