Remember Netscape, Bill?

Last year, the Bill & Melinda Gates Foundation asked HIV specialists what the charity should do to fight the virus in the developing world. More investment in vaccines, said some; more work on bug-killing microbicides, said others. More clean needles for drug injectors, said I. There was only one creative suggestion: “Treat HIV as if it were Netscape. Crush it like a bug.” Remember Netscape? The successful internet browser was manipulated out of existence as Microsoft skewed market incentives and bundled Internet Explorer with Windows. Could we do the same with HIV?

Maybe. When Thailand started closing brothels that didn’t enforce condom use, infections plummeted. Grants from charities like the Global Fund have bribed governments to do things voters don’t like paying for, such as free clinics for prostitutes.



So is the Gates Foundation rolling out similar programmes globally? Sadly not—it is too risk averse. People who give away their own money don’t need to worry about politically popular causes, or delivering measurable results in the short term. They could spend on the problems which charities can’t rattle collection boxes for, or development agencies won’t touch for fear of alienating voters. But, to do this, donors must want to touch the untouchable, and their staff must dare to propose it. And that’s rare. As one foundation worker told me recently, “A lot of staff sit around anticipating what the Dear Leader will want.”

Few philanthropists can compete with Bill and Melinda Gates for sheer generosity. The market hiccup wiped $7bn off their foundation’s assets but that still leaves $30bn to play with. This year they expect to dole out $3.5bn in grants, more than the World Health Organisation’s annual budget. However, it’s the growth of smaller-scale charities, with individuals as the main source of income, that is most notable. According to the consultancy New Philanthropy Capital, 180 charities of this kind were set up last year in Britain. And it’s these donors who are often more willing to support politically unpopular issues.

This may be a good thing but it presents a different set of challenges. Many of these new philanthropists made their squillions in technology or venture capital. Unlike the laissez-faire donors of earlier generations—who would often sign a cheque, collect a tax break and have done with it—these youngsters have ideas about how their money should be spent. “God save me from engaged donors,” one charity director told me. “They have this notion that business has all the solutions. But complex social problems require consensus. It’s not as simple as delivering a product and sending an invoice.” Needless to say, this director still takes their money. “But Christ, you have to do a lot of hand-holding.”

Such hand-holding usually pays off. Donors who develop a commitment to a cause give more, for longer. But these givers are also obsessed by business models that deliver “measurable impact.” As Robert Templer, of the International Crisis Group (funded by George Soros, among others) told me: “It’s understandable that people want to see results, but changes can take generations. How do you measure that on a quarterly business cycle?”

Engaged philanthropists have been around in the US since Rockefeller, but rich givers are a more recent phenomenon in Britain. That’s in part because City bonuses have put money into the pockets of people who don’t care as much as the “old rich” do about passing wealth on to the next generation. Sadly, this new generosity is still not changing the world as much as it might. If there were quick fixes for the big problems in development, they would have been fixed by now. Good philanthropy requires a detailed understanding of the challenges, strong partnerships, strategic thinking and, above all, distant horizons. The new philanthropists are too imbued with the culture of the bottom line to be that patient. “I do think it ironic that the model being proposed for the charitable sector is the very one that hasn’t worked for the City,” said Fenella Rouse, deputy director of the Institute for Philanthropy.

Warren Buffett is leaving most of his fortune to the Gates Foundation. Now if it would just use it to crush global poverty the way Microsoft crushed Netscape…