To most people Bill Gates, or William Gates III, is a worthy philanthropist, but for others he is a symbol of evil. Opinions are divided and worldwide concerns are raised about the ethics of some of his most influential ventures. In upcoming articles we will explore various questions about Bill Gates’ power of influence and possible conflicts of interest. But first, it’s important to understand his family history, the origin of his money, and the start of the Bill & Melinda Gates Foundation.
The Gates family fortune began long before Bill Gates created Microsoft.
In 1904, Charles C. Gates Sr. arrived in Colorado, in the United States to work in a gold mine. In 1910 he used $700 in savings and a $2,800 loan, according to Forbes, to buy the Gates Tire and Leather Company, where he and his brother grew from tire manufacturers to makers of all kinds of rubber products.
His son, Charles C. Gates Jr. further diversified the company’s investments, buying farms and cattle and taking a controlling interest in Learjet (a US jet manufacturer). The family’s main business was sold in 1996 and at this time, the so-called The Gates Corporation, was merged into the British engineering firm Tomkins in a $1.1 billion deal.
The family’s remaining business interests were brought together under the direction of Cody Resources, which today invests in oil and gas, land, water and real estate. Charles Jr.’s sister Diane Gates Wallach is chairman of Cody and also serves on the board of directors of Gates Capital Partners, which invests much of the family’s wealth.
Bill Gates, Microsoft and the influence of his mother in the deal with IBM
William Henry Gates III (Bill Gates) was born in the city of Seattle (USA), in 1955. Son of William Henry Gates II and Mary Maxwell, two powerful and wealthy families. His father was a lawyer who co-founded Preston, Gates and Ellis, a law firm with offices in the US and China.
Gates joined Harvard University in 1973, initially taking a law degree, later switching to mathematics and computer science. After two years, he dropped out of the course in order to focus on his endeavors.
In 1975, Bill Gates and Paul Allen created Microsoft. The company starts by developing the Altaris BASIC, a minicomputer developed in partnership with MITS, a technology company.
A year later, Microsoft became independent from MITS and began to develop software for various systems.
In 1980, IBM, a computer company for enterprises, does business with Bill Gates and Paull Allen. This project resulted in MS-DOS (Microsoft Disk Operating System), which achieved sales records and transformed Microsoft into a technological giant.
According to The New York Times, Bill Gates’ mother Mary Gates, a respected businesswoman, used her connection with John Opel, then chairman of IBM to help her son.
Mary Gates had several responsibilities, including her membership on the board of the nonprofit United Way of King County, where she met John Opel, then president of IBM.
Microsoft was already applying for the project, but IBM was considering several software companies, including Digital Research, one of Microsoft’s competitors. With this knowledge, Mary used her connection and spoke with John Opel about Microsoft, and then Opel spoke with IBM executives about the company.
The dark side of Bill Gate – according to Paul Allen
In 1983, Paul Allen leaves Microsoft after an argument over equity ownership and after being diagnosed with Hodgkin’s lymphoma.
Paul Allen, co-founder of Microsoft, wrote in his memoir that Bill Gates was a bully who sought to deprive him of his share of the Microsoft fortune when he was recovering from cancer. In an interview with “60 Minutes” Paul Allen confirmed that he thought about telling Bill Gates – “some days working with you is like being in hell”.
In that interview Gates is described as someone obsessed with work, but also with an ethically reprehensible behavior that shocked him, namely when he tried to “dilute his actions” (at Microsoft) to basically “nothing”.
The Beginnings of the Bill & Melinda Gates Foundation and Lifetime Connection to Warren Buffett
Between 1998 and 1999, the US government accused Microsoft of illegally maintaining its monopoly position in the computer market. At trial, the district court ruled that Microsoft’s actions constituted illegal monopolization under section 2 of the Sherman Antitrust Act of 1890.
In 2000, the news that Bill Gates had donated 90% of his wealth to his Bill & Melinda Gates Foundation made headlines around the world. The world’s largest private organization to support scientific research, global and local health , non-profit philanthropic efforts, was created out of the existing William H. Gates Foundation, founded and managed by the father of tycoon Bill Gates.
The funds of this non-profit organization come from donations from private institutions.
The main donation comes from Bill and Melinda Gates, who as you can see on the foundation’s website donated 36 billion of their own wealth from 1994 to 2018.
Then there’s the donation from Warren Buffett, who in 2006 pledged a lifetime contribution worth more than $30 billion. The donation primarily consists of annual transfers of shares from Buffett’s company, Berkshire Hathaway.
According to Influence Watch, the Trust Foundation , created in 2006 after Warren Buffett’s donation was designed to prevent the emergence of a conflict of interest, while also allowing Buffett to participate in the grant-making process of the Bill & Melinda Gates Foundation.
Do non-profit foundations pay taxes?
Nonprofits are exempt from federal income tax under subsection 501(c) of the Internal Revenue Service (IRS) tax code. In order to be exempt from federal taxes, nonprofit organizations have to comply with certain rules, as explained on Investopedia .
Non-profit companies are also exempt from paying sales tax and property tax. While a nonprofit’s income may not be subject to federal tax, nonprofit organizations pay taxes on employees (Social Security and Health Care) just like any for-profit business.
In the United States, there are 1.54 million nonprofits registered with the IRS as of 2016 based on the National Center for Charitable Statistics.
Ethical concerns
The Bill & Melinda Gates Foundation funds other organizations in order to support different causes linked to the media, health, educations, scientific research, among others. But Bill Gates high influence raises concerns about the ethics of this private enterprise.
The foundation is one of the largest private donors to the World Health Organization (WHO).
Concerns about this ethical issue became even more evident when the former President of the United States, Donald Trump, threatened to end US funding to the WHO and Bill Gates criticized the former representative of the American nation.
The Gates Universe Investigation continues, in the next articles we will talk about the main investments of the Bill & Melinda Gates Foundation and the possible conflicts of interest…
