When Bill and Melinda Gates announced their divorce in a tweet on May 3, they said “we will continue to work together at the foundation.” The next day, Gates Foundation CEO Mark Suzman said in an email to staff that both Bill and Melinda remained committed to the work of an institution that has 1,600 staff, a $54 billion endowment, and makes $5 billion in grants annually.
The Gateses direct the foundation along with a third board member, their longtime friend Warren Buffett—who pledged the bulk of his fortune to the foundation in 2006 and has been giving it shares of Berkshire Hathaway ever since. Buffett has now given the foundation tens of billions of dollars, but he’s far wealthier today—with an estimated fortune of $108 billion—than when he made his pledge. Bill Gates has also gotten much richer over time, with a net worth that stands at $125 billion. Both men have pledged to give away nearly all of their money.
Before May 3, my assumption was that the vast majority of the Gates and Buffett fortunes—more than $200 billion combined—would go to the Gates Foundation, which is scheduled to sunset 20 years after both Bill and Melinda have died. I assumed that because Buffett has already committed to this, and the Gateses have never hinted at giving on a large scale outside the foundation. To absorb all the wealth headed its way, I’ve expected that the Gates Foundation would get bigger over time and likely move into new issue areas—like domestic U.S. poverty, which it’s begun to take on in recent years, or maybe climate change, a passion of Bill’s.
Now I’m not so sure any of that is going to happen, especially in the wake of recent damaging revelations about Bill’s behavior. Today, the future of the world’s most important grantmaker is anything but clear, whatever its leaders may be saying. There’s a broad spectrum of possibilities of how things might play out. Let’s consider a few scenarios.
1. Business as usual
Bill and Melinda have devoted more than 20 years to building the Gates Foundation and are both deeply committed to its work. They have plenty of reasons to channel the bulk of their future giving through this institution. While one could easily see Melinda tapping a historic divorce settlement to bankroll her own grantmaking, the sheer scale of the Gateses’ promised philanthropy, along with their focus on complex global issues, requires a level of capacity that would be hard to replicate from scratch outside the Gates Foundation. With his intense focus on the science of infectious disease and agriculture, Bill has a particular incentive to keep his giving within a strong organization that has unique specialized staff and knowledge.
For his part, Warren Buffett has no reason—that we know of—to rethink his pledge to the Gates Foundation or to turn off a spigot of stock distributions that now bankroll a substantial portion of its annual grantmaking.
2. Melinda does her own thing
It’s still too early to say how much of her own wealth Melinda Gates—or will she start to go by Melinda French?—will have when her divorce from Bill is finalized. After some initial stock transfers from her soon-to-be ex, she’s already popped up on the Forbes billionaire list with a net worth of $3.1 billion. But after the Bezos divorce, it’s not hard to imagine that Melinda walks away with a substantial chunk of the Gates fortune, say a quarter or a third, becoming one of the world’s richest people. And it’s also possible that she decides to move all her future giving through her own philanthropic entity. Finally, after recent unsavory stories about Bill’s dealings with other women, it’s also easy to see how Melinda could decide she doesn’t really want to work closely with him at the foundation after all—leading her to largely check out, even as she stays on the board.
Under this scenario, the Gates Foundation would have greatly diminished resources as Melinda gives away her share of the fortune separately. It could also face governance challenges if Mr. Gates and Ms. French don’t see eye-to-eye on grantmaking priorities and compete to shape the foundation’s agenda. Warren may be able to mediate things, for now, using the power of his deciding third vote on the board, but he’s 90 and won’t be around forever.
3. Bill also goes it alone
If Bill Gates is faced with the prospect of forever sharing power at the foundation in an unhappy arrangement with Melinda, even as she blazes her own separate path as a mega-giver, he could well decide that he also wants to do his future giving through a separate entity. That might not make sense practically, but would be understandable. Why struggle with your ex about how to give away your money when you have the option to have total control? From some news reports, it sounds like Bill didn’t especially like sharing power at the foundation with Melinda in the first place—to the point that he didn’t even let her co-write its annual letter until the last few years.
