In 2006, Warren Buffett pledged and began donating billions of dollars of his Berkshire Hathaway stock to the Bill and Melinda Gates Foundation.
On the 10th anniversary of Buffett’s initial gift, the Gates Foundation 2017 Annual Report describes the incredible accomplishments their investments are making.
Gates stresses his optimism and the progress that the world is making in the area of global health and extreme poverty. He concludes that “we’re confident of one thing: The future will surprise the pessimists.”
I strongly recommend reading the Gates Foundation Annual Letter. The 5 minutes you spend will be eye opening and informative. It clearly explains and illustrates the progress, discoveries and challenges which the Foundation is working on.
Gates states that “extreme poverty has been cut in half over the last 25 years. That’s a big accomplishment that ought to make everyone more optimistic. But almost no one knows about it. In a recent survey, just 1 percent knew we had cut poverty in half, and 99 percent underestimated the progress.” In the survey, 70% of the respondents thought poverty had increased by 25% or more since 1990.
The Gates Foundation focuses on improving health and alleviating extreme poverty in the developing world. In the US, the Foundation supports programs related to education and low income families. The Foundation makes grants in all 50 states and supports work in more than 100 countries.
The Gates Foundation Report is relevant to our firm’s long term investment approach and philosophy because of our message of rational optimism as well as the importance of the global economy. As the world becomes healthier, life expectancy increases and poverty decreases, the middle class and economies throughout the world will grow.
The Foundation measures their success in many ways, but they watch certain numbers to guide their work and measure their progress. They don’t take credit for all of these trends, as the report begins by acknowledging that the “vast majority of global health and development funding” comes from contributions by donor nations and other philanthropists.
In the introduction to the Annual Letter, Bill and Melinda Gates stress the importance of foreign aid and the priority to lift up the poorest. This is “…one of the greatest…values (of our nations) is the belief that the best investment any of us can ever make is in the lives of others…the returns are tremendous.”
122 million: per UN figures, 122 million children’s lives have been saved since 1990, as tracked by the reduction of the number of childhood deaths under the age of five. The number of childhood deaths per year has been cut in half since 1990. More children survived in 2015 than in 2014, more in 2014 than in 2013, etc.
The Gates’ started the Foundation to save children’s lives. They learned other lessons as they addressed this goal. “If parents believe their children will survive-and if they have the power to time and space their pregnancies-they choose to have fewer children.” They learned the link between healthier children, better nourishment and increased mental capacities, which leads to parents having more time and money to spend on health and education.
This begins the process of how families and countries get out of poverty. Thus, as Melinda says, “reducing childhood mortality is the heart of the work for us. Virtually all advances in society – nutrition, education, access to contraceptives, gender equality, economic growth – show up as gains in the childhood mortality chart, and every gain in this chart shows up in gains for society.”
86%: Vaccine coverage is the highest it has ever been, 86% for the basic childhood vaccine package. This is one of the biggest reasons for the decrease in childhood death. And the gap between richest and poorest countries is the lowest it’s ever been.
350,000 to 37: In 1988, the global campaign to end polio was launched. At that time, in 1988, 350,000 new cases of polio were reported annually. The last cases in Europe and India were reported in 1998 and 2014, respectively. Worldwide, in 2016 only 37 new polio cases were reported in 3 countries, which are each affected by war and conflicts. These conflicts are inhibiting the distribution of the polio vaccine. The vaccine is close to eliminating polio. This should spur momentum for eradication of other diseases in the future.
However, “nutrition is the biggest missed opportunity in global health.” Bill says “malnutrition destroys the most human potential on the planet.”
The Gates Foundation has two important assets: optimism and huge amounts of money to address these challenges. As Melinda states, “Optimism is a huge asset. We can always use more of it. But optimism isn’t a belief that things will automatically get better; it’s a conviction that we can make things better.”
Massive assets: Huge resources, along with passion and intensity, are reasons for continued optimism that progress will be made in the Gates Foundation’s areas of focus.
* In 2015 and 2014, the Foundation spent $4.2 billion and $3.9 billion, respectively, on direct grantee support.
* Warren Buffett is donating over $2 billion per year to the Gates Foundation, which is likely to continue at even higher levels as Berkshire Hathaway stock has increased. His annual gifts to the Gates Foundation have to be spent.
* Buffett has donated $17.2 billion between 2006 and July, 2015.
* As of 12/31/15, the Foundation’s assets were almost $40 billion.
Bill cites Steven Pinker’s book The Better Angels of Our Nature. It shows that “violence has dropped dramatically over time…global poverty is going down, childhood deaths are dropping, literacy is rising, the status of women and minorities around the world is improving.” Most people do not realize these things.
Bill and Melinda end the report optimistically, yet recognizing the challenges they are trying to solve. “As hard as polio is, malaria is harder. As hard as reproductive health is, nutrition is harder than that. As hard as it is to save children under five, saving newborns is the hardest test of all.”
But remember their message: “The future will surprise the pessimists.”
We agree with them.
If you would like to assist in furthering the Gates’ and Buffett’s efforts, they recommend making a donation to UNICEF, “as an organization that is successful at serving families and children worldwide.”
Sources: Gates Foundation 2017 Annual letter and other information from the Gates Foundation website, www.gatesfoundation.org