In 1998, Bill Gates was facing the breakup of the empire he had spent his entire adult life building. The U.S. Department of Justice was suing Microsoft for antitrust violations and there was a real chance that the company would be forced to split into pieces. An unsympathetic media was piling on and portraying Gates as the archetypal villainous tech mogul. It was during this difficult period that Gates embraced philanthropic giving for the first time, making a $100 million donation to pay for vaccines for children.
This was not the first time a wealthy American accused of being a monopolist had sought to rehabilitate his public image through philanthropy. From Stanford University to Carnegie Hall, the names of the Gilded Age robber barons live on in the institutions they supported.
Before the end of Microsoft’s 18-month trial, Gates would contribute $20.3 billion to his foundation. It was the most expensive charm offensive in U.S. history. It was also the beginning of a strategy that would result in the Bill & Melinda Gates Foundation becoming one of the most influential non-governmental organizations in the world and serving as the latest paragon of an important shift in the U.S.’s political economy.
The Philanthropic Influence Machine
Gates could look back to the example of the twentieth century’s great foundations. Most notable were the so-called Big Three: the Carnegie, Ford, and Rockefeller foundations. Their respective founders had created them to build social prestige and fend off a backlash in public opinion which put their wealth and businesses at risk.
Carnegie, Ford, and Rockefeller were not ideological innovators. They broadly shared the reigning views of their generation of American elites: elitism, belief in Anglo-Saxon superiority, optimism about social engineering, and belief in the U.S.’s destiny as the world’s pre-eminent power. By putting their fortunes to the service of this consensus, they were able to make a deal: they would be rehabilitated and even elevated as some of the most prestigious benefactors of society. In exchange, they would provide a pot of money and build organizations that would carry out the social programs of the elite consensus without hindrance by the gridlocked checks and balances of formal government. In doing so, they created the new archetype of the public-spirited philanthropist and cast themselves into this prestigious role.
The interlocking group of para-state foundations, media organizations, universities, and think tanks that they funded served as valuable institutional containers for elite influence networks. Their networks employed the credentialed experts that produced the ideology, institutions, and policies that created a unified American system in the twentieth century. When an idea became embedded within these networks and socialized amongst its members, it came to define political normalcy—the assumptions of the Washington consensus. The Big Three thus became central and influential to the changing structure of institutional power in America. Later institutions like the National Science Foundation, the National Institute of Health, and even the World Health Organization (WHO) were modeled on divisions of the Rockefeller Foundation.
These legacy institutions became blueprints for Gates as well. As early as 1994, Gates was seeking the advice of Vartan Gregorian, president of the Carnegie Corporation of New York. Many early Gates Foundation decisions—including focuses like global health and the U.S. education system, the professional background of its leadership, and its organizational structure—followed the examples set by the Big Three.
Despite years of interest in philanthropy, Gates’s decision to seriously develop his foundation ultimately coincided with an important change to the U.S. tax code: the return of private charitable foundations as a way of getting tax breaks. While foundations are legally required to donate five percent of their assets each year, investment income can result in an ever-increasing pile of wealth. This little-noticed change in tax policy sparked the beginning of a new philanthropic age. Nearly three-quarters of the world’s 260,000 philanthropic foundations were established over the last 25 years, roughly coinciding with the passage of the tax bill. These foundations have wide discretion on how they spend their money.
From 2014 through 2019, the Gates Foundation earned around $28.5 billion in investment income while giving away $23.5 billion in grants over the same time span—a net profit. Despite giving away over $50 billion since his foundation’s inception, Gates’s personal fortune has grown from $39 billion in 1997 to around $107 billion today.
But the Gates Foundation remains in a class of its own in the foundation ecosystem, having greatly exceeded its predecessors in size and importance. Today, the Gates Foundation has more than double the endowment of the Big Three combined. Bill Gates himself has no peer in the world of philanthropic giving. In 2021, the $15 billion Gates donated amounted to 783 percent more than the second-largest donor in the U.S.
However, as much money as Gates has, his wealth still pales in comparison to the U.S. government, which spent $6.27 trillion in 2022. And unlike America’s billionaires, whose wealth is often illiquid and tied to the fluctuations of the stock market, the political elites who control this spending have few constraints. With this fact in mind, a primary emphasis of the Gates Foundation has become to organize and direct the spending of political elites both in the United States and abroad. Instead of merely giving away his own money as philanthropists in the past have done, Gates has uncovered a way to give away other people’s money.
In this way, the Gates Foundation takes on a role to not just contribute in its own right, but to provide a crucial organizing function for a much larger ecosystem of institutions. But whether by Gates’s own lack of interest in more independent causes, or the structural inability of such a foundation to pursue them, the role of the foundation is limited to effectively pursuing, rather than determining consensus priorities.
