New Boss At Gates

June 15, 2008       Mark Hrywna      

When living donors are still involved with a foundation, it’s not uncommon for them to turn to people they know who can carry out their mission. The selection of Jeff Raikes by the Bill & Melinda Gates Foundation to be their next chief executive officer "certainly fits that mold," said Eugene R. Tempel, executive director of the Center on Philanthropy at Indiana University.

Among 150 candidates, foundation co-chairs Bill and Melinda Gates "came back close to home," having seen Raikes in action and knowing him for more than 20 years, he said.

Raikes, who announced his retirement in January after 27 years at Microsoft where he was responsible for the Microsoft Office software suite, will succeed Patty Stonesifer on Sept. 2.

Stonesifer also was a Microsoft executive before heading up the Seattle-based foundation in 1997. She announced in February she would be stepping down by Jan. 1, 2009, and will begin a transition in September to a new, still to be defined, role at the organization.

The Gates Foundation has "very good program people in place already," Tempel said, so it’s not about new programming, but strengthening the plan and building the organization as it prepares to give away unprecedented amounts of money. Raikes has experience building and growing complex organizations, he said, and having worked in an organization where Bill Gates was present will be a plus as Gates becomes more involved with the foundation.

Raikes, who will officially retire from Microsoft Sept. 1, said a big part of the attraction to the job was "the strength of leadership in place. I have the experience in growing and scaling organizations and working with Bill and Melinda on their thinking but it’s a tremendous help to me to have a great leadership team in place."

Given that the foundation’s program areas have largely been chosen, and vision of the Gates’ is pretty clear, "it would seem that the CEO will be the person who implements and makes things happen — and that deep knowledge of nonprofits and foundations is a secondary consideration," said Elizabeth Boris, director of the Urban Institute’s Center on Nonprofits & Philanthropy, in Washington, D.C. "This is not to say that the content and context of the program areas is unimportant. They are very important because the large sums that the foundation is granting have to be given carefully or they risk upending fragile systems and networks," she said. "Much of the foundation’s impact will depend on how open the foundation leadership is to information and analysis, and to thoughtful critiques."

The largest foundation in the world, the Gates Foundation has an endowment of more than $37 billion and more than 500 employees organized into three programs: Global Health, Global Development and the U.S. Program, each with its own president.

"I think the missions…are both very exciting and in terms of aspirations somewhat awesome," Raikes told The NonProfit Times. He said that he expects to stay at the foundation for years. "Certainly a key part of what I hope to do is to help the team take on and continue to take on these big aspirations and use the benefit of my experience over the years to help them achieve that," he said.

"A key part of what I hope to do is to really help Bill and Melinda continue to define and refine the strategies to be a connecting point to the organization. Over time, I’m sure they’ll see perhaps variations on the things we’re already pursuing; perhaps see new opportunities for the foundation to make a difference."

Raikes also hopes to make the foundation a model for how it works with its partners. "Being able to achieve these aspirations will come only if we have great relationships with the grantees, the people they serve, other constituents, to help the foundation achieve its mission," he said.

Raikes said that he spoke with Microsoft CEO Steve Ballmer this past December about retirement, considering teaching and philanthropy among other things. It wasn’t until after Stonesifer announced in February that she’d be leaving that Raikes expressed his interest. Once he was offered the position, it only took "a nanosecond" to accept, as he had already gone through the considerations that were important to him, and speaking with his family.

Raikes will lead the foundation into an unprecedented era of growth that surely will ripple through the sector. Last year, the foundation made grant payments of more than $2 billion, but its endowment includes $1.6 billion received in 2006 from Warren Buffett and $1.76 billion last year, as part of his plan to begin giving away his $31-billion fortune.

"Bill and Melinda Gates have chosen someone who they know, trust and can work with — someone who has the skills and ability to translate their vision into reality," said The Urban Institute’s Boris. "It seems as if that’s the role Raikes played for Bill at Microsoft. As the foundation ramps up to 1,000 people, there is going to be a significant management role. This is a scale — both money and people — that is unprecedented in the U.S. private foundation world and it appears that Raikes has the experience to shape and manage that scale."

As president of the Microsoft Business Division, Raikes was responsible for "dramatic growth in the company’s business productivity lineÉnearly doubling revenue to more than $16 billion annually." He still serves on the company’s leadership team.

Melinda Gates said Raikes "has earned a reputation as a trusted and respected leader" during his more than 25 years of experience in the private sector. "Equally important, he shares our passion for these issues and for continuing Patty’s work to build a great culture at the foundation. Jeff is the right CEO to lead the strategies we have in place to help reduce inequities in the United States and around the world."

Raikes is the second former business executive appointed to a top foundation post in as many years. Last year, Luis A. Ubi–as, previously a director at McKinsey & Company, was appointed to succeed Susan Berresford as president of the Ford Foundation in New York City. "I’m not sure I’d call it a trend," Tempel said of executives crossing into foundations, "but there’s certainly more of it in the foundation and nonprofit world than we’ve seen in awhile. Is it a trend toward more accountability and efficiency? It certainly could be seen that way." He said it would have been more surprising if the new CEO had come from another foundation or a major university.

"Having started at Microsoft when they had 100 employees, growing to more than 80,000 employees, gave me a lot of experience managing high-growth, larger-scale organizations, as well as seeing the role of Microsoft in our industry be evaluated. I think I have a lot of grounding in what that all means," Raikes said. "Now, I have a lot to learn about how the foundation is viewed in the nonprofit sector."

Raikes isn’t exactly a neophyte to philanthropy. He co-founded the Raikes Family Foundation with his wife in 2002, which had net assets of $109 million in 2006 and last year gave away more than $6 million. Raikes is a trustee and his wife, Tricia, is the lead family member on the foundation, which focuses on issues of youth, education and inclusiveness, with commitments in the Pacific Northwest and his native Nebraska.

Raikes and his wife also co-chaired the 2006-07 fundraising campaign for the United Way of King County, which set a national record for fundraising. He also is a trustee of the University of Nebraska Foundation. He holds a Bachelor of Science degree in engineering-economic systems from Stanford University. NPT