Private philanthropy and conflicts of interest in global health

Suppose an Indian businessman—a billionaire who had invested in the emerging Indian auto industry—were to donate to the Hurricane Katrina rehabilitation efforts in New Orleans. Such a donation would surely be welcomed as a grand philanthropic gesture. But if the donation carried a caveat—that to receive the funds, New Orleans’ factories would have to be redesigned to produce Tata Nano cars instead of Ford pickup trucks—the donation might produce legitimate debate.

The same situation is arising in global health politics, after the Bill & Melinda Gates Foundation established partnerships with the Coca-Cola Company.

The partnerships are intended to “create new market opportunities for local farmers whose fruit will be used for Coca- Cola’s locally-produced and sold fruit juices”. The program is a four-year, $11.5 million partnership for “mango and passion fruit farmers to participate in Coca-Cola’s supply chain for the first time.” The links between Coca-Cola and the Gates Foundation are strong; Melinda Gates recently argued that Coca-Cola’s business strategy was a role-model for public health organizations. But perhaps more importantly, the Foundation holds significant shares in Coca-Cola (>15 million shares, over 7% of the Foundation’s portfolio, not counting Berkshire Hathaway holdings; since Warren Buffett is gradually transferring ownership of Berkshire Hathaway stock to the Bill & Melinda Gates Foundation, the Foundation will soon be the largest stakeholder of Coca-Cola (and Kraft) in the world. The Foundation is heavily invested in other food and pharmaceutical companies as well:

It has been noted that sugary drinks such as those produced by Coca-Cola are major contributors to obesity and diabetes, which are rapidly increasing in developing countries. Some people find it surprising that noncommunicable diseases like diabetes constitute more than half of all deaths in low- and middle-income nations, while the Gates Foundation, along with the World Bank and national official development aid donors, apportion <3% of their collective budgets toward these conditions.

Is it appropriate that the Gates Foundation has substantial holdings in the Coca-Cola Corporation, and also facilitates grants that encourage farmers in developing countries to become business affiliates of Coca-Cola? Private foundations are tax-exempt under the premise that they are not serving private interests, and that they ultimately result in greater public good than if their endowments were taxed and funneled through public systems.

Touching the third rail

While government aid for health has been extensively critiqued, less attention has been paid to private donors. Philanthropies have often been critiqued in retrospective analysis, but prospective critical analysis of foundations can be seen as ‘‘biting the hand that feeds us.’’ Within the global health community, private donors are viewed as the ‘‘third rail’’ that no one wishes to analyze. By virtue of not being subject to popular elections, private foundations operate outside the typical boundaries of democracy. They play a major role in determining what buildings will be built in which communities, whether new hospitals will compete with existing public infrastructure or contribute to local health systems, who will be hired and fired, and what changes will be made to the futures of poor communities—all without any official mechanism for those communities to vote on the matter. In the interests of public health, and particularly because poor communities do not automatically have a feedback mechanism to influence their decisions, we argue that it is appropriate to subject private foundations to the same scrutiny received by public institutions.

In this week’s PLoS Medicine, we report detailed data about the networks, activities, and funding patterns of the five major private global health foundations: the Bill & Melinda Gates Foundation, Ford Foundation, W. K. Kellogg Foundation, Robert Wood Johnson Foundation, and Rockefeller Foundation.

What did we find?

The five major US private nonprofit foundations have significant investments in food and/or pharmaceutical companies, directors who currently or have previously sat on the boards of those companies, and, in several cases, enter in partnerships with those companies. The invested companies included, to name a few, Coca-Cola, Kellogg (a leading producer of snacks and breakfast foods and the main investment of Kellogg Foundation), PepsiCo, Pfizer, GlaxoSmithKline, McDonald’s, Nestle (a company with 6,000 brands mainly in food and beverage including coffee, water, chocolate, confectionery, ice cream, health-care nutrition, and frozen foods, among others); Novo- Nordisk, YumBrands (the world’s largest restaurant company, operating Pizza Hut, KFC [Kentucky Fried Chicken], and Taco Bell among others), Johnson & Johnson (main investment of Robert Wood Johnson Foundation), and Sanofi- Aventis, in addition to several mining, petrochemical, and alcohol companies.

Significant overlaps between foundation leadership and circular flows of personnel with food and pharmaceutical companies were observed. In some instances, the corporations directly benefit from foundation grants, and foundations in turn are invested in the corporations to which they award these grants. Foundation board members and decision-makers sit on the boards of some for-profit corporations benefitting from their grants. Click on the map below to view the major interlinkages among Gates Foundation Board members and for-profit corporations:

While private foundations adopt standard disclosure protocols for employees to mitigate potential conflicts of interests, these do not always apply to the overall endowment investments of the foundations or to board membership appointments. The extent and range of relationships between tax-exempt foundations and for-profit corporations suggest that transparency or grantmaking recusal of employees alone may not be preventing potential conflicts of interests between global health programs and their financing.

Preventing conflicts

What are some strategies these foundations might adopt to mitigate potential conflicts of interest?

[1] Divestment: Foundation’s investments should not counteract the foundation’s charitable mission statement and objectives. There should be separation between investment management and the foundation’s board. It is possible to create a ‘‘blind trust’’ so that the foundation leaders are not aware of their corporate investments and avoid the possibility that investment knowledge influences program decisions.

[2] Beyond standard “transparency” rhetoric: Full disclosure of actual or potential conflicts of interest is necessary in making public health decisions, but current rhetoric claiming that foundations are transparent because they disclose their grants on websites is not translating into real, meaningful transparency. To find the linkages we observed in our study, we had to investigate detailed transcripts from the U.S. Securities and Exchange Commission. Meaningful transparency includes disclosing corporate affiliations (directorships, advisory panels, funding receipt) and personal investment holdings. A standardized format for disclosing a private foundation’s affiliations (analogous to the 990 form currently used by the IRS) could allow more meaningful transparency about the scope and management of potential conflicts of interest within private foundations.

[3] Alignment of aid with community needs: Foundation investments and program portfolios should incorporate representation from the intended recipients of its support. After all, if the Gates Foundation believes that converting farmers from current agricultural programs to production for Coca-Cola would help farming communities, in spite of evidence to the contrary, then the farmers themselves should have input. This point was international agreed upon in the Paris Declaration on Aid Effectiveness and Accra Agenda for Action, but evidence mounts that current grant-making activities can distort recipient government health budgets by focusing on one or a few diseases at the expense of others, create misalignments between health funding and the observed burden of disease, and inappropriately displace government funds that would have otherwise been invested in public health.

Potential conflicts of interest exist everywhere, but there is considerable variation in how they are managed. When such topics have been discussed in the public health literature in the past, they have resulted in the avoidance of disastrous outcomes—such as the revelation that medicine research was inappropriately influenced by the pharmaceutical industry. The overarching challenge is to prevent potential conflicts of interests from distorting science and public health outcomes, not to prevent thoughtful debate under the premise that billionaire philanthropists are beyond critique.