Bill Gates ups his billion-dollar giving

January 27, 2009, 12:43 AM UTC

There aren’t many optimists these days. Bill Gates, thank God, is one.

His assets – actually the assets of the Bill & Melinda Gates Foundation, where the bulk of his wealth resides – are down like everybody else’s. They declined about 20% last year, he says in his first annual letter for his foundation. Still, Gates notes in the letter released today, he and his wife have decided to increase their spending to $3.8 billion this year. vs. $3.3 billion in 2008.

The need is that great. So is the Gates’ optimism. I learned about that up-close a year ago when I wrote the first profile of Melinda that’s been done with her involvement. Fortune called her “The $100 Billion Woman” on its cover because that’s how much money – theirs and their friend Warren Buffett’s combined – theyll likely give away in their lifetimes.

Bill was full of hope then – and eager to trade his Microsoft job for full-time work at the foundation. But here’s what strikes me about his comments in today’s letter and a conference call he held this afternoon for reporters: how hopeful he is about advances in global health, where he’s spent 50% of his philanthropic dollars. In the next four to six years, he says, he expects HIV/AIDS to be “dramatically” reduced via a pill or a microbicide, which is a gel that women use to protect themselves from infection.

As he told me a year ago, Melinda helped draw him away from singly focusing on vaccine research and scientific solutions that may be decades away. “You can’t save kids just with vaccines,” as she says. Bill says in his letter that an AIDS vaccine is coming, but it’s “very likely to be more than 10 years away.”

The Gates are traveling more than ever. Melinda is in Ethiopia now. Bill is heading to Nigeria. A malaria vaccine is another big goal for him. A vaccine will go into the last phase of human trials this year, he says, and could be ready for wide use by 2014. It goads him that companies and governments have invested little in new malaria drugs simply because the disease has been eliminated in rich countries. It kills almost 1 million children per year elsewhere. So part of his new full-time work at the foundation is to egg on pharmaceutical companies that aren’t working on vaccines for the developing world. “Nobody gives them a hard time,” he told me. “That job is natural for me to do.”

The Gates’ newest passion: agriculture. They hope to bring a “Green Revolution” to Africa similar to the program that increased crop yields in Latin America and Asia beginning in the 1940s. This is high-tech and inordinately complex work – thus their lust for the challenge. But it may be easier than fixing U.S. education. In the past decade, the Gates have spent more than $2 billion on America’s public schools and it’s been a slog except for pockets of progress like New York City, where better teachers have made all the difference. Gates says in his letter that it’s “amazing how big a difference a great teacher makes versus an ineffective one…If you want your child to get the best education possible, it is actually more important to get him assigned to a great teacher than to a great school.”

While running a foundation is not like running a business (“You don’t have customers who beat you up when you get things wrong or competitors who work to take those customers away from you,” Gates says in his letter), here’s one way the two converge: Investing in the right people gives you the best shot at success. It’s a point that management guru Jim Collins, featured in the current issue of Fortune, preaches and it’s one of the many lessons Bill Gates is learning in his new calling.Click here to see Melinda Gates talking about more lessons learned in trying to fix U.S. education, from my interview that I did with her at the 2008 Fortune Most Powerful Women Summit.