Though its assets will not grow significantly as a result of the gift, the Gates Foundation's giving will double to $3 billion annually, making it by far the world largest private philanthropy.

The power being amassed by the Gates Foundation -- which, of course, bears the name of the world's richest man, Bill Gates -- does not appear to be lost on its founders, who have been very sensitive to the potentially negative ramifications that come when a foundation is so large. Nor is it lost on the charity's critics -- including political activists who have argued that Gates' grants have supported the wrong kinds of causes, ignored pressing problems or simply have been given out in the wrong way.

The amount of giving power the Gates Foundation has amassed is indeed remarkable -- with the Buffett fortunes added in, its annual giving is likely to be equal in value to the assets of many influential foundations, such as the Rockefeller Foundation and Charles Stewart Mott Foundation. This essentially makes the Gates Foundation what Dean Rusk once famously referred to as "the fat kid in the canoe" -- an organization of such size and clout that its actions, intentionally or otherwise, affect everyone else in its sphere of movement.

The challenges of keeping the destabilizing impacts of this size to a minimum, however, will be exacerbated by the fact that its new giving power is emerging into public view just as charitable foundations themselves are becoming politically controversial. In recent years, activists from both sides of the political spectrum have grown increasingly suspicious of large foundations -- criticizing both the size and influence of those that support the causes espoused by their political rivals. In this environment, the Gates Foundation faces a significant challenge: It could become a symbol for both sides, and likely will find itself at the center of a political maelstrom.

Foundations and Politics

The role of foundations in policymaking is coming under fire from some nongovernmental organizations (NGOs) as well as from governments and businesses. Members of both political parties have accused others of benefiting from philanthropic foundations that abuse the tax code and distort the political process. But the fight over whether the other side is "playing fair" actually conceals the real story, which is that both sides are watching and learning from the other about how to use foundations effectively in bolstering political efforts.

In the minds of liberals and Democratic Party activists, the Republican Party's electoral successes since 1980 are linked to the focused efforts of conservative organizations, such as the Scaife and John M. Olin foundations. In the minds of the conservatives, liberal organizations such as the John D. and Catherine T. MacArthur Foundation and the Pew Charitable Trusts have been the primary means of support for activists that support Democratic Party causes. In both camps, there is a common theme: They argue that money these foundations award to political charities exaggerates the popularity of certain movements and helps to sway voters to certain points of view in ways that, without the foundations' financial clout, would not be possible.

The reality, of course, is far more complicated and nuanced. Conservative foundations are not nearly as active in GOP political efforts as they often are portrayed as being, and they are loathe to simply fund ideas -- preferring instead to fund people. Liberal foundations, on the other hand, indeed have the power to support organizations that bolster Democratic politics, but -- as has been evident in debates over climate change -- more than money is needed to transform ideas from academic theory into new public policies.

Philanthropic foundations have been connected to the public policy cycle since the 1960s, when conservative foundations began awarding grants to individuals and institutions that they believed could reverse the prevailing trend toward more liberal government. Coordinated grants from a handful of conservative foundations led to the creation of the American Enterprise Institute (AEI), the Heritage Foundation, the Federalist Society and dozens of other conservative and libertarian NGOs and think-tanks. In the early 1980s, Heritage was portrayed as instrumental in the "Reagan Revolution" -- and in the 1990s, the Cato Institute was viewed as playing a similar role for Newt Gingrich.

Ronald Reagan's presidential victory and, in 1994, the surprising election of a Republican Congress prompted a concerted effort by liberal foundations and NGOs to figure out what they had missed. What were the Republicans doing that they were not? They saw the potential power of coordinated giving, and they were clearly aware of the influence that AEI and Heritage had won. Looking inward, these groups saw themselves as having funded very successful, powerful social movements in the 1960s and 1970s, but as having supported new social movements with much less tangible results since the mid-1970s.

This assessment gave rise to a pivotal misreading by liberal foundations: They saw conservative foundations as having funded a diffusion of ideas that grew into popular movements supporting the GOP. In truth, conservative foundations had not simply been funding ideas or movements, and they were not necessarily funding Republicans. They were funding conservative individuals and organizations they knew and trusted -- and the grant recipients were given latitude in which to work. That their creations -- Heritage, AEI, American Spectator -- proved influential in politics was considered a positive outcome, but the objective of the foundations was not necessarily to secure electoral victories for the GOP.

Based on this misperception, liberal foundations and NGO leaders concluded that for Democrats to win back power, liberal foundations needed to concentrate their annual grants among organizations that would bolster traditional Democratic constituencies and coordinate social change. This approach carried the day until George W. Bush's election in 2000. At that point, many liberal foundations again changed tactics and began to focus more sharply on strategic grant-making. In other words, foundations essentially set a goal -- for example, changing U.S. health care policy -- and then offered grants to organizations whose work would notch progress toward that goal. If the recipient failed, another organization would be awarded a grant to achieve the same strategic goal.