An example of this organizing approach is Gavi, a non-profit Bill Gates founded in 2000 that provides vaccines to poor countries. The Gates Foundation provided $4 billion in total to Gavi, including $750 million to get the group off the ground. Gates used this funding commitment to attract the involvement of many of the international institutions that were fostered by the Big Three, such as the World Bank and the WHO. With this backing in tow, Gavi was able to secure $16 billion in funding for the group from governments, including $2.2 billion from the U.S. Over the first 13 years of Gavi’s existence, it provided 440 million immunizations to the poor, which the WHO estimates prevented as many as six million deaths. The priority to provide global health and vaccination interventions was already well-established, but the Gates Foundation provided the crucial organization to achieve results.
The Gates Foundation took a similar approach when it helped start the Global Fund to Fight AIDS, Tuberculosis, and Malaria. The Fund raised $49 billion from governments, including $18 billion from the U.S., with the Gates Foundation pitching in less than $3 billion.
Gates can play this role as an organizing force in the global health system partly because he is the second-largest donor to the WHO, providing over 10 percent of the organization’s annual budget. This largesse has provided him with unprecedented influence over the WHO. Gates’s funding is tied to his Foundation’s agenda, allowing it to direct global health priorities. For example, polio eradication is by far the WHO’s best-funded program because Gates’s funding was earmarked for the cause.
By building an effective fundraising and organizing machine that is aligned with broader elite objectives, Gates has also raised his stature in the international community. One anonymous NGO representative stated that Gates “is treated like a head of state, not only at the WHO but also at the G20.” It is a reputation and strategy that reaches the halls of power in the U.S. as well. This position has allowed the Gates Foundation to play a coordinating role in major domestic political reforms, especially in education.
The Gates Foundation has spent $8.6 billion over the past 20 years on education-related initiatives and has found the U.S. education system remarkably pliable to its ideas. While the $721 billion spent annually by the U.S. on K-12 education flows through a decentralized system, the Gates Foundation targets its more modest funding toward specific central goals. Its most prominent achievement in education was its backing of Common Core, a reform to harmonize educational standards across states.
For a cost of around $200 million, the Gates Foundation cultivated support among groups as disparate as public teachers’ unions and the U.S. Chamber of Commerce. The result was a powerful bipartisan coalition of the kind that formal politicians would have had a much more difficult time creating, backed by a sense of “consensus” among experts and prestigious figures like Gates himself. Ultimately, numerous Gates Foundation staffers and associates went on to work in the Obama administration, which also supported the reforms. Less than two years after the Gates Foundation began its campaign, 45 states and the District of Columbia had adopted Common Core.
The Gates Foundation’s success rested on the fact that educational reform had extensive ideological and political support in Washington. What these supporters lacked was an institutional structure with an activist staff dedicated to making a specific reform happen. By having the Gates Foundation fill this role, Gates himself earned prestige and political favor among powerful allies like the Obama White House while being able to determine some of the resulting content.
What this prestige and effective organization cloaked was the actual outcomes of Common Core itself. Implementation varied widely state by state, and the program faced opposition from parents due to its unfamiliar and confusing methods of teaching subjects like math and reading. Five states have since repealed Common Core, and the program’s impact on student results is increasingly seen as a failure.
This shows a key limitation of the foundation model, and of the entire ecosystem of elite consensus and influence networks that the model operates within. It is limited to organizing power on behalf of the relatively misguided consensus priorities formed by a combination of managerial class interests and what sounds good in the press. It does not have the ability to set those priorities according to a coherent overall strategy, nor to discipline its efforts to actually deliver strategically useful results. The strategic executive function that could redefine or go against consensus is entirely missing. This is what makes the power of Gates himself, or of any other oligarch, relatively harmless to the overall system; however, it also locks that system into a pattern of strategic dysfunction.
None of this impacted the prestige and position Gates had earned from his role in making the Common Core reforms happen. President Obama awarded Bill and Melinda Gates the Presidential Medal of Freedom, the highest civilian award in the United States, in 2016. The following year, the Gates Foundation returned the favor by donating $25 million towards the construction of President Obama’s presidential library.
Gates’s foundation has secured him incredible leverage when making deals with power brokers. It acts as a valuable fund and a way to mobilize personnel. But he has also developed a larger network of personal relationships that have given him power and influence far beyond the realm of philanthropy, furthering his position as a fixer, funder, and coordinator in the halls of power. This has allowed him to assist with top-level government decisions and to act as a legitimacy-granting figurehead for major initiatives like the COVID vaccine rollout.
When people think of buying influence, they generally think of wealthy people paying for lobbyists and giving money to politicians. Gates himself has been an avid political donor, giving millions of dollars to Democratic candidates for Congress. In 2019, he launched the Gates Policy Initiative, headed by a former senior Obama White House official.
