A conversation with Jeff Raikes on June 13, 2014

Participants

Note: This set of notes gives an overview of the major points made by Jeff Raikes in the conversation.

Summary

Good Ventures spoke with Jeff Raikes about his tenure as CEO of the Bill & Melinda Gates Foundation (BMGF), as well as how to be an effective philanthropist and use philanthropy as a catalyst for broader change. Mr. Raikes also shared some feedback on Good Ventures’ strategy, and on how philanthropists can contribute to improving the effectiveness of philanthropy overall.

Jeff Raikes’ tenure at the Bill & Melinda Gates Foundation

Mr. Raikes served as the CEO of BMGF from 2008-2014. Prior to BMGF, Mr. Raikes worked at Microsoft for 27 years, and started the Raikes Foundation in 2002, where he currently serves as Co-Founder.

In 2005, BMGF paid out roughly$1 billion/year and employed 250 people. In 2014, the payout budget is about $4.5 billion, and BMGF has about 1,300 employees. During his tenure as CEO, one of Mr. Raikes’ main responsibilities was to put in place the organizational infrastructure and systems to handle the foundation’s growth. This included human resources staff, financial systems, and processes for setting strategy and conducting strategic reviews. Mr. Raikes also expanded and reshaped BMGF’s senior leadership team.

The “how” of philanthropy

While at BMGF, Mr. Raikes helped staff think about the “how” of philanthropy: systems thinking, faction analysis, outcome investing, etc.

In order to create long-term sustainable impacts, a funder needs to affect systems. Understanding how these systems operate and what happens when you intervene is necessary to doing effective philanthropic work. As CEO, Mr. Raikes recommended that all BMGF program directors become familiar with these two texts on systems change:

  1. Thinking in Systems, by Donella Meadows
  2. The Practice of Adaptive Leadership, by Ronald A. Heifetz, Marty Linsky, and Alexander Grashow

One of the takeaways from The Practice of Adaptive Leadership is that systems achieve a certain homeostasis due to the factions within and around them. Heifetz defines a faction as a group of people loosely bound by what they believe in, and in particular what they fear they will lose. When intervening in systems, it is important to understand the relevant factions.

When he started at BMGF, Mr. Raikes set overarching goals that roughly mapped to his previous goals as a leader at Microsoft. The goals revolved around the quality of the leadership team, employee environment, and partner relationships, as well as the clarity of the operating model and strategy, and discipline of execution. They also included actionable measurement and continuous improvement, and building a positive and resilient reputation for the foundation. Every year, Mr. Raikes would think about how BMGF could improve in terms of these goals. Mr. Raikes said that helping to build the capacity for impact was among his most important contributions to BMGF, and that it will put the foundation in a position to more effectively grant out its endowment over the coming years.

Catalytic philanthropy

One of the ways that philanthropy can be catalytic is by influencing the allocation of public sector resources. This can be done by producing intellectual property and evidence of efficacy that public sector institutions can use in making decisions about resource allocation. For example, BMGF has been working with the UK’s Department for International Development (DFID) on DFID’s agricultural work.

Philanthropy and improving foreign assistance

Before making philanthropic investments in foreign assistance, a funder should seek to understand how resources are currently allocated. The resources considered should not only include official development assistance (ODA), but also foreign direct investment and remittances. Then, the funder should consider how philanthropic investments might encourage a more effective allocation of those resources.

For example, one inefficiency in foreign aid is the large proportion spent on security and military assistance, especially in Afghanistan. That money might do more good if it were spent on cash transfers instead, or societal investments that create economic opportunity (e.g. agricultural development and market access).

One of the main priorities of the European office of BMGF is encouraging governments to maintain or increase their commitments to ODA and to allocate those funds according to what is most important. However, the deployment of domestic resources in developing countries has become equally, if not more, important than ODA, because of its sustainability. It would be useful to think about how ODA can be leveraged to enhance the deployment of domestic resources, which would have more lasting impacts.

The Mesoamerican Health Initiative (MHI), a partnership of BMGF, the Slim Foundation, and the government of Spain, is an example of how ODA can be used to positively influence the allocation of public sector resources in developing countries. The goal of MHI was to improve maternal and child health outcomes for the poorest quintile of people in multiple Mesoamerican countries. This goal was pursued through results-based financing: as health outcomes were achieved, additional funding from the donor partners became available to countries. Also, country governments were required to invest some of their own resources, and make this part of the official government budget, in order to unlock matching funds from donor partners. Results-based financing caused countries to implement more results-based planning. Appropriate incentives were key.

Feedback on Good Ventures’ strategy

The three criteria that Good Ventures and GiveWell have identified for selecting focus areas (importance, tractability, crowdedness) seem very sound, and the level of intellectual rigor in the process makes it stand out. One potential concern is that focusing on fields that are “uncrowded” could limit opportunities for collaboration. Even in fields that seem crowded, there may be different roles to play. One area that Good Ventures and GiveWell might consider in the category of global catastrophic risks is water scarcity, including as it pertains to food production. Mr. Raikes is still a farmer and interested in the problem of how to adapt agriculture to feed the growing global population, and related water issues, since a large portion of water use is related to food production. He’s involved with the Water for Food Institute at the University of Nebraska: http://waterforfood.nebraska.edu/.

Something that holds back philanthropy is the lack of a rigorous and disciplined intellectual framework for how to do philanthropy well. The recent trend of donors, such as Good Ventures, playing an active role as philanthropists may help address this, because they will both generate frameworks and also help build the services necessary to support them. Such services include improving the quality of information available and aggregating capital to be distributed effectively. Currently, too many donors make individual grants, and not enough are aggregating their wealth to be distributed by professional philanthropists. Developing frameworks to do philanthropy well, and shifting donor behavior to be more oriented toward achieving greater impact, are increasingly important, as the wealth available for philanthropy is growing. Thomas Tierney, Chairman and Co-Founder of The Bridgespan Group, says there will be eight to ten times as much wealth for philanthropy in the first half of this century as compared to the last century as a whole.

Recommendations

Mr. Raikes recommended the following resources and people for further learning on the topics discussed: