Council on Foreign Relations

June 5, 2008
Prepared remarks by Melinda French Gates, co-chair

Thank you. It's an honor to be here in such distinguished company.

More than 90 years ago, here in New York, a group of determined individuals began recruiting top scholars for a special assignment. They planned to advise President Wilson on policy options at the end of World War I.

Of course, when you take on a task where the need is great and your skills are broad, you often end up with "mission creep." And so "The Council" that was founded to present policy ideas to the President now also promotes policy discussion among the public. In a democracy, these are two sides of the same coin.

Your work benefits every American, but I would like to acknowledge a special debt to the Council. The success of our efforts at the foundation depends to a great extent on the informed decisions of policymakers and the public. So for the indispensable work you do in explaining the world to the country, Bill and I thank you.

In the course of our work, Bill and I have come to recognize that poor people cannot get adequate food, and education, and health care because they cannot express their needs in ways that matter to markets or that motivate governments. They simply do not have enough money or political power to get their basic needs met by the public or private sectors.

Only the nonprofit sector has the primary mission of serving the people who've been left out—yet nonprofits alone do not have the money to meet the needs of even a small fraction of these people.

Today, however, we do have a chance to harness political and market forces in ways that allow all three sectors to serve the neediest—even as each still fulfills its separate mission, whether that is serving constituents, making profits, or meeting the needs of the poor.

This kind of collaboration is difficult. It pushes all three sectors beyond their familiar routines. But it can also direct a much higher share of talent and energy to improving the lives of the world’s poorest people—and that's what I'd like to talk about today.

Some organizations have very auspicious beginnings; others more humble. The Bill and Melinda Gates Foundation began as hundreds of letters in dozens of boxes in Bill Senior's basement.

Back in the 1990s, lots of requests were coming in for funding, and we had no plan for dealing with them. Fortunately, though, Bill’s dad was winding down his law practice, and he offered to help us answer the mail.

Naturally, he would forward the most compelling letters to Bill and to me. And every time Bill's briefcase was reloaded for another Microsoft trip, he would take one or two of those letters with him. They were often very personal requests from people—and he carried them with him because they were so hard to answer.

Those letters forced us to start asking ourselves: "How can we do the most with what we have?" We talked with a lot of people and read of lot of material. A pivotal item on the reading list turned out to be a World Bank Development Report that named all the diseases that were killing children in the developing world. We read, for example, that Rotavirus was killing half a million kids a year. Rotavirus!

We hadn't even heard of it—because it wasn't killing American kids.

That report showed us in a sickening way how some lives in the world are seen as worth saving, and some are not. We thought, "This can't be true, but if it is true, it deserves to be the priority of our giving."

Then in 1998, Bill's dad read a report from the International AIDS Vaccine Initiative, and sent it to us with a note, saying: "If this isn't what philanthropy is for, I don’t know what is."

Bill, who tries never to waste words, wrote back to his dad: "Agreed."

These experiences led to our early work in vaccines. We believed from the beginning that our role was to take risks that others mostly avoided—risks that, if they paid off, could give millions of people who've been left out a chance to make the most of their lives.

We still see this as our role, whether we're working in global health, global development, or improving education here at home. But back then, we were a bit naïve about how it might unfold.

For one thing, we thought we really wouldn't have to pay much attention to the work of government or business. We would just fund breakthrough innovations and they would magically get to the people who needed them.

Of course, we came to philanthropy from an industry where breakthrough ideas quickly found their way to the people who wanted them. But back then, we were serving people who had money. Now, we're trying to meet the needs of people with almost no money.

And this has brought us to a much more thoughtful view of the roles that foundations, businesses, and governments might play in trying to change the world.

If I may, I'd like to briefly sketch the strengths and constraints of the three sectors as I see them.

First of all: Government. Tonight, I am talking about donor governments. Recipient governments play a crucial role in this work, and some of them should be doing more to meet the needs of their people. But I want to focus tonight on the strengths and constraints of wealthy governments.

