Invoice Gates Can Take away Melinda French Gates From Basis in Two Years

0
95

Bill Gates and Melinda French Gates have at times referred to the jointly founded foundation as their “fourth child”. If they can’t find a way to work together in the next two years after their planned divorce, Mr. Gates will have full custody.

This was one of the key takeaways from a series of announcements about the future of the world’s largest nonprofit foundation made on Wednesday by its chairman, Mark Suzman, that overshadowed an injection of an additional $ 15 billion in resources to top the $ 50 – It adds billions of dollars previously amassed in his foundation over two decades.

“They agreed that Melinda would step down as co-chair and trustee if one of them decides after two years that they can no longer work together,” Suzman said in a statement to the foundation’s staff on Wednesday. If so, he added, Ms. French Gates would receive “Bill personal resources for her philanthropic work” independently of the Foundation.

The money at stake underscores the strange mix of public importance – global health, poverty alleviation, and gender equality, among others – and private affairs that go along with every step of the first philanthropic couples, even after they announce their split . The foundation plans to add additional trustees outside of its narrow circle, a move toward better governance that philanthropy experts have been pushing for years.

When they announced their divorce in May, Mr. Gates and Ms. French Gates emphasized the importance of the work the Foundation had built together and said they “continue to share a belief in this mission.” In Wednesday’s announcement, everyone repeated these feelings. “These new resources and the advancement of the Foundation’s leadership will support this ambitious mission and important work in the years to come,” Gates said in a statement.

Ms. French Gates emphasized the importance of expanding the board. “These changes in corporate governance bring more diverse perspectives and experiences into running the foundation,” Ms. French Gates said in a statement. “I firmly believe in the foundation’s mission and, as Co-Chair, I remain fully committed to its work.”

Immediately after the divorce was announced, it was unclear how they would share control of the institution. Wednesday’s announcement suggested that Microsoft co-founder Mr. Gates will stay in control if they can’t settle their differences as he’s essentially buying his ex-wife out of the foundation.

Mr. Suzman said he didn’t know how much she would get when the time came. But any payoff would likely be substantial.

Public records indicate that billions of dollars worth of shares have been transferred to Ms. French Gates’ name since the divorce. It has its own priorities through a separate organization called Pivotal Ventures. Mr. Gates also has his own group, Gates Ventures.

Less than a year ago, the Gates Foundation was headed by Mr. Gates, Ms. French Gates, his father, and one of his closest friends, billionaire Warren Buffett. It was a remarkable concentration of power for one of the most influential institutions in the world, a $ 50 billion private foundation that operates in every part of the world.

The restructuring announced on Wednesday could begin the process of making the Gates Foundation more responsive to the people whose mission it is to help and loosen the reins that have held its founders in their hands for more than two decades.

“We try to do this in a very careful and conscious way and think long-term,” Suzman said in an interview.

In a broader sense, the planned changes at the Gates Foundation reflect the tensions within philanthropy as a whole – between the desires of the wealthy, powerful donors who donate millions and even billions of dollars and the nonprofits that donate those funds to food, shelter, and the Treat those in need.

Daily business briefing

Updated

July 7, 2021, 10:39 a.m. ET

“Governance issues preceded separation and divorce, just as those issues are an issue with all family foundations,” said Rob Reich, co-director of the Center on Philanthropy and Civil Society at Stanford.

Two former high-ranking officials at the Gates Foundation in an article a few weeks after the divorce announcement called for an expanded board of directors, including “a chairman who is not the CEO, founder or family member of the founder.”

“Given that founders receive a significant tax benefit on their donations, the assets supervised by the board should be considered public property with the board held in trust,” wrote Alex Friedman, former CFO and Julie Sunderland, former director of the Foundation’s Strategic Investment Fund.

The Gates Foundation seeks to fight Covid-19, eradicate polio and reshape the fight for gender equality, even as its two co-chairs break free from a 27-year marriage. The foundation employs more than 1,700 people and awards grants in countries around the world. Since 2000, the foundation has made more than $ 55 billion in grants, much of it from Mr. Gates and Ms. French Gates, but also tens of billions from their close friend Buffett, the chairman of Berkshire Hathaway’s board of directors.

However, the future of such an influential institution, which through its scholarship holders, touches the lives of millions of people, is crucially decided in a separation agreement between two billionaires.

Buffett’s announcement last month that he was stepping down as the foundation’s third trustee made it clear that the divorce had initiated significant changes. Mr Suzman then pledged that governance changes would be announced that month, with many observers expecting a new list of independent trustees to be released.

Details of what that might look like remained few on Wednesday, neither the names of candidates for the board of trustees nor the final number of new trustees were published. Mr. Gates and Ms. French Gates will approve changes to the foundation’s governance structures by the end of the year and the new trustees will be announced in January 2022, according to the statement.

At the center of the changes ahead is Mr. Suzman, a 14-year-old Gates Foundation veteran who was named CEO as the spread of Covid-19 in the United States became apparent. Born in South Africa, Harvard and Oxford trained Mr. Suzman was a Financial Times correspondent in London, South Africa and Washington before joining the United Nations. He joined the Foundation in 2007 to work on global development policy before assuming the top post last year.

Mr Suzman said in an interview that he only heard that Mr Gates and Ms. French Gates were divorcing about 24 hours before the news was published. He said they started talking about possible government changes “almost immediately”. He said he was in regular contact with both of them. “I have three-way conversations with them. We have regular three-way email exchanges and other discussions, ”said Mr. Suzman.

He noted that the hands-on guidance from Mr. Gates and Ms. French Gates means the changes will take some time.

“The level and depth of the commitment of our co-chairs and trustees goes well beyond what a conventional board of directors does and how it does it,” he said in an interview. “So we’ll need some time to think about how we can balance that with the people we’re bringing on board.”

Mr. Suzman will work with Connie Collingsworth, the Foundation’s Chief Operating Officer and Chief Legal Officer, to help run the process. Final decisions on both the new trustees and changes to the Foundation’s governance documents will be made by Mr. Gates and Ms. French Gates. It is a reminder that power will remain focused on the former couple, at least for the time being.