The Power of Billionaire Philanthropy in World Politics

by Peter Hägel
, 10 May 2021

At a time when billionaires are being targeted by conspiracy theories, what is the actual power of philanthropic billionaires such as Soros in the Georgian Revolution in 2003, or Gates in the global health ecosystem?

This article was taken from Philanthropes en démocratie, edited by Anne Monnier and Sylvain A. Lefevre and published in the Vie des idées/Puf collection.

During the Covid-19 crisis in spring 2020, Bill Gates replaced George Soros as the main target of conspiracy theories about billionaire philanthropists. [1] As with Soros before, wild claims went viral, no matter how strongly they were refuted by fact-checkers. Such rumors are interesting as they reveal the fears and political agendas that lie behind their propagation. Many of these are person-specific and dangerous, such as the anti-Semitism surrounding Soros, or the anti-vaccination movement in relation to Gates. But some also stand in the tradition of democratic populism and its mobilization of conspiracies against elites that are being perceived as distant, secretive and unaccountable (Fenster 2008). Gates and Soros have attracted anti-global and anti-elite scorn, because they have become the most powerful transnational philanthropists of our age.

The Bill and Melinda Gates Foundation’s (BMGF) first guiding principle stated that it “is a family foundation driven by the interests and passions of the Gates family”; [2] until this day, the foundation has only three trustees: Bill and Melinda Gates, and, in the role of the silent investor, Warren Buffett. George Soros, when expanding his international philanthropy during the 1990s, liked to see himself as a “stateless statesman”: “I do have a foreign policy, … [m]y goal is to become the conscience of the world” (Kaufman 2002: 293). Such self-understandings replace public policy with private enterprise. This creates serious problems for democratic self-determination, especially when it takes place transnationally, with billionaire philanthropists intervening in other countries. At the global level, the normative questions are more complicated, since it is not a democratic arena to start with.

The Power of Billionaire Philanthropy

Among the world’s superrich, especially in the U.S., philanthropy is part of elite culture, and most of it stays within the fields of health, education, and the arts (Wealth-X 2016: 10-12, Ostrower 1995, Adloff 2010). At the top, however, billionaires are often using philanthropy as a tool for social entrepreneurship, trying to circumvent, replace, or shape public policy, which has become the subject of critical investigations (Callahan 2017, Reich 2018). In her analysis of nearly 200 of the highest-spending philanthropists in the U.S., Kristin Goss found that “[m]ore than half of [them] … have serious policy interests”, with 16 of them focusing on international affairs and foreign policy (Goss 2016: 445f). World politics thus remains a minority interest, but, with Gates and Soros, two extremely resourceful individuals have ventured into this realm, each with a strong determination to make the world a better place, according to their own ideals. In the case of Soros, this means “building open societies” in the spirit of Karl Popper (Soros 2011); for Gates, it is reducing poverty and “saving lives” through biomedical solutions, above all vaccination. [3]

Both Gates and Soros first achieved market-leader status with their companies: Gates with Microsoft, Soros with the Quantum fund, for a long time the most profitable hedge fund (Kauffman 2002: 134-146). During midlife, each shifted his material and entrepreneurial capacities into philanthropy, which is global and results-oriented like their former businesses. Both have chosen to intervene in fields where their professional experience, their skills, knowledge and acumen, can be marshalled effectively. Soros has excelled in what is called macro-investing, betting on the outcomes of major trends and trajectories in international political economy, which corresponds well with his transnational political philanthropy. Gates built Microsoft with a strong focus on product development and technology, which he could transpose into his approach to global health.

Their financial resources are immense, because, unlike other billionaires whose wealth is tied up in their companies, most of it is liquid, accumulating capital income via investment firms—Cascade Investment for Gates, Quantum for Soros. Between 1994 and 2019, Gates and his wife transferred over US$ 35.8 billion to their foundation, while their personal wealth stayed, according to Forbes, at over US$ 100 billion. [4] Soros stood at only US$ 8.3 billion personal wealth in 2019, much reduced since 2017, because he gave US$ 18 billion to his Open Society Foundations, to establish an endowment, and to avoid taxation. Such sums can compete with and surpass the budgets of many states. In 2018, the Gates Foundation accounted for 8.3% of the worldwide spending on global health (US$ 3.2 billion); only the U.S.(US$ 13.2 billion) and the UK (US$ 3.3) had larger budgets. [5]

