What the Gates-Epstein Report Teaches Charities About Managing Risk

An outside law firm review of the Gates Foundation’s ties to convicted sex offender Jeffrey Epstein found that foundation staff and leaders, including Bill Gates, met with Epstein about 30 times over three years to discuss the creation of a donor-advised fund to support public health and a nonprofit that the Gates Foundation ended up supporting. All of the meetings took place after Epstein pled guilty in a child prostitution case in 2008.

The findings from the five-month investigation, conducted by law firm WilmerHale, were released on Tuesday and point to insufficient protocols and procedures at the world’s largest foundation and the leading global supporter of disease and poverty eradication. 

Gates was introduced to Epstein in 2011 by an adviser who had a dual role at the foundation and in Gates’s personal office. The report says Gates was aware of Epstein’s conviction when the two met in 2011. One of the meetings that included Gates or foundation staff took place at the Gates Foundation headquarters, and several were at Epstein’s Manhattan residence. The report also found that Epstein learned information about Gates and the foundation through two foundation employees who forwarded Epstein information about Gates and his organization.

Numerous Gates Foundation employees repeatedly raised concerns about the foundation’s interaction with a convicted sex offender, but their concerns were disregarded, the report found.

Despite disbursing billions of dollars in grants each year, the foundation for most of its history has been run in an insular way. 

From 2006 until 2021, the Gates Foundation’s Board of Trustees consisted of just three individuals — Bill Gates, his now ex-wife Melinda French Gates, and his good friend and fellow billionaire Warren Buffett. The foundation first took on independent board members in 2022, and Melinda French Gates departed the foundation in 2024 following the couple’s divorce. Today the foundation has eight board members, including Bill Gates and CEO Mark Suzman.

Experts say the same sort of lapses they see regularly at small and midsize nonprofits — including insufficient board governance and independence and too little attention paid to reputational risk management — may have played a role in the foundation’s embarrassing three-year relationship with Epstein.

“It’s just a great lesson for nonprofits in general that this stuff can get very real, and they need to have the right protections in place,” says Corey Jackson, managing director of Sarah J Consulting. “We see it over and over again, where there’s a very influential leader or a founder and no one wants to question that person or decision. It’s so important to have protocols and procedures in place so that those things can come up in an organizationally healthy way.”

The Gates Foundation, which declined to comment, provided a summary of the findings but did not make the full report available.

Increased Oversight at Gates Foundation

Based on recommendations from WilmerHale, the Gates Foundation’s board approved several changes to how outside projects are vetted, including a “heightened review of proposed foundation meetings that take place at personal residences,” according to the summary of the law firm’s findings. 

The grant maker will create a centralized process to vet outside donor advisers, brokers, and others who facilitate partnerships with Bill Gates, the board, and other members of the executive team. For projects that originate with Gates himself or the board, the foundation will create an “escalation process” intended to suss out possible reputational risks and bring them to Gates, who will then have discretion to continue with the project or consult the full board.

According to the plan, the Gates Foundation will enhance its training on the handling of sensitive documents with outside parties and review its conflict of interest rules. It will also clarify the authority given to people who have dual roles with different entities associated with Gates and the foundation.

Despite the Gates Foundation’s work to implement the recommendations, damage may have already been done. Warren Buffett, who has given about $47 billion to the Seattle grant-making giant since 2006, decided to withhold his annual gift until the WilmerHale report came out, the Wall Street Journal reported in June. Then, last week Buffett ended the philanthropic relationship altogether, saying he would devote nearly all of the remainder of his $147 billion fortune to foundations run by his family.

The foundation’s association with Epstein has made life tougher at Gates’s Seattle headquarters, according to a report from the Financial Times. The paper reported that Suzman, the philanthropy’s CEO, told employees at a February 5 town-hall meeting that he felt the association with Epstein “sullied” the foundation’s work.

“Having that association just makes [our mission] more uncomfortable and more challenging and more difficult in ways that it shouldn’t,” he said, according to the article.

Exit Strategies Are Important

Nonprofits face all kinds of risks: natural disasters, computer hacking attacks, a changing economic climate. Increasingly, nonprofit leaders cite external relationships — whom the organization partners with or who donates money — as a major risk to their reputation, said Melanie Lockwood Herman, executive director of the Nonprofit Risk Management Center, a nonprofit consultant. She declined to comment directly on the Gates Foundation findings. 

Every nonprofit is different, she said. Plans to determine risk should be tailored to each organization, and every external relationship a nonprofit has should be evaluated with hazards in mind.

But nonprofits should be ready to terminate a partnership if it is discovered that it is associating with someone who might detract from its mission. To do so, it is important to lay out a process upfront, Herman said.

“Nonprofit teams formally engaging with an external party should anticipate the need to exit that relationship,” she wrote in an email. “Written agreements memorializing partnership terms should include a graceful exit strategy that can be triggered if the relationship cannot be continued for any reason.”

Assets Can Turn Out to Be Risks

The experience at the Gates Foundation should drive home to other nonprofits and foundations that what may be viewed as assets — such as relationships with powerful people or the ability of a small family-led board to move quickly — may also introduce risks that need guardrails, says Onuka Ibe, managing partner at La Piana Consulting.

“Some boards are quick to talk about their financial oversight and financial risk management and financial conflict of interest processes and things like that, but reputation is also a huge risk,” Ibe says. “Reputational risk deserves the same rigor as financial risk.”

Most charities will assess the financial costs and likely programmatic outcomes before starting a new initiative, but few have a structure in place for assessing what the reputational impact might be — either positive or negative, he says. “Just take a step back and make that a core question that gets asked,” he says.

If the Gates Foundation had included a reputational risk assessment before moving forward with its relationship with Epstein, a review panel might have proposed speaking to him only over the phone rather than visiting him at his Manhattan residence and insisting that Epstein hand over a list of potential donors to the foundation rather than acting as an in-person intermediary, Ibe says.

“We think about decisions as one point in time,” Ibe says, “as opposed to a series of choices that were made before Gates staff members were in that room with Epstein.”