Jeff Raikes has kept a pretty low profile in his first year as chief executive of the Bill & Melinda Gates Foundation. The man who built Microsoft Office now runs the largest private foundation in the world, which gives out more than $3 billion a year from an endowment of $30 billion.

Raikes recently talked about the fallout of the economic crisis on the foundation, the importance of risk taking and failure in philanthropy, and his experience working with Melinda Gates, which he said has been the most fun. He spoke at a breakfast last week sponsored by the Puget Sound Business Journal. (I couldn't get in, but thanks to the Seattle Channel I was able to watch it here).

DEAN RUTZ/SEATTLE TIMES

Jeff Raikes grew up a "farm kid" in Nebraska and later gave up a job at Apple to join Microsoft in 1981. "Steve Jobs yelled at me, telling me that Microsoft was going to go out of business," Raikes said.

Not a lot of what he said was new, but he did reveal some insights from his first year, including how serious the stock market plunge hit the Gates Foundation.

"The biggest impact by far is on our partners and the people that our partners and we strive to serve," he said. "It's one of those things if you think about it you get a little depressed."

On Jan. 1, 2008, the Gates Foundation's endowment was $39 billion. In just one year it had dropped to $30 billion.

"That's nine billion," Raikes said. "Part of that is the payout, part of that is the drop in the market. Let's say you have another 10 percent drop in the market. We're paying out $3.5 billion in direct charitable activity. Jan 1, 2010, we're now at $23 billion."

"At one point in time I thought that was the scenario I was looking at," he said. "The good news is the market has come back. The situation isn't quite as dire as it was a few months ago."

"At the end of the day we're very fortunate that Melinda and Bill took a deep breath and decided we're going to keep investing." The foundation's direct charitable giving is up about 10 percent this year, and its endowment stood at $30.2 billion at the end of June.

But the crisis has forced a renewed focus on top priorities, Raikes said, namely the biggest killers of children in the developing world -- HIV/AIDS, tuberculosis, malaria, pneumonia and diarrhea.

"We have to figure out how we can keep the momentum going in the short term while recognizing we have to conserve financial resources for the long term," he said.

One of the most important things he's learned in the first year is how the role of philanthropy differs from business and government.

"The private sector certainly is important but appropriately driven by the profit motive... government has the responsibility to provide services to raise the overall standard of life... You really don't like the government doing risky things with your tax dollars."

The Gates Foundation will take on some risky ventures and challenging ideas that government couldn't take on alone, he said.

"There are going to be times because we're taking risks we will fail... that's part of our role," though the goal is to succeed, Raikes said. "It's not that different frankly from how we operated at Microsoft."

Billionaire Warren Buffett, who is giving the bulk of his fortune to the Gates Foundation, told Raikes the foundation shouldn't be succeeding all the time. Raikes understood the message, but said it's another thing to try to pass it down.

"Warren would say swing for the fence," Raikes said, using a baseball metaphor. "But I've got the 700 or 800 employees at the Gates Foundation saying oh, alright, it's OK for me to fail."

Raikes has known and worked closely with Microsoft Chairman Bill Gates for 28 years. Raikes joined Microsoft when the company had about 100 employees and met his wife, Tricia, there.

He said working with Melinda Gates has been a highlight of the year.

"I knew Melinda at Microsoft, but in particular for me the most new fun in this year has been working with Melinda," he said. "For me she's a tremendous collaborator, a great coach, a great mentor." She has a deeper understanding of how the foundation works than her husband, who was busy at Microsoft until last year, he added.

Raikes said former Microsoft President Jon Shirley and baseball manager Lou Piniella are among his own mentors. He said he looked up to Shirley because he could not only guide others but "personally step in, roll up [his] sleeves and make it happen."

On Sept. 25 Raikes will address the annual meeting of the Greater Seattle Chamber of Commerce, focusing on the impact of the economic downturn on efforts to address family homelessness. Details are here.