Commentary Magazine


Bill Gates's Fortune

To the Editor:

Hats off to Chester E. Finn, Jr. for his lucid and constructive article [“Giving It Away: An Open Letter to Bill Gates,” January]. The points Mr. Finn raises, particularly on the need to honor donor intent, apply, of course, to all philanthropies. In fact, I found the article so insightful that I forwarded it to the trustees and staff of the various foundations I have established.

My associates and I have been diligent in our various philanthropic endeavors to ensure that our mission statements and legal framework cannot be tampered with, so that the examples Mr. Finn cites of what happened to Henry Ford and others will not happen to us.

I would like to close with a cautionary word for Bill Gates and other philanthropists, taken from a report of the Avi Chai Foundation: “The business of philanthropy is more complex and difficult, and in any event certainly more frustrating, than the business of business.”

Zalman C. Bernstein
Chairman, Avi Chai
Foundation
New York City

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To the Editor:

Now the Right’s doughty warriors of the pen have taken to tutoring Bill Gates and others like him on how to spend their money. The probability of their success is equivalent to that of a hunter shooting flying ducks with a slingshot. Here is why, based on my own personal experience: my Dad was a Bill Gates of his time. He was born in a Carolina town in 1886. Unable to afford much higher education, he contributed to the South’s very substantial brain drain in those years by going North. By 1906, he was driving a streetcar in New York City when an uncle located him with news that his father’s infant drug-wholesale business was approaching bankruptcy and he had better come home.

Realizing the hopelessness of wholesaling when few merchants in central North Carolina had credit to buy, he shifted to a single product his father had created. In those days only the druggists in the Republican hill country had credit, but there were no paved roads in the state and those in the mountains were little more than trails. So Dad sold his product off a horse’s saddle bags in the hill country to the west. Eventually he was flush enough to afford a buggy and, more important, a mail-order course in advertising. He also acquired a rudimentary plant so his sisters could stop producing and packaging the product in the kitchen.

Around 1928, he listed his company on the New York Stock Exchange. In the 1920’s, the firm opened markets in Europe and operated several plants in the U.S. Under his guidance, the company created a program in advertising and marketing that attracted top college graduates; many who took the course went on to become heads of competing drug firms and leading ad agencies. By 1960, the company was manufacturing an array of over-the-counter and prescription drugs in plants throughout the world.

What Mr. Finn and similar folks do not realize is what this kind of success does to the mind-set of such high achievers. Their instincts have been right at nearly every turn, whereas most business people are lucky if they are right only half the time. They have hired and fired top experts of all sorts and found most of them wrong on critical decisions. Such a record convinces men and women of this stripe that they can perform just as well at giving money away as they did at making it.

Dad knew many of the top industrialists, bankers, advertising geniuses, etc. of his time, and it was my privilege to sit at table with these people. Most of them shared Dad’s outlook. Although it eventually took some of them to disaster, the mindset I describe is real, and it needs to be understood by would-be tutors.

Don’t weep, Mr. Finn, if Bill Gates uses your unread letter to light his evening fire.

R.R. Richardson
Amagansett, New York

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To the Editor:

The advice Chester E. Finn, Jr. gives to Bill Gates on what he should not do with his philanthropy deserves to be heeded. But his principal recommendation about what Gates ought to do, help the burgeoning “charter-school” movement, should be taken warily.

Since most of the money for charter schools will inevitably come from public funds, such schools are potentially yet another example of the kind of government-philanthropic “collaboration” that Mr. Finn rightly notes has so disappointed many well-meaning private donors. Indeed, the authority under which these schools operate ultimately rests not with the often-dedicated teachers who are creating them, let alone any philanthropists, but rather with the government agency that charters them. And while public funds come on the backs of the students who wish to attend the schools (and thus reflect parental choices rather than bureaucratic formulas that may not take instructional quality into account), our experience with other voucher-like programs, notably Medicare and Medicaid, shows that this device is no guarantee against government meddling.

Bill Gates might be better advised to join the growing ranks of philanthropists who are supporting scholarship programs that enable needy children to attend private schools. Although even with a substantial infusion of new money, the demand for such scholarships might exceed the number that can be offered, nonetheless, the donors can have more confidence that their gifts will be well-used.

Leslie Lenkowsky
Center on Philanthropy
Indiana University
Indianapolis, Indiana

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To the Editor:

Chester E. Finn, Jr.’s concern with the biases of major foundations in their dispensation of largesse is well-taken, although it covers familiar territory in a not too balanced way. There are, after all, various smaller to middle-range foundations that have a clear conservative orientation.

