Project #22011 - case study

CASE STUDY #1: The World's Largest Charity 

 

Bill Gates is the wealthiest person in the world# According to Forbes magazine, his net worth is $50 billion# Microsoft's 2008 earnings were over $60 billion# But at age 50 Bill Gates earned respect in a new way# Along with his wife Melinda, the chairman of Microsoft became the greatest philanthropist in history# Melinda, a former Microsoft colleague, has a bachelor's degree in computer science and economics and a masters in business from Duke University# #Bill dropped out of Harvard at the end of his sophomore year to run Microsoft##

 

In its short existence, the Bill and Melinda Gates Foundation has already helped save at least 700,000 lives in poor countries through its investments in vaccinations# In the U#S#, its library project has brought computers and Internet access to 11,000 libraries# The fund sponsored the biggest privately funded scholarship program in history, sending over 9,000 high-achieving minority students to college# It is the largest foundation in the world, with an endowment of about $35 billion# Each year the Gates Foundation spends almost the same amount as the World Health Organization #WHO## In 2006 the Foundation made grants of over $1#5 billion#

In 1993, advisers gave Bill Gates a copy of the 1993 World Bank Development report# The document explained how many millions of people in poor countries die from diseases that already have cures# Then it listed the most cost-effective methods of preventing those deaths, from immunization to AIDS prevention to nutrition# The document reads like a blueprint for the Gates foundation#

In June 2006, Bill Gates announced that he was stepping down from full-time duties at Microsoft, giving up his role as chief software architect, to devote more attention to the Gates Foundation#

The Gateses run the Seattle-based foundation like a business# They are fluent in the science of public health, and both use the language of business to describe their philanthropic work# "There is no better return on investment that saving the life of a newborn," said Melinda#

 

The foundation has been able to instill a rare level of accountability from its grantees# In India, the Foundation runs an HIV AIDS-prevention program, headed by Ashok Alexander# Alexander calls the program's clinics "franchises#" In 2005, Alexander cut off funding to three nongovernmental organizations because they did not meet agreed-upon milestones# "People are not used to being terminated for nonperformance," says Alexander#

Gates did not keep his title of top philanthropist for long# In that same month that Gates left Microsoft, Warren Buffett announced that he planned to give away his stake in Berkshire-Hathaway, the company he founded, worth more than $44 billion# Buffett will divide the gift over five foundations, but the largest amount will go to the Gates Foundation# Buffett's donation exceeds the amounts given by the great philanthropists of the past# Andrew Carnegie's giving totaled about $380 million—$7#6 billion in today's dollars# Based on the Berkshire stock price on the day the gift was announced, Buffett's gifts would be worth $37 billion# Because the donation is in the form of Berkshire stock shares given over time, the total donation could grow in value as the company grows#


According to Buffett, he always intended to have his wife oversee his charitable giving when he died# But after she died in 2004, he saw an opportunity to invest in "an existing well-respected foundation run buy two ungodly bright people#" He changed plans and started giving away his fortune in 2006#

Buffett credits his late wife Susan for his change in priority# "We agreed with Andrew Carnegie, who said that huge fortunes that flow in large part from society should in large part be returned to society," said Buffett#

The gift more than doubled the size of the Gates Foundation# "We are awed by our friend Warren Buffett's decision to use his fortune to address the world's most challenging inequities," Bill and Melinda Gates said in a statement# "As we move forward with the work, we do so with a profound sense of responsibility# Working with Warren and with our partners around the world, we have a tremendous opportunity to make a positive difference in people's lives#

Please write a 1 page paper that answers the following questions# Answer the questions in a 1 page paper format# I should not see the questions or 1, 2, 3 in your papers! 

QUESTIONS: 

1# How do Bill and Melinda Gates use basic business principles to run the Gates Foundation?

2# Since the foundation does not earn a profit, how should the success of the Foundation be judged?

3# Most philanthropists are wealthy individuals who begin their charitable work late in life after years of building an enterprise# Why do you think Gates started so early in his life?
 
4. Why do you think Buffett chose the Gates Foundation for his record-breaking donation?

Subject Business
Due By (Pacific Time) 2/4/2014
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