Charity, investment clash

Gates Foundation vaccinates kids, invests in polluting plants

EBOCHA, NIGERIA -- Justice Eta, 14 months old, held out his tiny thumb.

An ink spot certified that he had been immunized against polio and measles, thanks to a vaccination drive supported by the Bill & Melinda Gates Foundation.

But polio is not the only threat Justice faces. Almost since birth, he has had what his neighbors call "the cough." People blame fumes and soot spewing from flames that tower into the air over a nearby oil plant. It is owned by the Italian petroleum giant Eni, whose investors include the Bill & Melinda Gates Foundation.

In a contradiction between its grants and its endowment holdings, a Los Angeles Times investigation has found, the foundation reaps vast financial gains every year from investments that contravene its good works.

In Ebocha, where Justice lives, Dr. Elekwachi Okey, a physician, says hundreds of flares at oil plants in the Niger Delta have caused an epidemic of bronchitis and asthma. No definitive studies have documented the health effects, but many of the 250 toxic chemicals in the fumes and soot have long been linked to respiratory disease and cancer.

"We're all smokers here," Okey said, "but not with cigarettes."

The Gates Foundation has poured $218 million into polio and measles immunization and research worldwide, including in the Niger Delta. At the same time that the foundation is funding inoculations to protect health, the Times found, it has invested $423 million in Eni, Royal Dutch Shell, Exxon Mobil Corp., Chevron Corp. and Total of France -- the companies responsible for most of the flares blanketing the delta with pollution.

Suspect holdings

Like most philanthropies, the Gates Foundation gives away at least 5 percent of its worth every year. It invests the other 95 percent of its worth. Monica Harrington, a senior policy officer at the foundation, said the investment managers have one goal: returns "that will allow for the continued funding of foundation programs and grant making."

By comparing these investments with information from for-profit services that analyze corporate behavior, the Times found that the Gates Foundation has holdings in many companies that have failed tests of social responsibility because of environmental lapses, employment discrimination, disregard for workers' rights, or unethical practices.

This is "the dirty secret" of many large philanthropies, said Paul Hawken, an expert on socially beneficial investing. "Foundations donate to groups trying to heal the future," Hawken said in an interview, "but with their investments, they steal from the future."

Blind-eye investing -- investing in destructive or unethical companies without attempting to improve their way of operating -- rewards bad behavior, said Douglas Bauer, senior vice president of Rockefeller Philanthropy Advisors, a nonprofit group that assists foundations on policy and ethical issues.

At the Gates Foundation, blind-eye investing has been enforced by a firewall between its grant-making side and its investing side. The goals of the former are not allowed to interfere with the investments of the latter.

Much of the rest of philanthropy, however, is beginning to address contradictions between making grants to improve the world and making investments that harm it. Recent surveys show many foundations have adopted at least basic policies to invest in ways that support their missions.

Bauer said the Gates Foundation's resources give it the unique power to move the debate. If Gates adopted mission-related investing, he said, the shift in the world of philanthropy would be "seismic."