Among Foundations, Who's the Biggest Impact Investor?

Figuring out which foundations engage in the most impact investing is not so easy. While some reports, like a 2015 study by the Center for Effective Philanthropy, have gauged how widespread this practice has become in foundations, actual dollar amounts are still hard to come by—unlike annual grantmaking tallies, which are readily available. That's too bad, since it makes it hard to compare institutions on impact investing or otherwise track a growing stream of foundation dollars.

The paucity of data is also problematic for another reason. As we and others have said before, the rise of impact investing is yet one more trend that is making philanthropy less transparent. The growing popularity of LLCs among some mega-funders, like Mark Zuckerberg and Priscilla Chan, underscores this point. LLCs are favored because it's easier to mix traditional grantmaking with impact investing, but these vehicles are also exempt from the public reporting requirements of private foundations. 

All this is context for answering the question posed in the title of this post. While there is no handy database to tap for a list of top impact investors by dollar amounts, the Bill and Melinda Gates Foundation is clearly the biggest impact investor, and by a significant margin. 

We offer that answer not because we went to the foundation's website and tallied up the dollar amounts of all its impact investments. We wouldn't be able to do that, since such amounts aren't listed, even though Gates is otherwise quite transparent about its impact investing, listing all investments it's made here

But in a New York Timesarticle last year, Gates staff said that the foundation's impact investments totaled $1.5 billion—more than triple the total in 2009. 

No other big foundation has anything close to that kind of money deployed in impact investments. The only philanthropic player we can think of that might rival Gates in this regard is Laurene Powell Jobs's Emerson Collective. But as a non-transparent LLC, we don't know what it's doing. We wouldn't be surprised to see the Chan Zuckerberg Initiative hitting such big numbers once it's fully up and running. In time, the Omidyar Network could reach this level, too. And if such giant foundations as Ford, Kellogg and Robert Wood Johnson ever go in big with impact investing, watch out. 

Right now, though, Gates is the undisputed leader in impact investing, which makes sense, given the kinds of problems it's working. Tackling infectious diseases lends itself nicely to partnerships between biomedical firms and philanthropy, as do some other Gates priorities, such as agricultural development and financial inclusion.

We'll leave it to others to parse through the wisdom of the actual investments Gates is making and the controversies that have sometimes surrounded them. Our point, here, is that Gates has a lot of financial capital combined with a mission for which impact investments make a lot of sense. In contrast, a place like, say, Ford has plenty of capital, but goals that may be less easily advanced by impact investing.  

So what's the latest with impact investing at Gates? It involves biotherapeutic products.

The Gates Foundation, along with Merck, Lilly Asia Adventures, and ARCH Venture Partners recently put up a total $14 million to Just Biotherapeutics to close on a Series A2 funding round. Just Biotherapeutics describes itself as a company that is “focused on technologies that will accelerate development of biotherapeutics and substantially reduce their manufacturing costs.” As the company's name implies, it's all about expanding access to biotherapeutics to the poorer people of the world. 

While biotherapeutics raise some concerns regarding the “potential consequences of using genetically modified organisms,” their use also offers the potential to save lives by curing diseases or treating diseases that currently have no viable treatments.

Biotherapeutic products have a pretty decent track record of success, at least in wealthier countries. But unsurprisingly, the prohibitive cost of such products means that the world’s poor countries can hardly afford to use them. As we all know, that particular kind of roadblock has obsessed the Gates Foundation since the start. 

Of the Gates Foundation’s 20 or so grantmaking programs, nearly half are directed at curing or treating diseases like polio, malaria, neglected tropical diseases and HIV, just to name a few. Gates has an eye on disease cures and eradication, but it’s always been keen on making treatments accessible and affordable. 

Gates led the financing round for Just Therapeutics by contributing $8 million, while the remaining investors contributed $2 million each. The money will build out new infrastructure and add a “critical pilot plant,” and Good Manufacturing Practice (GMP) capabilities. GMPs refer to the FDA regulations that require manufacturers of pharmaceuticals, medical devices and blood products take a high-quality approach to their practices to ensure the minimization of mistakes and contamination.

Merck, Lilly Asia Adventures, and ARCH Venture Partners are existing investors, previously participating in Just Biotherapeutics Series A round of funding, which resulted in a total $15 million investment led by Merck. While the Gates Foundation did not participate in that initial funding round, it has a previous history with this company.

RelatedMerck Company Foundation: Grants for Global Health

One year after Just Biotherapeutics was established, the Gates Foundation awarded the outfit a nearly $15 million grant to back its work developing new technologies aimed at lowering the costs of monoclonal antibodies (mAbs), which can be used to treat a number of diseases. The overall goal of that initial grant was to make the use of mAbs for infectious diseases more affordable in low income markets.

Just a few short months after that grant, Gates awarded the company another $9.5 million to “develop sequence optimized anti-HIV molecules,” with two goals in mind. The first was to significantly decrease manufacturing costs and the second to improve stability in order for more effective and easier non-cold chain distribution in both low and middle income countries.

Indeed, $32.5 million is no small beans, even if those past grants were spread out over four to five years. On the other hand, this is Gates we're talking about. It recently gave IVCC a $75 million grant over five years to fund development of new products to stop the spread of mosquito-borne parasites. Gates has awarded IVCC close to $135 million in grants since 2010. This year alone, it has awarded over 125 grants for nearly $300 million out of its Global Health program.