The power of Gates and Soros is, at its core, dispositional (Hägel 2020: 110-116, 246-259): their personal wealth allows them great flexibility to choose projects and partners, and to change these whenever the billionaires find new priorities or more suitable associates. Usually, Soros and Gates provide funding on a short-term basis that requires renewal. Since recipients know that the billionaire’s funding can go elsewhere, they have an incentive to anticipate and comply with the donor’s wishes. “[T]he BMGF’s influence is evident in the reaction and second-guessing of the foundation’s interests and position” (Harman 2016, 355). In order to exercise their power across borders, Gates and Soros rely on their organizations, which act as local beachheads and brokers. In 2019, Soros’s Open Society Foundations network boasted offices in 38 foreign countries, and the Gates Foundation in seven. As these institutions depend entirely on the billionaire’s money, employees can be expected to execute their funder’s objectives. The local staff can provide the billionaire with information about, as well as contacts in the country, which, over time, generates social capital in addition to the financial capital (Burt 2004). The billionaire’s institutions abroad can hence help him to identify and recruit promising allies, before taking on the more mundane function as channels of influence by disbursing money. In all of this, the fact that they are external actors can give billionaires strategic advantages to disrupt existing political constellations. “Outside challengers often make the most effective adversaries because they are not bound by the conventions of the strategic action field and instead are free to bring new definitions of the situation and new forms of action to the field.” (Fligstein & McAdam 2012, 99f)

How these mechanisms operate can be seen in the course of the so-called Rose Revolution in Georgia, when Soros empowered the opposition movements that would defeat President Eduard Shevardnadze in the 2003 election. While the EU and the U.S. also promoted free and fair elections, observers expected a gradual power shift with varying compromise scenarios. Soros, however, had the more ambitious plan to import the “electoral revolution” model, which had previously lead to regime change in Slovakia and Serbia (Bunce & Wolchik 2011). In 2002, frustrated with rampant corruption in Georgia, the billionaire began to promote Shevardnadze’s opponent Mikheil Saakashvili, and put a new executive director, the strategic organizer Alexander Lomaia, in charge of his Open Society Georgia Foundation (OSGF). Lomaia brought six influential NGOs together in the “Democracy Coalition Project”, and later financed the training and the activities of the student movement Kmara, as well as, via paid-for advertising, the pro-opposition TV coverage of the main private channel, Rustavi-2. The highly symbolic actions of Kmara, such as the burning of flags, and their extensive broadcasting on Rustavi-2, spawned the impression of a citizen uprising. During the victorious showdown of the Rose Revolution, when Saakashvili stormed the parliament on November 22, 2003, Lomaia was on his side, and later became Saakashvili’s Minister for Education and Science. Throughout the whole process, the OSGF’s social network, developed over the prior decade, was more valuable for coalition-formation than for the actual funding of opposition forces, which, from what is publicly known, amounted to less than US$ 1 million (Hägel 2020, 214-235).

While Soros initially commented that “I’m delighted by what happened in Georgia, and I take great pride in having contributed to it”, he later tried to downplay his role, in order to protect his Open Society network. In response to what happened in Georgia, Russia and other post-Soviet authoritarian regimes, such as Uzbekistan and Kazakhstan, have restricted the work of Soros’s local foundations (Soros 2011, 33f ). Yet, in a non-public internal document from the Open Society Foundations network, which was leaked during summer 2016, probably by Russian hackers, the reconstruction of the OSGF’s past confirms its pivotal role: “From its earliest days, OSGF made a profound impact on the political and civic life of Georgia, demonstrated by the events of 2003’s peaceful Rose Revolution. Several NGOs that had been nurtured and backed by OSGF played central roles in the peaceful protests that ended the rule of Eduard Shevardnadze, and, following the transfer of power to Mikheil Saakashvili …, many senior OSGF staff members left to take up positions inside the new government.” [6]

The Gates Foundation seemingly has less of a political agenda than the Soros network—who would be against “saving lives”? Still, how to enhance Global Health best is a major public policy debate, regarding approaches and priorities, e.g. basic health care or biomedical solutions, communicable or non-communicable diseases. Since his foundation is a key funder in this field, Gates can exert influence on the agenda and choices (Hägel 2020, 188-214). When the BMGF is offering funding to developing countries, it often does so in the form of “matching grants”, which require co-funding by the recipient government, and thus have an impact on national health budgets. The BMGF finances major scientific research programs, and, in 2019, it was involved in at least 35 different public-private partnerships (PPPs). In these, pharmaceutical companies cooperate with governmental and non-profit organizations, e.g. within the Global Alliance for Vaccines and Immunization (GAVI), on whose governing board the BMGF is holding one of the four permanent seats, besides the WHO, UNICEF and the World Bank. In 2018, the Gates Foundation was the second largest contributor, after the U.S., to the World Health Organization’s (WHO) General Fund, [7] with most of the money earmarked for specific projects in the realm of infectious diseases and vaccination.