But Gates’s largest political donations do not go to candidates themselves. For example, the Gates Foundation donated $456 million to Arabella Advisors, founded by Eric Kessler, a former Clinton White House official. Arabella is a “dark money” group—it spends money to influence elections, but the source of its money is not disclosed to the public. The group raised $1.6 billion in 2021 and spends its money on groups aligned with Democratic Party leadership.
The goal of these kinds of donations is not just to influence elections, but also the appointments of cabinet heads and officials—those who ultimately determine policy. The U.S. political system has seen more power delegated to the executive branch each year, with the legislative branch increasingly becoming a junior partner. As a result, executive branch agencies can draft “model” regulations that federal agencies then implement—essentially, writing laws without formal legislation. Gates has placed himself in a valuable position: not only do his donations get people elected, but his foundation can even supply the officials on whom they rely to get policy through. Members of the Gates Foundation have become key members of the Department of Education. The head of the Department of Energy met with Gates within 24 hours of being confirmed by the Senate.
Major legislation decisions are now made behind closed doors by senior leadership, with rank-and-file legislators having limited ability to shape policy or add amendments. Under this system, it takes rare circumstances for legislators to gain real power. One such example is Senator Joe Manchin, the Chair of the Senate Energy Committee, who has been called the “most important swing vote” in the Senate. Manchin comes from a conservative Republican-dominated state and has been a check against the progressive wing of the Democratic Party in the gridlocked Senate. Not coincidentally, at least 50 billionaires have donated money to Joe Manchin over the past five years. He has been receptive to their concerns, including opposing a “billionaires tax” on extreme wealth.
Gates has developed a strong relationship with Manchin, starting at least three years ago when the prospect of the Biden administration taking power created the potential for a bill to subsidize clean energy investments, one of Gates’s long-standing goals. Gates became instrumental in winning the support of Manchin, who was concerned about his constituents losing their jobs in the coal industry. Gates suggested some of these workers could be retrained to build small modular nuclear reactors, such as the ones from TerraPower, a company Gates founded. Ultimately, the Inflation Reduction Act (IRA) was passed successfully at an associated cost of $355 billion, with Gates credited by the Democratic leadership as being instrumental to the effort. And shortly before Christmas, the Gates-backed company Form Energy announced a $760 million factory in Manchin’s home state of West Virginia.
The collaboration shows how the Gates Foundation serves as only part of a wider set of strategies employed by Gates to advance his position. An analysis by The Nation of 19,000 charitable grants made by the Gates Foundation over the past 20 years showed close to $2 billion in donations to private companies, including $250 million to companies in which the Gates Foundation holds stocks or corporate bonds. Many of these recipients were pharmaceutical and medical technology companies involved in global health initiatives, but media organizations were another major category of recipient. The Gates Foundation has given $319 million to media outlets over the past two decades, often paying for journalism related to public health, climate change, and education.
The beneficiaries of the Gates Foundation’s largesse have included some of the largest media organizations in the world, including the New York Times, NPR, The Financial Times, the BBC, and CNN. Gates also maintains a personal involvement in the media landscape. He is a regular at conferences organized by The New York Times, such as its lucrative DealBook conference. Gates has also developed friendships with influential Times names like opinion columnist Nick Kristoff; during Kristoff’s campaign to become governor of Oregon, Melinda Gates served as an influential fundraiser. The Sulzberger family, which publishes the Times, has collaborated on projects with Gates Foundation alumni, such as former CEO Patty Stonesifer.
The relationship between Gates and the Times is another form of gaining leverage. More than most U.S. news institutions, the Times makes top-down editorial decisions about how subjects are covered. For example, it has been claimed that editors at the Times decided that the technology industry could not be covered positively and that a more adversarial tone would be taken in its reporting of the industry. The paper has also become a virtual monopoly with more digital subscribers than the Wall Street Journal, Washington Post, and 250 other Gannett papers combined. Influence with the Times and its editors does not only buy Gates individual stories but an entire narrative about himself, his organization, and his priority causes.
Gates’s success in cultivating a wide array of media relationships also benefits his foundation. The Gates Foundation funds ostensibly independent bi-partisan research to reach its desired conclusions; the media organizations it also funds then cover the results of this research. In essence, the Gates Foundation is paying for the creation of bipartisan consensus around its own ideas. Such media operations furthered goals like the Common Core reforms. More broadly, they have served to shore up Gates’s personal image as a civic-minded philanthropist committed to goals that are universally acclaimed as public goods—an acclamation the Gates Foundation itself secures through its contacts and funding.