But a more serious problem occurs when Mr. Finn chides Bill Gates for supporting United Way and for making large-scale gifts of computers and other electronic devices to schools and libraries. This strikes me as churlish. I find it a trifle brassy, or, as one might say, plain chutzpah to instruct a self-made billionaire in how to spend his money, on whom, and under what umbrella.

If Mr. Finn is displeased with the past pittances doled out by Bill Gates, he should by all means express himself, perhaps in a private letter or a grant proposal. But in a democracy, even the rich have the right to spend their money foolishly and as they see fit.

Irving Louis Horowitz
Rutgers University
New Brunswick, New Jersey

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To the Editor:

Chester E. Finn, Jr. offers persuasive reasons why results-driven foundation grants are preferable to the system we usually see in operation. As president of a fund-raising consulting firm, I can attest to the fact that, as Mr. Finn points out, political correctness, smugness, and self-justification have led to a wholesale waste of time and money so frequent that it is hardly remarked on, even by those of us in the profession.

But to grasp the full extent to which welfare-state indoctrination has moved philanthropy backward, it is crucial to understand that the two visionaries who created the modern foundation based their philanthropies on the philosophy that every grant must not only do some measurable good but involve commitment on the part of recipients.

Andrew Carnegie believed that libraries could provide a means to knowledge. He was prepared to pay for the construction of buildings, but not for their upkeep. Any community that wanted a Carnegie library had to pledge operating funds. No pledge, no grant. The result was 1,671 libraries throughout the country.

John D. Rockefeller’s idea of bad philanthropy was the annual dinner for tramps at Cleveland’s Five Points House of Industry. Such handouts appalled him. Instead, the approximately $600 million he donated, and the $400 million his son, John, Jr., gave away, paid for, among other things, the University of Chicago, the eradication of hookworm in the South, and the creation of the American health-care system. But the Rockefellers’ gifts mandated commitments from students and members of the public, who not only had to agree to be educated but to put into practice what they had learned.

The two men who created the modern corporation (and subsequently the modern foundation) took something from that experience that profoundly influenced their ideas on philanthropy. They were apparently the first to appreciate the truth of what Peter Drucker would write years later: “For the ultimate test is not the beauty of the mission statement. The ultimate test is right action.”

Milton Goldin
Tarrytown, New York

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Chester E. Finn, Jr. writes:

Although this correspondence about Bill Gates does not (yet) include a note of thanks from him, several points deserve comment.

I would love to go duck hunting with R.R. Richardson, and he may select the weapon. I will even try a slingshot if, while I am missing the ducks, he will tell me more of the riveting saga of his father’s career. The lessons he draws about the temperament and belief structures of highly successful entrepreneurs are also insightful, and I am willing to accept his assertion that most such folks do not take advice well. But neither do most fifteen-year-olds, and that does not stop parents (and other observers of their behavior) from proffering it. In any case, Zalman C. Bernstein’s letter indicates that not all entrepreneurs and philanthropists resist advice. I thank him for his kind words and echo his remark about the difficulty of giving well.

Leslie Lenkowsky is right to note that charter schools are a species of public school, but they are also one of the most promising developments on the education-reform front, and philanthropists do not err by fostering them. Certainly it would be grand if Bill Gates and other donors were also to contribute generously to the burgeoning movement of privately-funded scholarships that help needy youngsters attend better schools. Such a program in Ohio is, in fact, the largest single recipient of funds from the small foundation that I head. But we are assisting charter schools, too. In the world of education, it is a mistake to place all one’s bets on one reform.

As Irving Louis Horowitz knows, no essay could possibly interfere with the right of the wealthy to make mistakes with their money (or with their families, or in their eating habits or choice of movies). But why is it “brassy” to suggest ways of avoiding such mistakes and doing good? Bill Gates has shown himself to be a quick study when it comes to making money, taking in information, even borrowing from other people. Indeed, Microsoft’s most profitable products were invented elsewhere. Gates’s own genius has been in adapting the ideas of others into successful ventures. Why must he change that pattern when the time comes to focus on giving his money away?

Milton Goldin’s observations about Carnegie and Rockefeller are keen, and accord in full with the recommendations of the National Commission on Philanthropy and Civic Renewal, on which I had the honor to serve. We, too, believe that the most effective giving is the kind that expects something from recipients.

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