Now, the approach of liberal foundations is a combination of strategic grant-making and donations to traditionally Democratic, issue-specific groups.

Political Criticisms

There is a misperception among conservatives also: They see the current move toward policy change on drugs pricing and policy, energy policy and food regulation as having originated in the philanthropic endeavors of liberal foundations. While it is true that these issues have been driven to Congress by a host of foundation-funded activist organizations that are dedicated to influencing regulatory change, foundation grants have been available for each cause -- without decisive effect -- for more than a decade. The grants have provided resources for the most polished and professional liberal interest groups, but successful policy change almost always requires that grassroots activists become active before political success becomes reality. (In fact, the evolution of the climate change debate mentioned above has demonstrated this principle well.)

Nevertheless, members of Congress -- particularly Republicans -- are calling for increased scrutiny of foundations, and particularly of their giving programs and tax status. While the battle is a strategic one, the tactical debate is guided by a question of whether foundations are abusing the tax code. IRS rules restrict the spending of private foundations for political lobbying. Foundations can award grants to charities that lobby, such as 501(c)4 groups (which have unlimited ability to lobby); however, grants to such organizations must be designated for projects that could be legally undertaken by 501(c)3 organizations. These charities, which receive the bulk of foundation grants, can spend only a fraction of their budgets on politics; by law, they must focus primarily on public "education" rather than lobbying. Of course, the definition of "education" has gotten stretched to include some fairly overtly political organizations -- the Heritage Foundation, according to the tax code, is a non-partisan educational charity.

Both parties in Congress are prone to examining the grants made to obviously political "educational" charities and crying foul. Congress occasionally looks into the question, and -- partly as a result of the effective communications strategies employed by foundations and grant recipients -- these efforts usually die on the vine.

Another issue that has been carried forward -- again, primarily by Republicans -- concerns "donor intent." In this realm, activists claim that many powerful foundations give awards to groups and causes that are antithetical to the beliefs of the founding patron. Some of the cases cited are obvious to the point of irony: The Rockefeller fortune, for example, now funds a number of overtly anti-oil initiatives. Critics say that in such cases, foundation directors are subverting the original intent of the donor -- that times may change, but James N. Pew (of Sun Oil) did not envision supporting regulations that would force a shift away from oil as an energy source.

Some in the more liberal camp, meanwhile, have begun to question the overall power of private foundations. They ask whether foundations that give millions of dollars to local education initiatives, for instance, are usurping the role of the state and essentially eroding democracy by overpowering government, with its more finite resources. These critics ask whether foundation executives who are not accountable to the public should play a significant role in the education policies of local communities.

Gates and the Power of Foundations

Into this milieu comes the Buffett announcement concerning the Gates Foundation. The size of the Gates Foundation is already tremendous, with assets in excess of $30 billion (more than double the assets of the Ford Foundation, the second-largest private philanthropy in the United States, at $12 billion). When the Buffett funds are added in, the Gates Foundation will award more than $3 billion annually in grants (more than triple the amount given by the Ford Foundation).

For some, the Gates Foundation raises a philosophical problem: How big is too big? This question is perhaps most important as it relates to -- or poses a threat to -- government. For example, the Gates Foundation -- which has accomplished much, and with surprisingly little controversy, in the battles against AIDS and malaria -- has been criticized over education initiatives. Because the foundation gives hundreds of millions to various local school districts in efforts to improve education for minorities, it is a voice of influence in those districts. And this naturally disturbs some, who view the foundation as much as an interloper as a helper.

Moreover, the power of a single, monolithic foundation can be amplified as a constellation of smaller NGOs cluster around it. One needs only to look at the community of NGOs that has grown up around the National Institutes of Health and U.S. Agency for International Development (AID) to see that significant donors can create empires of organizations that depend on their largesse. If NIH and AID are indicators, numerous charities will tailor their work in order to win Gates grants -- and, in effect, become wards of the foundation. In this way, the power of a foundation is intensified in a kind of "greenhouse" effect, as it wins a community of peripheral supporters, spokespeople and advocates.

The Gates Foundation has done much to minimize such effects in its work to date. But continuing to do so successfully likely will become one of the foundation's most significant challenges when it is spending as much as $3 billion on disease and education. If it fails in this realm, the foundation could emerge as a rallying point for both sides of the politicized foundation debate.

As we already have seen, each political party is trying to find political advantage through foundation reform -- while also protecting its own interests. Neither side is likely to advocate an overhaul of the basic behavior or missions of foundations, since both have much to lose. However, it is possible that politicians will address the scale of foundations' operations. Conservatives might support measures that would encourage smaller foundations; this would level the playing field without significantly hampering their own smaller foundation supporters, and Democrats who are wary of large concentrations of wealth could join the GOP in this effort.