Wealthy governments have tremendous range and resources. They can tap some of the world's most brilliant minds and mobilize massive efforts to meet people's needs. When the world wants to rush relief to tsunami victims, only governments have the scale to take the lead.

But governments have two big constraints. The taxpayers must be willing to pay. And the spending generally needs to prove itself quickly. The two-, four-, six-year election cycle doesn't lend itself to investments that take ten years to show results.

Second: Business. Businesses are agile, creative, and in touch with people's needs. And they are self-funding enterprises. They can offer the public a continuous supply of what it wants. But—and this is the key constraint of businesses—they must make money for their owners.

Third: Foundations. The great strength of the nonprofit sector is its freedom—foundations can follow their hearts. They have no stock price, no earnings statements, no election day that can define failure and force change.

Of course, with freedom comes responsibility. Foundations must establish their own agendas, determine their measures of success, and set their tolerance for failure. But they are free to go where compassion demands action—especially to those areas where there are few political or financial rewards for meeting human needs.

Of course, foundations face constraints as well. When a product or a service is not paid for by the people who benefit from it, the money often doesn't go very far or last very long.

To illustrate the point, if our foundation began tomorrow to pay the bills for California's public schools we would spend our endowment down to zero in less than a year.

Philanthropic resources are tiny compared to the resources of business or government—and that sets a powerful limit on what foundations can do, and how they can do it.

What this means, once you analyze the strengths and constraints, is that no sector, acting on its own, will likely be able to do very much for very long to change the lives of people who have been left out—those people who cannot now express their needs in ways that matter to markets or that motivate governments.

So—we face the obvious question: Can we encourage cooperation among the three sectors in a way that minimizes our weaknesses and maximizes our strengths? Can we combine the scale and resources of government with the self-funding qualities of business and the risk-taking approach of foundations that serve the poor?

(I think every sector's initial answer is something like: "Do you have any idea what it's like to deal with those people?!?")

Yet this cooperation is what our foundation is aiming for when we take risks. We want to make it easier for business and government to serve those who've been left out. And we're trying to do it by finding breakthroughs that will reduce the costs or increase the benefits that come to them from serving the poor, whether that’s greater political support, higher financial return—or whatever drives the engines of the organization.

For example, mobile banking—like storing and sending money using a cell phone—could help millions of people in developing countries. But companies are afraid to provide these services, because in the absence of clear regulations, they don't know whether they'll be able to recoup their investments. If governments develop clear policies that reduce this risk, more businesses will step in, and more people will benefit.

Take another example. If fighting disease in developing countries has little public support, it will offer little political return. But if the disease is highly publicized, and people see the impact of government action and take pride in it, then the political incentives for action can be high.

Bill went to Canada last year to meet with Prime Minister Harper and make an announcement on AIDS vaccine work. Reporters asked him whether he was just being used by politicians to get votes in the upcoming elections. But Bill said, "If spending money on AIDS can get you votes, that's a phenomenal thing."

Government, businesses, and nonprofits can get the best results for people who've been left out when they strike the right relationship with each other—a relationship in which they acknowledge their overlapping strengths and weaknesses, and push one another to do what each does best.

A short time after we announced our first major grant to create the Childhood Vaccine Program (which sought to shrink the time it takes between discovery of a vaccine and its use in the developing world), Bill and I were having dinner at our home with some of the scientists who were going to be working on the grant. As they talked about the amazing opportunities they saw, Bill and I were so inspired that we just said—without any forethought: "What could you do with more money?"

So the scientists decided to stay for dessert. And we talked about the problem in its full dimensions—30 million children around the world every year who weren't receiving low-cost, life-saving vaccines. This discussion led the following year to the launch of the Global Alliance for Vaccines and Immunization, or GAVI.

