Deep dive: What do the Gates Foundation governance changes mean?

Bylaws for the new board of trustees slated to oversee the Bill & Melinda Gates Foundation suggest that co-chairs Bill Gates and Melinda French Gates will retain ultimate power over decision-making at the organization. Still, a separate agreement negotiated as part of the pair’s divorce means French Gates could leave the foundation after a two-year trial period, potentially upending the board’s structure. Devex spoke with several philanthropy experts about what the introduction of an independent board could mean for the Gates Foundation and how members might engage with its co-founders, who are no longer legally bound to each other by marriage but remain connected — and committed, they say — to the organization’s mission. The Gates Foundation announced Wednesday that it would bring on four new board members: Zimbabwean billionaire and philanthropist Strive Masiyiwa, London School of Economics Director Minouche Shafik, philanthropic advisory firm The Bridgespan Group’s co-founder and co-chair Thomas J. Tierney, and Gates Foundation CEO Mark Suzman. “The foundation entering its third decade is the right time for us to bring a diverse set of trustees to the table to help us with our thinking and shaping our strategies and programs over time,” French Gates said in a video announcing the governance changes. Gates said in the video that within this “small group,” trustees are willing to be “very self-critical and look at the different opportunities that we have.” The new trustees, all of whom have previously worked with Gates or French Gates in some capacity in recent years, could wield immense power as leaders of one of the world’s largest private foundations. Launched in 2000, the Gates Foundation directs more than $5 billion in grantee support annually and has nearly 1,800 employees in offices around the world. It is hugely influential in areas such as global health, education, and global development. Among the new trustees, Masiyiwa has been flagged by some as the most likely to — in the words of the foundation’s video announcement — “push back.” Specifically, he could challenge the foundation’s approach to equity in vaccine distribution. As U.S. philanthropy historian and Gates Foundation grantee Benjamin Soskis noted in an op-ed for the Chronicle of Philanthropy, Bill Gates initially opposed waiving intellectual property rights for COVID-19 vaccines during the pandemic. “Gates became the face of the failure of a ‘charitable model,’ relying on voluntary contributions from Western governments, corporations, and philanthropies, to ensure a vaccine’s equitable distribution,” Soskis wrote. “It’s weird, in a way, to speculate at this moment because we don’t know what the future holds for the foundation.” --— Stephanie Ellis-Smith, co-founder, Giving Gap Masiyiwa, on the other hand, has been heavily involved in COVID-19 vaccine negotiations on behalf of the African Union as head of the African Vaccine Acquisition Task Team. That has included negotiations with Moderna and South Africa’s Aspen Pharmacare. He also has been a strong advocate for increasing the supply of doses to the African continent, critiquing the global systems that created widespread vaccine inequity over the course of 2021. But how the new board members’ power will measure up against Gates and French Gates is not yet clear. “I want to be unequivocal. We remain a family foundation,” Suzman told The New York Times in an interview about the addition of new trustees. Gates’ and French Gates’ relatives are barred from serving on the board, as are foundation employees, with the exception of its CEO. However, a carve-out would allow “a child of the marriage of Bill Gates and Melinda French Gates” to join. Also, according to language in the governing principles, the co-chairs must be present at all meetings and part of the majority for any decision made by the board. The bylaws further indicate that Gates and French Gates, who requested the changes to the foundation’s governance, have the authority to alter the board at will. “These Governing Principles may be altered, amended, or repealed and new Governing Principles may be adopted by the Trustees,” the document reads. Gates Foundation spokesperson Andrew Estrada clarified to Devex that “Trustees” in this context refers to Gates and French Gates. Allowing the co-chairs of a private foundation to change governance policies is fairly typical, according to Cynthia Rowland, an attorney and partner at the firm Farella Braun + Martel who advises donors and nonprofits. “It would also be typical for the founders to be able to appoint and remove other trustees at will, but there always has to be at least one trustee/director in office,” she wrote in an email, adding that some organizations have a higher minimum. Another section of the governing principles that precludes the board from making any decisions related to the foundation’s investment securities also makes sense, given that the endowment was placed in an organization that is separate from the foundation and transfers money over for distribution, according to Thad Calabrese, an associate professor of financial management at New York University’s Robert F. Wagner Graduate School of Public Service. An arrangement in which investment decisions are made by outside investment managers rather than the board isn’t “totally abnormal,” he said. Of course, a lingering question is whether Gates and French Gates will both remain as co-chairs and trustees. The pair have agreed that French Gates could resign within two years of their divorce if either found that they could not amicably work together. If she left, French Gates would receive “personal resources from Bill for her philanthropic work” that would be separate from the foundation’s endowment, Suzman wrote in a note to employees last year. With French Gates’ future at the foundation still in question, the governance changes are a “trial run, as I read it,” said Stephanie Ellis-Smith, a philanthropy adviser and co-founder of Giving Gap, which connects donors to Black-led nonprofits. “It’s weird, in a way, to speculate at this moment because we don’t know what the future holds for the foundation, as per … [its] writings,” she said. The foundation is clearly still working through those uncertainties. Just hours after circulating a press release about the new board members, the organization raised eyebrows when it sent out an updated version. The original press release stated: “With a more than $50 billion endowment; Gates and French Gates’ additional commitment of $15 billion last year; the pledges by Gates, French Gates, and [former trustee Warren] Buffett to devote the bulk of their remaining resources to the foundation; and the requirement to spend down the endowment after the co-founders’ deaths, the foundation is uniquely positioned to continue its work of fighting poverty, disease, and inequity in the United States and around the world, while maintaining a major role in the field of philanthropy for decades to come.” However, the updated version replaced “the pledges by Gates, French Gates, and Buffett” with “the expectation of future pledges.” Buffett said in 2006 that he would give the bulk of his wealth to the Gates Foundation and four other philanthropies, and Bill Gates is still expected to provide the foundation with a majority of his fortune as well. But if French Gates leaves, she might choose to use another vehicle — such as her Pivotal Ventures — for her philanthropic giving. French Gates is worth over $11 billion, while Gates’ net worth is $127 billion and Buffett’s is $111 billion, according to Bloomberg. But again, Rowland said she didn’t find the language in the updated press release atypical. “I always encourage my high-net worth clients to make pledges non-binding unless there is a good reason to do otherwise,” she wrote. Sara Jerving contributed to this article.