The Gates Foundation has been getting slammed by bloggers (see a compilation here assembled by Tactical Philanthropy) and other pundits for its head-in-the-sand (ooops, does that indicate a bias?) posture on the matter of socially responsible investing of its portfolio.

In case you missed Gates' position statement, it essentially says they're too busy saving the world with the billions they spend in grants to worry about adverse impacts from the mega-billions they invest.

The Gates Foundation posture indicates either that:

    • They are tone depth to the requirements, expectations and power of institutional leadership;
    • They are naive, or worse, disingenuous in dismissing their own capacity to assess the possibly deleterious impacts of their investments (some conceivably in direct conflict with their grantmaking objectives); or,
    • They are plain dumb or uncaring (and they are most certainly neither).

So let's deal with the first two possibilities.

First, leadership. In our book, when you're THE leader, you carry extra responsibility to, well, LEAD! It's irrelevant that most other foundations don't apply social impact screens to their investments. On the basis of size alone, the Gates Foundation has been bestowed the leadership mantle formerly worn by the likes of Ford and Rockefeller (both of whom do consider social impacts … see the Chronicle of Philanthropy's excellent review of this landscape from last May).

The leader sets the tone, sets the bar. The Gates' shouldn't lead us backward.

Giving the benefit of the doubt, it's conceivable that, as relative newcomers to the world of doing good, the Gates' and their inside advisers simply don't appreciate the degree to which the bully pulpit they occupy can carry tremendous influence. Even — perhaps especially — if the Gates Foundation were to single out and remove only one or two “bad apples” from their portfolio, the fanfare and consequent impact would be enormous. Other foundations would be encouraged to follow suit. Corporations would take heed. Who needs the publicity of being shunned by Bill Gates?!

Second, capacity. Do we buy the contention that the Gates Foundation would be unduly distracted from its grantmaking mission if it “diverted” staff from identifying the best solutions and partners for addressing the problems they have targeted? Absolutely not!

What are all those program staffers doing now, if not including in their assessments some evaluation of obstacles and impediments to progress? And surely, assuming they do so, they would readily identify, from time to time, corporate behavior that confounded their goals. All program analysts worth their salt working in any sphere should be able to identify the “bad actors” governmental, corporate, or otherwise whose practices are flagrantly contrary to the public interest. After all, somehow, harnessing all the brainpower available to it, the Gates Foundation has managed to conclude that tobacco investments are a “No!”

But let's move beyond criticism to a constructive suggestion. Bill and Melinda, are you listening?

How about if the Gates Foundation simply adopts a “Throw Out the Bad Apple” strategy?

The Foundation could have its program officers scan the investment portfolio once a year, and identify any particularly noticeable bad actors in their sphere of activity. Who should be identified as part of the problem, rather than part of the solution? The Foundation principals could then review that list and determine what high leverage opportunities might exist for making a very public point by either disinvesting, jawboning, or voting shares.

This procedure would not require some meticulous across-the-board application of multi-dimensional social standards to each company in the Gates Foundation portfolio (a standard we recognize some others might demand).

What it would require is good judgment selectively applied with some regularity and public purpose. And if your company winds up being singled out … hey, life's unfair. There's no shortage of more honorable money-making investments the Gates' could substitute.

If this were the standing practice of the Gates Foundation, then

    • corporations on whom the foundation took action would have a big problem on their hands (bigger than the Gates Foundation seems or chooses to recognize),
    • other corporations in which the foundation was invested would realize that someday they too might fall in the bulls-eye,
    • other foundations might step up to the plate as well,
    • the program staff would not be unduly burdened (they'd just be “re-purposing” the solutions analysis they should already be making), and,
    • we grousers on the outside would feel that at least the Gates Foundation wasn't giving corporate ne'er-do-wells a free ride.

And we poor folk could get on with the far more pleasant job of complimenting the Gates' largesse, and asking others to follow suit.

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