As a married couple, Bill and Melinda Gates spent decades amassing one of history’s largest fortunes. Now that they’re divorcing, they have to untangle that $145 billion.
Details of the split have already started to emerge.
Cascade Investment, a holding company Bill created with his Microsoft Corp. winnings, transferred securities worth more than $1.8 billion to Melinda French Gates, according to U.S. regulatory filings dated May 3. The shift comprised about $1.5 billion of Canadian National Railway Co. shares and more than $300 million of AutoNation Inc. stock. Cascade currently holds securities valued at more than $50 billion, including stakes in Republic Services Inc., Deere & Co. and Ecolab Inc.
How their wealth is ultimately divvied up is set to shake up the uppermost ranks of the world’s richest people and could have billion-dollar implications on what philanthropic causes get attention. The couple oversees the largest private foundation in the world and has promised that the majority of their wealth will be donated.
In announcing the split, the couple said they will both remain involved in the Bill and Melinda Gates Foundation, which has contributed vast sums to the realms of global health, climate change policy and social issues. But the $50 billion operation — with billions more still to be given — depends on the cooperation of two exes.
“As uncomfortable as it is, their personal relationship is going to have huge consequences for where the money goes,” said Benjamin Soskis, senior research associate at the Urban Institute’s Center on Nonprofits and Philanthropy. “The Gates Foundation is the most influential and important philanthropic organization in the world, not only in terms of its assets and grantmaking. Bill and Melinda themselves have each become incredibly influential public figures in their own rights.”
The split, after 27 years of marriage, comes just two years after the 2019 separation announcement of Jeff Bezos and MacKenzie Scott, another billionaire tech couple in Washington state. That divorce led to a 75-25 split of the couple’s 16% stake in Amazon.com Inc. for Bezos and Scott, respectively.
It made Scott the fourth richest woman in the world and rippled through the global philanthropic landscape as she became one of the most prolific donors of 2020, contributing to gender equality causes alongside Melinda French Gates.
The Gates fortune, at $145 billion according to the Bloomberg Billionaires Index, could prove more complex to carve up than the Bezos assets, which were largely concentrated in Amazon stock.
The couple’s net worth originated with Bill’s stake in Microsoft, but shares of the software-maker now probably make up less than 20% of their assets. They’ve shifted much of his holding into the Gates Foundation over the years and his exact stake hasn’t been disclosed since he left Microsoft’s board last year.
The biggest asset is Cascade Investment, which is run by money manager Michael Larson. Through Cascade, Gates has interests in real estate, energy and hospitality as well as public companies. Canadian National is the third-biggest public equity holding. Cascade transferred 14.1 million shares to Melinda, and has 87.3 million shares, which are owned by Bill, the regulatory filing shows.
The couple are also among the largest landowners in America and have homes including their 66,000 square-foot mansion in Medina, Washington.
The rapid stock transfer could be a sign that it’s already been decided how the fortune will be split.
“I would imagine that almost everything is done,” said Jacqueline Newman, a divorce attorney and managing partner at Berkman Bottger Newman & Schein LLP. “For them to issue this kind of statement, they have probably worked out 90-95% of the divorce. They’re not putting something like this out otherwise.”
Community Property State
The Gateses live in Washington, which is a community property state. That means that anything acquired during a marriage is considered to be equally owned by both partners. But that doesn’t necessarily mean their fortune will be evenly split.
“It is not a mandatory 50-50,” said Janet George, a family lawyer in Washington with the firm McKinley Irvin. “The courts can award more or less, depending on what is just and equitable.”
Details of their division may never be publicly revealed because they’re likely hidden behind the couple’s private contracts, George said. Their stakes in public companies that are large enough to have to report holdings will give a peek behind the curtain.
What the couple owns is one thing, but much of their focus over the past couple of decades has been on what to give away.
The foundation is one of the largest private charitable foundations in the world, having made almost $55 billion in grant payments through the end of 2019. A former general manager at Microsoft, Melinda helps drive strategy at the organization, with a particular focus on gender equity. Bill has been more focused on the science and global health side of their giving.
“Bill and Melinda will remain co-chairs and trustees of the Bill & Melinda Gates Foundation,” a spokesperson for the foundation wrote in an emailed statement. “No changes to their roles or the organization are planned. They will continue to work together to shape and approve foundation strategies, advocate for the foundation’s issues, and set the organization’s overall direction.”
Both Bill and Melinda Gates “were not just behind the scenes players. They were decision makers,” said Soskis of the Urban Institute, whose own work has been supported by the Gates Foundation.
In cases where a wealthy philanthropic couple splits up, their foundations are sometimes divided as well, said Mela Garber, a tax principal at the accounting and advisory firm Anchin in New York who specializes in matrimonial matters.
Even when divorces are amicable, Garber said, “they might not want to be together at certain meetings and fundraising, and have the same level of involvement with people around.” The complexities of two exes working together can become clearer as time goes on, she said. “Creating two new foundations eliminates a huge area of tension.”
Splitting the Gates Foundation is difficult for many philanthropic experts to imagine. However, “they could pursue separate goals within the confines of the foundation itself,” said Brian Mittendorf, an Ohio State University professor who studies nonprofits.
Already a household name thanks to his previous status as the world’s richest man, Bill Gates became even more famous when he emerged as a go-to expert on the pandemic at a time when official guidance was often confusing and contradictory. His work has made him a target of conspiracy theories as well as controversies over patents and how to open up global access to the vaccines.
For her part, Melinda French Gates has raised her own profile with the publication of a book, “The Moment of Lift: How Empowering Women Changes the World,” in 2019. She has in recent years helped shift the foundation’s strategy, as a “top-down, technocratic” approach to giving has become more responsive to “community needs and community input,” Soskis said.
Despite its size, the Gates Foundation’s board only has three members: Bill, Melinda, and Warren Buffett — who has promised to devote bulk of his own considerable fortune to his friends’ foundation. That means disagreements between the two exes may need to be settled by the 90-year-old billionaire.
“To the extent to which they have huge divergent interests that would arise, Buffett would play an important role,” Ohio State University’s Mittendorf said.
The pair could also pursue their separate interests outside the foundation, in their investments and personal philanthropy. Bill Gates, for example, founded Breakthrough Energy Ventures, a fund that fights climate change by investing in startups with the potential to cut global annual emissions by as much as 500 million tons each year. Other backers include Bezos and Michael R. Bloomberg, founder of Bloomberg LP.
In 2015, Melinda French Gates started Pivotal Ventures, an investment and incubation company, “as a separate, independent organization to identify, help develop and implement innovative solutions to problems affecting U.S. women and families.”
In 2019, French Gates committed $1 billion to speed up the pace at which women gained power and influence in the U.S. A year later, Pivotal announced it’d be partnering with MacKenzie Scott to start the Equality Can’t Wait Challenge, a $30 million award to organizations that come up with ways to advance women’s power by 2030.