By ROBERT A. GUTH The Bill & Melinda Gates Foundation will spend less than it previously planned on grants next year, a sign that even the biggest players in philanthropy aren't immune to the turmoil hitting financial markets.
Officials at the Seattle-based foundation said they will expand the charity's payout of grants in 2009 by 10%, which is less than they originally planned. The officials didn't provide the original growth plan nor give a total amount of grants the foundation expects to make next year.
The Gates Foundation's decision was described in a letter on its Web site by Jeff Raikes, its chief executive officer. "The financial crisis is affecting everyone, from our foundation to our partners," he wrote.
The former Microsoft Corp. executive, who moved to the foundation in September, wrote that he has asked the foundation's employees to reduce expenses. "We are closely scrutinizing our budget," he wrote.
The payout refers to the money that the foundation plans to actually spend next year, which includes grants and administrative costs. It doesn't include the value of all grants the foundation will decide to make next year, many of which will be paid out over the course of several years.
As of Oct. 1, the Gates Foundation had a $35.1 billion endowment. U.S. tax law requires a private foundation each year to pay out at least 5% of the average market value of its total assets. The Gates Foundation's payout has always exceeded that minimum, and recently has been around $3 billion a year.
In addition, the foundation must distribute all of an annual gift from billionaire Warren Buffett, who gives the Gates Foundation an installment each year from 10 million shares in Berkshire Hathaway Inc. that he pledged to the foundation in 2006. The foundation received an installment of $1.8 billion from that gift in July.
How the Gates Foundation responds to the economic crisis will be closely watched because of the large number of nonprofits it funds and the vast number of projects it touches world-wide. The foundation is one of the largest financial backers of efforts to combat AIDS and is a major donor to educational projects in the U.S. and to areas such as financial services in developing countries.
The Gates Foundation has predicted a steep increase in its grant-making following the 2006 gift from Mr. Buffett.
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