“This Is Not Charity”

How Bill Clinton, Ira Magaziner, and a team of management consultants are creating new markets, reinventing philanthropy—and trying to save the world
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"Ira,” as everyone calls him, is a man with a past. He has been Clinton’s friend since they were at Oxford together, on Rhodes scholarships, in the late 1960s. Magaziner has had a two-track career as business consultant and social reformer, with more success at the former than at the latter. As a boy, he led a strike at his summer camp, and as a student at Brown University, he led a major curriculum reform. In the early 1970s, he organized a group of recent college graduates to live in the wilting postindustrial town of Brockton, Massachusetts, and work for social change—an idiosyncratic effort he later called naive. No less naively, in 1984 he led a state-appointed study commission that cooked up a 1,000-page industrial policy for Rhode Island. The voters rejected it by 4-to-1.

In 1993, he repeated the Rhode Island mistake, this time on a heroic scale. The Clintons tapped him to manage their health-care reform. Again he produced an ambitious, complicated plan, this time running to 1,342 pages; again it bombed politically. Magaziner’s gift is his ability to see entire systems whole, from their smallest details to their global architecture. That made him a successful business consultant, but it did him little good on Capitol Hill, where any plan with more than two or three moving parts is too complicated. Magaziner was a parallel processor, an efficiency expert whose plans depended on simultaneous changes on multiple fronts and levels. He was ill-suited to Washington, where progress is serial and incremental.

Stung, he worked for a while on Internet issues for the Clinton administration and then went back to consulting, which was what he was doing when Clinton called in 2002. Having by then replenished his bank account, he kept one business client and otherwise donated himself to the Clinton Foundation. He takes no salary, saying he wants to instill a volunteer ethic.

I first met Magaziner in 1992, when he was working on the incoming Clinton administration’s transition team. His laser-like intensity and his command of detail were unmistakable then, and no less so when I reconnected with him for this article, in February. Now 59, he retains a quiet, composed demeanor and a rapid-fire manner of speaking, but what was once an unruly shock of gray curls is now a straight corporate cut. He rarely laughs or raises his voice. The words that people use again and again in connection with him are brilliant and driven. He thrives on impossible deadlines, and his stamina for travel beggars belief: He all but lives in hotels and airplanes, proselytizing, making contacts, initiating negotiations, closing deals. Staff members say they get e-mails from him at midnight and 5 a.m. Asked if his pace is sustainable, he replies, “I still feel 18. I have a feeling if I stop it will all catch up.”

Where exactly Clinton’s role in the foundation ends and Magaziner’s begins is not altogether clear, perhaps not even to them. Sometimes, to an outsider, they seem to share a brain. Clinton, clearly more than a figurehead, is chairman, guiding spirit, and the big gun strategically deployed for publicity and persuasion. “Without him as anchor and persona,” Magaziner says, “we’d be pounding sand.” Magaziner is effectively chief executive, strategist, recruiter, and senior negotiator, operating with what appears to be freewheeling authority. “We’ve worked together long enough so he trusts me,” Magaziner says of Clinton.

The sensibility Magaziner brought to the AIDS assignment was that of a business strategist who had helped big companies—General Electric, Black & Decker, Corning—cut costs by consolidating orders, automating communications, and working with suppliers to find efficiencies. With Clinton’s cachet and idealism as a lure, Magaziner set about hiring people in his own image. He wanted people who knew how to put together a business plan, who understood how companies work, and who could talk to line executives in their own language.

Starting with a staff of five, the foundation began visiting drug manufacturers. “I saw that the drugs, even the generic versions, were very high-priced,” Magaziner says, “and I knew that the inherent cost structure couldn’t be that high. I surmised that what was happening is that there were only 70,000 people being treated in the developing world. I surmised the manufacturers weren’t able to get scale economies in production. I began to see that we could aggregate enough demand to form what businesses call a buyers’ club.”

So the foundation went to governments in Africa and the Caribbean and organized demand for AIDS drugs, obtaining intentions to place large orders if prices could be cut. It simultaneously went to drug companies, offering them a much larger and less-volatile market for AIDS drugs in return for lower prices based on the projected higher volume. Although the foundation asked for aggressive “forward pricing” to kick-start demand, it pointedly did not ask for donations or charity. “To be sustainable,” says Magaziner, “this can’t be a charitable act.” Rather, the foundation was offering a business proposition: If we get you the demand, can you get us the supply?

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Jonathan Rauch is a contributing editor of The Atlantic and National Journal and a senior fellow at the Brookings Institution.

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