GAVI is the best example in our experience of the three sectors working together to maximize their strengths. It brings together pharmaceutical companies, donor and recipient governments, the WHO, the UN, the World Bank, and foundations to support the delivery of childhood vaccines in the 75 poorest countries in the world.

The plan incorporates the capabilities of all three sectors—government can guarantee the purchase of vaccines and distribute them, business has the skill and infrastructure to manufacture them, and foundations spend the start-up capital, show that the idea can work, and bring in the other sectors to take it to scale.

Eight years after its inception, GAVI has immunized more than 175 million children and saved nearly 3 million lives. Since the year 2000, funding for immunization in the 75 countries has jumped from $1.1 billion to $2.5 billion a year. The poor countries supported by GAVI have more than doubled their own spending on vaccines. Finally, in the first three years of the alliance, our foundation accounted for 90 percent of the resources. In the years that followed, our funding has accounted for 10 percent of funds received.

In terms of saving lives, we believe this is the best investment the foundation has ever made, and it reflects an important approach to making an impact: Foundations can catalyze action from government and business by finding ways to reduce the cost or increase the return from meeting the needs of the poorest people.

But foundations are not the only catalysts. Bill and I believe that government's power as a catalyst is very much underappreciated and underutilized. When a government declares that it will purchase vaccines, it will find a manufacturer. But it goes beyond that. If a government announces that it will be a buyer of a vaccine that doesn't yet exist, it will find an inventor. When government commits to buying new ideas or bringing existing ideas to scale, it can serve as a catalyst for countless individuals and organizations—since new ideas can come from anywhere.

I would like to offer a few suggestions for how government can use its power as a catalyst to make more use of the talent and resources of the non-profit and business sectors.

My first suggestion builds on a program called Grand Challenges that our foundation launched five years ago. Grand Challenges supports research into scientific obstacles that, if solved, would clear a path to discoveries of vaccines, treatments, and cures for diseases that mostly affect the poor.

What if donor governments could use this model to encourage research into obstacles that block progress in its own programs? This would be research that the government doesn't have the money or the mission to fund, but where an innovation could advance government goals. The government could say, for example: "We're having a hard time distributing vaccines in some countries because we can't keep the vaccines cold—and so they spoil. If you can find a solution, we'll use it and pay you for it."

This approach takes advantage of the capabilities of the different sectors. Government may have the money to buy and distribute a new tool, but not for the research needed to discover it. So it could lay off the risk of the research on foundations that would be willing to fund it, or businesses that might be able to profit from it.

Nonprofits and businesses could offer government a comparable deal from the other direction. Rather than wait for the government's request, they could cite a problem and ask government: "If we can find a solution, will you use it?" This two-way conversation would spark creative thinking and focused research on a very large scale.

Let me offer one more idea. Governments and foundations send thousands of staff members into the field to work on global health and development projects. What if these field experts were to meet with business people and help them find market-based approaches to serving the poor?

There are many more market-based opportunities to serve the poor than we realize, and there are many businesses that want to help and don't know how. We can do a lot of good if we can do more match-making in this area.

I hope I'm not making it sound as though we have all the answers. If you go to our Web site and read about GAVI, you'll see that we've posted a list of things we've gotten wrong—and how we're trying to fix them. We've been in the game long enough to know that we’re not always going to be right.

But there is one area where I am convinced that we are right.

Success demands partners. There are things that others can do that we can’t. There are resources others have that we don't. That can be humbling, but it's also energizing. Through partnerships, we can make an impact that would never be possible if we were working alone.

If we are going to one day see a world where there are no more children dying from preventable diseases, where extreme poverty has ended, where all children everywhere go to school and develop their talents, it will come about only if foundations and governments and businesses are working together on the same goals, and only if we divide the labor to make the most of the special capabilities of each sector.

To do that, we're going to have to understand each other better than before—and that means working and talking with each other a lot more often. I'm pleased to have had the opportunity to come here this evening and do that with you.

Thank you.