Overall, the Gates Foundation has moved beyond mere influence—it has acquired authority, the right to officially participate in the governance of Global Health. Gates and his wife have been asked three times to speak at the World Health Assembly, and the billionaire was apparently the driving force behind the WHO’s agenda when it declared a “decade of vaccines” in 2012. Gates’s “right to rule” is a case of “delegated” authority (Green 2014, 10-14, 33-36), because it depends on the explicit approval of the WHO and its member states. [8] This delegation has been spurred by what Gates and his foundation can offer. Beyond the financial resources, it involves, increasingly, expertise. The BMGF-sponsored Institute for Health Metrics and Evaluation is now the leading source for global health data, officially partnering with the WHO in 2015. Gates himself, just as he was eager to master the programming code when he was heading Microsoft, has accrued proficiency in the technical know-how regarding Global Health and is regularly publishing in scientific and news media (Gates 2015, 2018).

Limits and Prospects of Billionaire Philanthropy

On the face of it, billionaires that use their philanthropy to intervene in the politics of other states are violating collective self-determination. Usually, however, this is happening in fully legal ways, if civil, economic and political rights, such as freedom of assembly, investment or speech, follow the liberal principle of non-discrimination between nationals and foreigners. When billionaires act transnationally, the tensions within modern liberalism come to the fore: individual liberty conflicts with democratic self-determination, and national conceptions of the demos clash with cosmopolitan ideals. Attaining a balance within these tensions has never been simple and cannot be left to political theory alone. For illiberal states, the choices are simpler. These rights can be taken away, as Soros has always been aware of: “A foundation will never be able to compete with the state, … because a state has powers of coercion” (1995, 140). He has often faced this power, especially in Russia, where his foundation’s Moscow offices were raided in 2003, and its operations made illegal in 2015. In 2017, the Hungarian government started to shut down Soros’s Central European University. If one rejects coercive methods and wants to stay within the liberal model, one could try to regulate billionaire philanthropy in ways that make it more public and accountable, e.g. by requiring more representative boards of trustees or greater transparency for foundations such as those of Gates and Soros. But there is the risk that too many special obligations would push billionaires to use the vehicle of the limited liability corporation instead of the non-profit foundation, like Mark Zuckerberg and Laurence Powell Jobs are already doing for their philanthropy (Hägel 2020, 248, 262f, 267f).

At the level of global governance, questions of legitimacy and accountability are more complicated, because powerful states often dominate. Decision-making clout remains with a small oligarchy of states, institutionalized via the veto right of the five permanent members of the UN Security Council, and through share-weighted voting inside the World Bank and the IMF. Consensus-based international cooperation can sometimes overcome these democratic shortcomings of international politics. Yet, this ideal of multilateralism is currently being rejected by ultranationalist leaders in many major states, who see international affairs as a zero-sum game. Within Global Health, the WHO, whose responses to the 2009 “swine flu” and the 2014 Ebola epidemic had already been inadequate (Kamradt-Scott 2018), is weakening further, as China is pulling its weight, and the U.S. is withdrawing. Given this context, and despite the many things that are wrong with billionaires wielding power, Global Health may need Bill Gates more, not less, to provide public goods. Speaking like a global minister of health, in a BBC interview on 12 April 2020, Gates emphasized that, since 2015, “I and other health experts” had warned that a global pandemic “was the greatest potential downfall the world faced”. He then scolded governments for being insufficiently prepared for the Covid-19 outbreak. Notwithstanding his self-righteous attitude, his assessments seem largely correct. His technocratic approach is not the only or best answer, and the mounting conspiracy theories should tell Gates that his individualistic handling of public policy requires rethinking. Still, his resources for, his expertise in, and his commitment to Global Health cannot be substituted in the near future.

[1] See (in French) Damien Leloup and William Audureau, « Coronavirus: comment le milliardaire américain Bill Gates cristallise la haine des complotistes », Le Monde, 23 May 2020.

[2] See https://web.archive.org/web/20071011221455/http://www.gatesfoundation.org/AboutUs/OurValues/GuidingPrinciples/default.htm(accessed 6 June 2020).

[3] Bill and Melinda Gates, “Warren Buffett’s Best Investment”

[4] Gates’s Microsoft stock holdings have decreased to just over 1% of the company’s shares ; see also Anupreeta Das, “Breaking Down Bill Gates’s Wealth”, Wall Street Journal, 19 September 2014.

[5] See Institute for Health Metrics and Evaluation. The next largest donor was Germany (US$ 1.7 bn).

[6] “Open Society Georgia Foundation Strategy for 2014-2017”.

[7] The data was found on the website of the Institute for Health Metrics and Evaluation.

[8] In 2017, the BMGF entered into “official relations” with the WHO. See “Gates Foundation, KEI Enter Into Official Relations With WHO”, Intellectual Property Watch, 31 January 2017.