Published in Partnership with Forbes.com.

This is the first article of an ongoing series at the Skoll World Forum titled “Our Theory of Change”, which highlights different strategies and approaches of investment organizations working for social impact.

Article Highlights:

  • Philanthropy plays an important, but limited, role. We can take risks, move quickly, and help catalyze change. But large-scale, lasting change is ultimately driven and sustained by markets and governments.
  • While there are many effective ways to approach and quantify development, individual people are the lens through which we view and measure success.
  • We take calculated risks on promising ideas. Some of these risks will pay off; others won’t. But we expect to learn from all of them—and as we learn, we will adjust our strategies accordingly.

One of the questions I’m often asked as CEO of the Bill and Melinda Gates Foundation is what issues we invest in and why. To answer, it helps to understand a little about the foundation’s history.

More than a decade ago, Bill and Melinda read a newspaper article about the millions of children dying in poor countries from diseases that most people in the United States don’t have to worry about. One disease in particular—rotavirus—caught their attention, and it was killing half a million children a year. They’d never even heard of rotavirus. They thought it might be a typo.

Rotavirus, they learned, is one of the main causes of diarrhea. When kids in the United States get diarrhea, their doctors give them electrolytes. When kids in the developing world get it, they often die.

Reading this helped Bill and Melinda make two decisions: That they would start a foundation right away and that their giving would focus on solving some of the world’s greatest inequities.

The Gates Foundation is guided by the belief that all lives—no matter where they are being led—have equal value.  Whether a child is born in New York or New Delhi shouldn’t pre-determine their access to health, education, and opportunity. Of course, this belief is simple to say, and much harder to achieve. But our ultimate goal is to reduce the world’s greatest inequities, so every person has the opportunity to live a healthy, productive life.

“Large-scale, lasting change is ultimately driven and sustained by markets and governments. Our work must therefore strengthen or complement these forces, not compete with or replace them.”

How do you we translate this vision into reality for the billions who are suffering?

First, we recognize that philanthropy plays an important, but limited, role. We can take risks, move quickly, and help catalyze change. But large-scale, lasting change is ultimately driven and sustained by markets and governments. Our work must therefore strengthen or complement these forces, not compete with or replace them.

Second, we focus on benefitting individuals. While there are many effective ways to approach and quantify development, individual people are the lens through which we view and measure success.

Third, we can have the greatest impact by focusing on a few, key long-term issues.

We are teaming up with partners around the world to take on some tough problems: extreme poverty and poor health in developing countries, and the failures of the education system in the U.S. We focus on these in particular because we think they pose the biggest barriers that prevent people from making the most of their lives.

In all of our work, we fund innovative solutions that can break down these barriers: improved seeds and agricultural techniques to help farmers in the developing world grow more food and earn more money; new vaccines to protect children from deadly diseases; new methods to help students and teachers in the classroom.

We take calculated risks on promising ideas. Some of these risks will pay off; others won’t. But we expect to learn from all of them—and as we learn, we will adjust our strategies accordingly.

Let me share one example of how all of our work comes together to help improve people’s lives.

A few years ago, I traveled to Ol Kalou, a village in Kenya, to visit a chilling plant put in place by Heifer International with their partner, TechnoServe.

The plant gives almost 3,000 dairy farmers the ability to chill their milk so that it won’t spoil before it is transported to a processing plant. This facility opens up a whole new market opportunity for them.

I was impressed by the chilling facility, but what really struck me were all the additional services attached to it. The plant had become a central hub where dairy farmers in a radius of 50 kilometers could get access to financial services, buy feed, and seek veterinary care for their cattle.

This is one kind of investment foundations are well-suited to make. At some point, these agricultural hubs may be profitable. In that event, they will draw interest from the private sector. But businesses won’t take that risk unless somebody provides more evidence that the business model works. I am optimistic that our project with Heifer International and TechnoServe will do just that, while helping thousands of farmers escape poverty and hunger.

In Ol Kalou, I met a couple, David and Lucy.

They used to have three cows, but they sold two so they could send their daughter to college, where she’s working on a degree in hotel management.

Thanks to dairy hub, David and Lucy have access to local markets so they can sell the milk their cow produces and earn more income.  They are working with an agricultural extension agent who is helping them practice proper husbandry, which will triple their milk production. Through the chilling facility, they’ll be able to store, then sell, that surplus.

This innovative partnership could make the difference between David and Lucy’s daughter graduating or running out of tuition money.

It was a small thing, maybe. But for David and Lucy, the ramifications were a happy and rewarding future for their daughter.

At the Gates Foundation, improving the lives of people like David and Lucy is what our work is all about. Working together with our partners, we can find innovative solutions that will give every person the chance to live a healthy, productive life.