Why Isn't Bill Gates Giving Away More Money, Faster?

I know, this question seems totally obnoxious given that the Bill and Melinda Gates Foundation gave away $3.4 billion in 2012. Nobody has ever given at this level, period. But hear me out on why Bill and Melinda Gates are moving far more slowly than conventional wisdom suggests. 

Despite all the money that Bill Gates has given away, he and Melinda currently sit on a fortune estimated at $77 billion. In other words, the wealth Gates hasn't yet put into the foundation is roughly twice as large as the current assets of the foundation (which stood at $40 billion at the end of 2012). He and Melinda have the capacity to give at a much, much higher capacity. 

So why aren't they doing that?

Why is so much Gates money sitting on the sidelines—especially given Gates's global campaign to get billionaires and governments alike to give more, and his frequent observation that spending additional money on things like vaccinations translates, almost mathematically, into saving more lives? If nearly every dollar spent really has that kind of certain impact, why not step things up—and now?

The Gateses have also frequently touted the return on investment of preventive philanthropy: Spending today to stop an infection or prevent an unwanted pregnancy or help a kid graduate from high school means the problems of tomorrow will be smaller and less costly to deal with. AIDS, of course, is a prime example: Get more African truck drivers wearing condoms now, say, and that could head off untold spending on drugs and medical treatment later, not to mention human suffering and lost productivity. 

Beyond the case for frontloaded philanthropy, here's a more practical question: Just how exactly do Bill and Melinda Gates plan to deploy that extra $77 billion if they aren't already increasing their annual giving now? Just do the math here: If they started giving away another $3 billion annually, starting this year, they'd go through only half that money by the mid-2020s. 

Gates has not said much about the pace of his giving (at least that I've seen), but it's interesting to speculate on what he and Melinda are thinking. So, herewith, a few possible reasons for the go-slow approach. 

They Want More Evidence and Better Answers

Gates is famously obsessed with effective grantmaking and evaluating the impact of the foundation's work. And while spending on certain global health challenges may be pretty straightforward, other areas of grantmaking, like development and education, are far more murky, and the Gates Foundation has made some big and costly missteps over the years. The Gateses may simply feel like they don't yet have the answers they need or want before ramping up further. But a few years from now, those answers may be clear, especially given the foundation's huge investments in research and evaluation. 

They Are Waiting for Bigger, Better Pipelines

Giving away vast amounts of money is way harder than it looks, and there's a long history of grantmakers dumping too much money into a space too quickly, before the right infrastructure was in place to spend big funds effectively. The Gateses may feel that three or four billion is about as much as they can move out the door right now without overloading their own institutional capacity and that of the organizations they work with. 

They're Swamped With Buffett's Money

Since Warren Buffett made his huge pledge of Berkshire Hathaway stock to the Gates Foundation in 2006, the value of that stock has doubled. Just last year, Buffett gave the Gates Foundation $2 billion and more will be coming. So we need to remember that the Gateses aren't just dealing with their own bloated fortune, they're also trying to absorb much of America's second largest fortune. 

They Want That Big Fortune to Get Bigger

This is my favorite theory: Bill Gates wants to keep growing his fortune and have an even bigger pile to pump into philanthropy in a decade or two. Beyond his continued large holdings of Microsoft stock (which might one day recover some of its past valuation), Gates has made a wide variety of investments. It's perfectly plausible that that $77 billion fortune could grow even larger—a lot larger. Could we imagine Bill and Melinda Gates sitting on $150 billion a decade or two from now? Yes, we could. 

Regardless, here's the bottom line: As much as the Gates Foundation is now giving, it's actually a near certainty that we ain't seen nothing yet.