Our 2017 annual letter is addressed to our dear friend Warren Buffett, who in 2006 donated the bulk of his fortune to our foundation to fight disease and reduce inequity. A few months ago, Warren asked us to reflect on what impact his gift has had on the world.

2016 Hedge Fund Letters

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Warren Buffett

What follows is our answer to him.

It’s a story about the stunning gains the poorest people in the world have made over the last 25 years. This incredible progress has been made possible not only by the generosity of Warren and other philanthropists, the charitable giving of individuals across the world, and the efforts of the poor on their own behalf—but also by the huge contributions made by donor nations, which account for the vast majority of global health and development funding.

Our letter is being released amid dramatic political transitions in these countries, including new leadership in the United States and the United Kingdom. We hope this story will remind everyone why foreign aid should remain a priority—because by lifting up the poorest, we express the highest values of our nations.

One of the greatest of those values is the belief that the best investment any of us can ever make is in the lives of others. As we explain to Warren in our letter, the returns are tremendous.

Dear Warren,

Ten years ago, when we first got word of your gift to the foundation, we were speechless. It was the biggest single gift anyone ever gave anybody for anything.

We knew we owed you a fantastic return on your investment.

Of course, philanthropy isn’t like business. We don’t have sales and profits to show you. There’s no share price to report. But there are numbers we watch closely to guide our work and measure our progress.

Our goals are shared by many other organizations working to save and improve lives. We’re all in this together. So most of the numbers we look at don’t focus just on how we as a foundation are doing, but on how the world is doing—and how we see our role.

Warren, your gift doubled the foundation’s resources. It’s allowed us to expand our work in US education, support smallholder farmers, and create financial services for the poor. But in this letter, we’re going to tell you about our work in global health—because that was the starting point of our philanthropy, and it’s the majority of what we do.

We’ll tell the story through the numbers that drive our work. Let’s start with the most important one:

Our Favorite Number

ImageBill: If we could show you only one number that proves how life has changed for the poorest, it would be 122 million—the number of children’s lives saved since 1990.

Melinda: Every September, the UN announces the number of children under five who died the previous year. Every year, this number breaks my heart and gives me hope. It’s tragic that so many children are dying, but every year more children live.

Bill: More children survived in 2015 than in 2014. More survived in 2014 than in 2013, and so on. If you add it all up, 122 million children under age five have been saved over the past 25 years. These are children who would have died if mortality rates had stayed where they were in 1990.

Melinda: Here’s one of our favorite charts. It shows that the number of childhood deaths per year has been cut in half since 1990.

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© The Economist Newspaper Limited, London, September 27, 2014

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Bill: Melinda and I first started following these childhood mortality numbers more than 20 years ago. As you know, we’d taken a trip to Africa to see the wildlife, and we were startled by the poverty. When we came back, we began reading about what we’d seen. It blew our minds that millions of children in Africa were dying from diarrhea, pneumonia, and malaria. Kids in rich countries don’t die from these things. The children in Africa were dying because they were poor. To us, it was the most unjust thing in the world.

Melinda: Saving children’s lives is the goal that launched our global work. It’s an end in itself. But then we learned it has all these other benefits as well. If parents believe their children will survive—and if they have the power to time and space their pregnancies—they choose to have fewer children.

"Saving children's lives is the goal that launched our global work."

Bill: When a mother can choose how many children to have, her children are healthier, they’re better nourished, their mental capacities are higher—and parents have more time and money to spend on each child’s health and schooling. That’s how families and countries get out of poverty. This link between saving lives, a lower birthrate, and ending poverty was the most important early lesson Melinda and I learned about global health.

Melinda: This is why reducing childhood mortality is the heart of the work for us. Virtually all advances in society—nutrition, education, access to contraceptives, gender equity, economic growth—show up as gains in the childhood mortality chart, and every gain in this chart shows up in gains for society.

Bill: Back in 2001, after I gave a talk to a group of your friends about cutting childhood deaths, you told me that the foundation’s values and your values aligned. Saving children’s lives aligns with another one of your deepest values, Warren: using resources wisely and never wasting money when it can be avoided.

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Bill: Remember the laugh we had when we traveled together to Hong Kong and decided to get lunch at McDonald’s? You offered to pay, dug into your pocket, and pulled out…coupons! Melinda just found this photo of me and “the big spender.” It reminded us how much you value a good deal. That’s why we want to point you to this number, 122 million. Saving children’s lives is the best deal in philanthropy.

The Best Deal Is Vaccines

Melinda: And if you want to know the best deal within the deal—it’s vaccines. Coverage for the basic package of childhood vaccines is now the highest it’s ever been, at 86 percent. And the gap between the richest and the poorest countries is the lowest it’s ever been. Vaccines are the biggest reason for the drop in childhood deaths.

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Melinda: They’re an incredible investment. The pentavalent vaccine, which protects against five deadly infections in a single shot, now costs under a dollar.

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Bill: And for every dollar spent on childhood immunizations, you get $44 in economic benefits. That includes saving the money that families lose when a child is sick and a parent can’t work.

"For every dollar spent on childhood immunizations, you get $44 in economic benefits."

Melinda: At the start, we just couldn’t understand why vaccines weren’t available to every child who needed them. We were naïve. There were

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