If both Bill and Melinda decide to largely give away their vast wealth outside the foundation, then its long-term trajectory will look very different than it did a few weeks ago. Instead of serving as a vehicle to dispose of both the Gates and Buffett fortunes, the foundation would effectively lose more than half of its projected future resources. It would still be able to sustain its current scale of grantmaking with its huge endowment and those annual infusions of Berkshire Hathaway stock. But there’d no future increase to that grantmaking.
4. Warren pulls the plug
All the scenarios so far have assumed that Warren Buffett honors the commitment he made to give the bulk of his wealth to the Gates Foundation. Is it possible, though, that this isn’t how things play out? Let’s take a closer look.
In the 2006 letter where Buffett detailed his pledge, he stated that he is “irrevocably committing to make annual gifts of Berkshire Hathaway ‘B shares throughout my lifetime for the benefit of” the Bill and Melinda Gates Foundation, with the main condition being that at least one of the Gateses remain alive and active in its leadership. Buffett also pledged a minority of his shares to the four foundations run by his children. Given this language, which amounts to a legally binding contract, there is every reason to think that Buffett’s distributions to the foundation will continue during his lifetime.
What might happen after he’s gone appears less set in stone. Buffett said in his pledge letter that he would “soon write a new will that will provide for a continuance of this commitment—by distribution of the remaining earmarked shares or in some other manner—after my death.” Later that year, in his annual letter to Berkshire Hathaway shareholders, Buffett said he had revised his will to stipulate that his stock would go to Gates and the four Buffett foundations, stating further that all these funds be spent “ten years after my estate is closed.”
I would think that after Buffett revised his will, he provided the Gates Foundation with a clear-cut and legally binding statement of his bequest pledge. But no such document has been made public, that I know of, and the language in his two 2006 letters might be interpretable otherwise if Buffett changes his will to cut out the Gates Foundation.
This eventuality very sounds far-fetched, but it’s not hard to imagine that Buffett could come to have second thoughts about his 2006 pledge. If Bill and Melinda are striking out on their own, while battling over how to run the foundation, Buffett could decide that this isn’t what he signed up for during happier times. Meanwhile, he has an obvious alternative to leaving most of his fortune to Gates—giving it to the foundations run by his three children, Peter, Howard and Susie.
It’s been reported that 15 years ago, Buffett didn’t have confidence that his children could give away wealth on such a historic scale and saw Gates as a safer bet. Now, he might see things differently. All three of the Buffett children preside over large and professional grantmaking operations that together give out more than $1 billion a year. They’ve each proven themselves to be imaginative and effective philanthropists. There is every reason to believe they’d know how to handle more than $100 billion if it came their way. (I argued long ago that this would be a better use of Buffett’s money.)
If Gates Foundation doesn’t end up getting Buffett’s fortune, and it also doesn’t receive major new infusions of wealth from either Bill or Melinda, it would have to drastically cut its grantmaking. If the foundation were solely relying on its endowment and abided by a 5% payout, its annual giving would be around half its current level.
5. Bill and Melinda split up the foundation’s assets
Fast forward a few years. Buffett is gone and so are his annual distributions of stock to the foundation. The Gates Foundation is downsizing and shedding staff, many of whom take jobs at either Bill or Melinda’s fast-growing new grantmaking operations. After enough internal battles over the direction of the Gates Foundation, the former couple agree that they’d be happier if they divvied up its assets and remaining staff.
Bill’s new foundation takes on much of what the Gates Foundation does in the areas of global health, disease research, agriculture, and other activities related to science and technology, and also adds a climate change program. It’s the biggest grantmaker in the world. Melinda’s organization is also a giant and quickly becomes the largest backer of women’s empowerment and gender equity in the U.S. and abroad. It also scales up a major domestic program on poverty and economic mobility.
It’s impossible to know how the divorce of Bill and Melinda Gates will go. It could be entirely amicable and they get along fine afterward, productively co-chairing their foundation for decades to come as it gives away two of the world’s greatest fortunes. Or things could get nasty, and then all bets are off.
My own hunch is that the foundation does eventually absorb the bulk of wealth under the control of Bill Gates and Warren Buffett, becoming even larger and more powerful than it is today. But that Melinda largely goes her own way, separately giving away most of her money to support women’s empowerment.
One thing seems clear: All this wealth will go to philanthropy one way or another.