Power Players

Billionaire Bill Gates says this is the best investment he's ever made

Bill Gates, billionaire and co-chair of the Bill and Melinda Gates Foundation, in Washington, D.C., U.S., on Thursday, March 26, 2015.
Bloomberg | Getty

With almost $100 billion to his name, Microsoft co-founder and philanthropist Bill Gates has an intimidatingly large heap of funds to deploy.

Wednesday, Gates revealed the best investment he has ever made in an essay in The Wall Street Journal. It's the $10 billion he's invested, through the Bill & Melinda Gates Foundation, into three particular organizations that increase access to vaccines and medicines for people who need them around the world.

Gates says investing $10 billion in Gavi, the Vaccine Alliance; the Global Fund; and the Global Polio Eradication Initiative, which help deliver drugs to developing countries, has been a rewarding experience because unlike other kinds of investments, they are consistently successful.

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"Technology is a boom-or-bust business, but it's mostly busts. I've always assumed that 10% of my technology investments will succeed — and succeed wildly. The other 90% I expect to fail," Gates writes.

"When I made the transition from my first career at Microsoft to my second career in philanthropy, I didn't think that my success rate would change much. ... Discovering a new vaccine, I figured, would be just as hard as discovering the next tech unicorn. (Vaccines are much harder, it turns out.)"

But one type of investment "surprised" Gates "because — unlike investing in a new vaccine or technology, the success rate is very high," he says. "It's what people in the global-health business call 'financing and delivery.'"

Gates explains that buying medical supplies and getting them where they're needed can be difficult and dangerous because they often are needed in "remote villages and war zones."

He says most people have never heard of the organizations that do this, or their work, but each of the three he's invested in "has been extremely successful.... These organizations are not trivial or expendable. In fact, they are probably the best investments our foundation has ever made."

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Gates says the $10 billion his foundation has put into the three organizations has created an estimated $200 billion in social and economic benefits. (The estimate is from the Copenhagen Consensus Center, a think tank that estimates cost analysis to global problems.)

"Suppose that our foundation hadn't invested in Gavi, the Global Fund and GPEI and had instead put that $10 billion into the S&P 500, promising to give the balance to developing countries 18 years later. As of last week, those countries would have received about $12 billion, adjusted for inflation, or $17 billion if we factor in reinvested dividends," Gates says describing the estimates from the Copenhagen Consensus Center.

Had the Gates Foundation invested that $10 billion in energy projects in the developing world, the return would have been $150 billion, Gates says. Infrastructure investment in the developing world would have returned $170 billion.

"By investing in global health institutions, however, we exceeded all of those returns," Gates writes.

"Institutions such as Gavi, the Global Fund and GPEI are the closest things that we have to surefire bets to alleviate suffering and save lives," he writes in the Journal. "They are the best investments that Melinda and I have made in the past 20 years, and they are some of the best investments the world can make in the years ahead."

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Bill Gates, billionaire and co-chair of the Bill and Melinda Gates Foundation, in Washington, D.C., U.S., on Thursday, March 26, 2015.
Bloomberg | Getty
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