When viewing this web of relationships, the overall logic becomes clear: Gates attains prestige and influence in exchange for underwriting the activities of institutional power brokers using an extensive personal network and institutional funding relationships. Common Core and the Inflation Reduction Act were made possible by Gates’s ability to mobilize his foundation and network toward these goals. The trade has proved beneficial: in the roughly 15 years from the start of the Microsoft antitrust trial, Gates went from being perceived as a villain in the tech industry to topping lists of the most admired public figures in the world.
The Self-Replicating Elite
The Gates Foundation’s approach, and the approach of the Big Three, has created a template for others to follow. Billionaires like Mark Zuckerberg and Laurene Powell Jobs, Steve Jobs’s widow, have taken to forming limited liability corporations to give them more flexibility in making political donations and investing in businesses. But more than a template, the Gates Foundation also represents an important tendency in the U.S. governance landscape of decision-making and administrative power. It embodies a move away from the formal government and into an increasingly self-organized ecosystem of foundations, media, and prestige institutions.
These organizations are tightly interconnected, sharing not only donors and goals but even personnel as people move between jobs in the massive nonprofit industry. A simple search of Gates Foundation employees on LinkedIn brings up hundreds of graduates of Stanford, Berkeley, and Ivy League schools; its senior leadership is dominated by graduates of these schools as well. Elite consulting firms like Bain, McKinsey, and Boston Consulting Group appear on the resumes of Gates Foundation employees.
The interconnectedness of these groups, and of the people who run and fund them, undergirds why Gates’s power does not actually translate into him decisively shaping American public ideology. The Gates Foundation effectively mirrors the beliefs and goals of the U.S. professional class overall—the same people who staff and run it. Gates’s prestige, and that of his organization, is based on his ability to deliver on particular goals within the overall system of power and ideology. In the 2000s, it focused on global development; today, its website displays a commitment to diversity, equity, and inclusion.
This process is not merely a passive one. An array of philanthropic advisors and consultants, stemming from the same classes of people, exists to direct where and how a donor commits their money. One member of the Gates Foundation’s board of directors is Tom Tierney, Bain’s former managing partner, as well as the founder of The Bridgespan Group. Spun out of Bain, The New York Times dubbed Bridgespan “The Consulting Firm that Billionaires Turn to When They Give Away Money.”
Bridgespan is a pervasive presence among the largest nonprofit groups in the U.S. and is part of what some call the “consult-ification” of philanthropy. By all accounts, many of the largest donors have little idea what they are funding outside of general topics and rely on staffers and consultants to execute projects because they do not have the time or specialized knowledge required. This directly impacts what projects are even possible under the aegis of philanthropy. Only those projects that fit within the confines of what consulting firms view as “best practices” are approved. Newer philanthropic initiatives, like Eric Schmidt’s P150, explicitly target philanthropic advisors rather than donors, since they are the ones who decide the funding targets. When the actual donor does not make the decisions, it is easier to just work around them.
When funding targets are decided by advisors, it becomes even less likely that philanthropy reflects unique or contrarian ideas about the world or what problems are most important. Instead, they reflect the established ideological consensus. That consensus is itself not formed by any careful strategic research, but by a mess of class incentives, activism, political propaganda, and the news cycle. But from the Big Three to the Gates Foundation, the goal of philanthropy has always been prestige within the terms of this consensus, not acting independently from it. Any future strategic function would have to repurpose this ecosystem from the governance role it has grown into, not rely on the prior intent of its participants.
This is also why initiatives like Gates’s Giving Pledge have been successful: if one is giving money for prestige purposes, it is always better to associate with big, favored names on socially prominent causes rather than go at it alone on underrated ones. It is not so much that members of these networks are told what to think—it’s just that they are there primarily for the prestige and fashionable causes, and they would never have joined or thrived in them if their priority was independent strategic thought. The Gates Foundation has built its success on embracing this structural reality because it aligns with the overall goals that Gates himself has worked toward for his whole life.
A person’s fundamental dreams and priorities tend to be relatively fixed and most purely revealed when they are young. When Elon Musk was a teenager, he built model rockets, programmed video games, and devoured science fiction books. When Steve Jobs was a young man, he immersed himself in hobby electronics, dropped out of college to work as a videogame designer at Atari, and went on a pilgrimage to India to explore Buddhism.
Microsoft co-founder Paul Allen gave a telling anecdote about the young Gates: when he was only 13 years old, he talked about wanting to run a Fortune 500 company. By the time Gates was 17, he had started his first company. Gates has always been interested in the prestige of power and in outsized success. He would achieve both through Microsoft and the Gates Foundation. But neither was built on his original ideas or ideology. Instead, managerial and tactical brilliance became the key to his success. Bill Gates may not have invented the system of foundations, but he has mastered it better than anyone else.