Essential Medicines News

A Times investigation reveals the Gates Foundation, the world’s largest charitable endowment and a major donor on global health issues, has billions of dollars of investments in unsavory companies. These companies, according to the piece, are often involved in activities that run counter to the aims of the Gates Foundation. Most notably for the subject of access to essential medicines:

In 2005, the foundation held nearly $1.5 billion worth of stock in drug companies whose practices have been widely criticized as restricting the flow of key medicines to poor people in developing nations. …

The Gates Foundation’s top priority is stopping AIDS, Bill Gates told the International AIDS Conference in August. Since its inception, the foundation has donated more than $2 billion to fight the disease.

The foundation did not respond to written questions about the problems of patients who cannot obtain needed AIDS drugs due to pharmaceutical company policies.

Meanwhile, the foundation holds its grant recipients to a far higher standard than the drug companies on which it bets large portions of its endowment. Its grant form says it expects recipients “to exercise their intellectual property rights in a manner consistent with the stated goals of the Bill & Melinda Gates Foundation to promote the … availability of inventions for public benefit in developing countries at reasonable cost.”

Critics say the Foundation should not reward “bad behavior” by investing in socially irresponsible companies and should use its votes as a shareholder to influence companies’ policies.

At the Gates Foundation, blind-eye investing has been enforced by a firewall it has erected between its grant-making side and its investing side. The goals of the former are not allowed to interfere with the investments of the latter.

The foundation recently announced a plan to institutionalize that firewall by moving its assets into a separate organization, the Bill & Melinda Gates Foundation Trust. Its two trustees will be Bill and Melinda Gates. The trust will invest to increase the endowment, while the foundation gives grants.

The only exception is a ban on investing in tobacco companies.

This “one hand doesn’t know what the other hand is doing” approach is on the decline among other philanthropies:

Major foundations that make social justice, corporate governance and environmental stewardship key considerations in their investment strategies include the Ford Foundation, worth $11.6 billion, the nation’s second-largest private philanthropy; the John D. and Catherine T. MacArthur Foundation; the Rockefeller Foundation; and the Charles Stewart Mott Foundation.

Moreover, nearly one-third of foundations participate directly in shareholder initiatives, voting their proxies to influence corporate behavior. A few have become shareholder activists. In recent years, for instance, the Nathan Cummings Foundation, with an endowment of $481 million, has sponsored proxies to force corporations to address environmental sustainability and political transparency.

A follow-up piece and more information on the series are available at latimes.com/gates.