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Gates Foundation: New Funding Force

By Robert Weisman

In the technology research bazaar, ever alert to shifts in funding, there’s a new high roller bellying up to the bar.

The deep-pocketed Bill and Melinda Gates Foundation, with a $31.9 billion endowment and a $30 billion commitment from Warren Buffett, last winter gave $2.5 million to the Broad Institute of Harvard and MIT to fund a pilot study to create a genetic map of malaria.

Over the summer, the Gates Foundation donated $2 million to help Boston’s Partners in Health run a training program in Rwanda on HIV treatment and prevention. It previously had given $44.7 million to the Harvard-affiliated nonprofit group, cofounded by medical anthropologist Paul Farmer, for research on tuberculosis in Peru and Russia.

Even labs that have no Gates money, and have done little work in the foundation’s core areas of interest, health and education, are being drawn to the magnetic new force in research underwriting.

Draper Laboratory engineers are working under a modest $112,000 grant from the World Health Organization to develop a sensor-based breath analyzer to test for tuberculosis. But when it comes to building a prototype and testing it in a Third World field trial, Draper will be seeking a larger grant from a source it has never tapped: the Seattle-based Gates Foundation.

A few blocks away from Draper, administrators at the MIT Media Lab are in talks with the Gates Foundation about funding for a variety of research projects in the healthcare and aging fields.

“With the resources they’re putting out, their magnitude, and their scale, the Gates Foundation is attracting a lot of interest,” said James D. Shields, who took over this month as chief executive of Draper, a nonprofit research and development lab that is expanding into biomedical and other fields from its traditional base in ballistic missile guidance and space systems.

The role of the Gates Foundation, whose stated mission is “to help reduce inequities in the United States and around the world,” has been growing steadily since it was formed in 2000 by Microsoft Corp. founder Bill Gates, the world’s richest man, and his wife, Melinda French Gates. Bill Gates stunned the business world in June when he said he would step away from daily operations at the software company in two years to devote most of his time to running the foundation.

Later that month, Buffett, the legendary investor who is a close friend of Gates, said he would give away the bulk of his $42 billion fortune to five foundations, with the Gates Foundation getting by far the largest chunk. Buffett’s gift made the already richly endowed Gates Foundation a formidable force in the research world — especially in global health, where it is increasingly focused — at a time when traditional funding sources have become less reliable.

The foundation, which has made grants totaling $11 billion over the past six years, including $1.3 billion last year, declined to make a representative available for an interview. Roughly half of its grants have been in the health arena, with most of the rest focused on education, according to the foundation.

But people in the Boston area research community suggest the Gates Foundation is making its influence felt in two ways. It has shown a willingness to back long-term research at a time when many funding sources, like corporations and government agencies, have shifted their focus to shorter-term projects. And while agencies like the National Institutes of Health direct much of their funding to chronic diseases afflicting Americans, the Gates group has been bankrolling projects aimed at solving health problems in the developing world.

“This is letting people take on the problems of previously neglected diseases for which it was impossible to get significant funding in the past,” said Eric S. Lander, director of the Broad Institute, a biomedical research collaborative. “It’s empowering a generation of young scientists who want to be working on these problems.”

Jim Yong Kim, founding trustee and former executive director of Partners in Health, said Gates himself brings an “extreme results-oriented approach,” honed at Microsoft, to the challenges of stopping HIV transmission and halting deaths from malaria in poor countries. In a round of vaccine grants earlier this year, for example, Gates required recipients — labs that historically have vied with one another — to share methodology and even preliminary research data.

“They’re turning up the thermostat almost immeasurably,” Kim said. “They’re insisting that projects get implemented, and get implemented as soon as possible. Bill and Melinda Gates are fundamentally changing the entire field of global health. They’re changing the way we think about what is and is not possible.”

Their hands-on approach was on display in July when Bill and Melinda Gates visited a Rwanda hospital where Partners in Health runs a training program. Along with other philanthropic groups active in world health projects, from the Rockefeller Foundation to the Wellcome Trust of the United Kingdom, the Gates group increasingly is setting the agenda for researchers.

“It’s almost like another huge NIH pool,” said Kenan E. Sahin, founder and president of Tiax LLC, a Cambridge research and development company. “If one looks at where they’re putting their money, it’s a predictor of what might happen.”

While the Gates Foundation is preparing to boost its grant-making to about $3 billion a year by 2008, that remains a fraction of the $27 billion annually invested in medical research by the NIH.

But the foundation has hired some of the top health experts in their fields. “Gates probably has a deeper healthcare staff than anybody out there in the foundation space,” said Momenta Pharmaceuticals Inc. chief executive Craig A. Wheeler, who has worked with the foundation on global health issues.

And it has reduced the risk for companies investing in research on diseases prevalent in the Third World by striking partnerships with governments to guarantee a market for new drugs and treatments.

“What the Gates Foundation has done is to come into the research marketplace with a new approach,” said Nils Daulaire, chief executive of the Global Health Council in White River Junction, Vt., a policy and advocacy group working in developing countries. “It’s beginning to correct the market failure in research and development for the past 50 years: People most in need of product - drugs and technology for better health - have no purchasing power.”

Perhaps the biggest impact of the gifts from Gates and fellow billionaire Buffett may be the message they send to other wealthy business leaders. “They’ll be an enormous impetus,” said Victor W. Zue Ph.D. ’76, codirector of MIT’s Computer Science and Artificial Intelligence Laboratory. “It’s not only that they’re making these investments, but they’re setting the example for other people to make investments.”