Warren Buffet
Warren Buffett gives away his fortune
FORTUNE EXCLUSIVE: The world's second richest man - who's now worth $44 billion - tells editor-at-large Carol Loomis he will start giving away 85% of his wealth in July - most of it to the Bill & Melinda Gates Foundation.
By Carol J. Loomis, FORTUNE editor-at-large
NEW YORK (FORTUNE Magazine) - We were sitting in a Manhattan living room on a spring afternoon, and Warren Buffett had a Cherry Coke in his hand as usual. But this unremarkable scene was about to take a surprising turn.
"Brace yourself," Buffett warned with a grin. He then described a momentous change in his thinking. Within months, he said, he would begin to give away his Berkshire Hathaway fortune, then and now worth well over $40 billion.
This news was indeed stunning. Buffett, 75, has for decades said his wealth would go to philanthropy but has just as steadily indicated the handoff would be made at his death. Now he was revising the timetable.
"I know what I want to do," he said, "and it makes sense to get going." On that spring day his plan was uncertain in some of its details; today it is essentially complete. And it is typical Buffett: rational, original, breaking the mold of how extremely rich people donate money.
Buffett has pledged to gradually give 85% of his
The Gateses credit Buffett, says Bill, with having "inspired" their thinking about giving money back to society. Their foundation's activities, internationally famous, are focused on world health -- fighting such diseases as malaria, HIV/AIDS, and tuberculosis -- and on improving
Up to now, the two Gateses have been the only trustees of their foundation. But as his plan gets underway, Buffett will be joining them. Bill Gates says he and his wife are "thrilled" by that and by knowing that Buffett's money will allow the foundation to "both deepen and accelerate" its work. "The generosity and trust
Buffett himself thinks that will happen. Or to state that proposition more directly: He believes the price of
This last foundation was for 40 years known simply as the Buffett Foundation and was recently renamed in honor of Buffett's late wife, Susie, who died in 2004, at 72, after a stroke. Her will bestows about $2.5 billion on the foundation, to which her husband's gifts will be added. The foundation has mainly focused on reproductive health, family planning, and pro-choice causes, and on preventing the spread of nuclear weapons. Counting the gifts to all five foundations, Buffett will gradually but sharply reduce his holdings of Berkshire (Charts) stock. He now owns close to 31% of the company-worth nearly $44 billion in late June - and that proportion will ultimately be cut to around 5%. Sticking to his long-term intentions, Buffett says the residual 5%, worth about $6.8 billion today, will in time go for philanthropy also, perhaps in his lifetime and, if not, at his death.
Because the value of Buffett's gifts are tied to a future, unknowable price of
That alone would be the largest philanthropic gift in history. And if Buffett is right in thinking that
So that's the plan. What follows is a conversation in which Buffett explains how he moved away from his original thinking and decided to begin giving now. The questioner is yours truly, FORTUNE editor-at-large Carol Loomis. I am a longtime friend of Buffett's, a Berkshire Hathaway shareholder, and a director of the Susan Thompson Buffett Foundation.
A conversation with Warren Buffett
FORTUNE EXCLUSIVE: Editor-at-large Carol Loomis speaks with Buffett on why he sped up his plan to give away his money and why he chose the Bill & Melinda Gates Foundation.
By Carol J. Loomis, FORTUNE editor-at-large
No, absolutely not. I feel terrific, and when I had my last physical, in October, my doctor gave me a clean bill of health.
Then what's going on here? Does your change in plans have something to do with Susie's death?
Yes, it does. Susie was two years younger than I, and women usually live longer than men. She and I always assumed that she would inherit my
And Susie would have enjoyed overseeing the process. She was a little afraid of it, in terms of scaling up. But she would have liked doing it, and would have been very good at it. And she would really have stepped on the gas.
By that you mean that she always wanted to give away more money, faster, than you did?
Yes, she said that many times. As for me, I always had the idea that philanthropy was important today, but would be equally important in one year, ten years, 20 years, and the future generally.
And someone who was compounding money at a high rate, I thought, was the better party to be taking care of the philanthropy that was to be done 20 years out, while the people compounding at a lower rate should logically take care of the current philanthropy.
But that theory also happened to fit what you wanted to do, right?
(He laughs, hard.) And how! No question about that. I was having fun - and still am having fun - doing what I do. And for a while I also thought in terms of control of
I had bought effective control of
So if I had engaged in significant philanthropy back then, I would have had to give away shares of
Even so, you and Susie set up the Buffett Foundation way back in the 1960s, which means you obviously expected to be giving away money sometime. What was your thinking back then?
Well, when we got married in 1952, I told Susie I was going to be rich. That wasn't going to be because of any special virtues of mine or even because of hard work, but simply because I was born with the right skills in the right place at the right time.
I was wired at birth to allocate capital and was lucky enough to have people around me early on - my parents and teachers and Susie - who helped me to make the most of that.
In any case, Susie didn't get very excited when I told her we were going to get rich. She either didn't care or didn't believe me - probably both, in fact. But to the extent we did amass wealth, we were totally in sync about what to do with it - and that was to give it back to society.
In that, we agreed with Andrew Carnegie, who said that huge fortunes that flow in large part from society should in large part be returned to society. In my case, the ability to allocate capital would have had little utility unless I lived in a rich, populous country in which enormous quantities of marketable securities were traded and were sometimes ridiculously mispriced. And fortunately for me, that describes the
Certainly neither Susie nor I ever thought we should pass huge amounts of money along to our children. Our kids are great. But I would argue that when your kids have all the advantages anyway, in terms of how they grow up and the opportunities they have for education, including what they learn at home - I would say it's neither right nor rational to be flooding them with money.
In effect, they've had a gigantic headstart in a society that aspires to be a meritocracy. Dynastic mega-wealth would further tilt the playing field that we ought to be trying instead to level.
From the fact that you've given your kids money before to set up foundations and are planning to give them more now, I gather you don't think that kind of flooding them with money is wrong.
No, I don't. What they're doing with their foundations is giving money back to society - just where Susie and I thought it should go. And they aren't just writing checks: They've put enormous thought and effort into the process.
I'm very proud of them for the way they've handled it all, and I have no doubt they're going to keep on the right track.
So what about the Susan Thompson Buffett Foundation and what all this means for it?
As you know, because as a director you've seen it close up, Allen Greenberg, the foundation's president, has done an excellent and thoughtful job of running it. His results-to-cost ratio is as good as I've ever seen. And he'll keep on that same path now, not just with Susie's money, but with mine too.
Actually, if I had died before Susie and she had begun to distribute our wealth, this is the foundation that would have scaled up to a much bigger size - right now it has only five employees - and become her main vehicle for giving. And the foundation anchored my plans too. Until I changed my thoughts about when to give, this was to be where my fortune would go also.
And what changed your mind?
The short answer is that I came to realize that there was a terrific foundation that was already scaled-up - that wouldn't have to go through the real grind of getting to a megasize like the Buffett Foundation would - and that could productively use my money now.
The longer answer is that over the years I had gotten to know Bill and Melinda Gates well, spent a lot of time with them having fun and, way beyond that, had grown to admire what they were doing with their foundation. I've seen them give presentations about its programs, and I'm always amazed at the enthusiasm and passion and energy they're pouring into their work. They've gone at it, you might say, with both head and heart.
Bill reads many thousands of pages annually keeping up with medical advances and means of delivering help. Melinda, often with Bill along, travels the world looking at how well good intentions are being converted into good results. Life has dealt a terrible hand to literally billions of people around the world, and Bill and Melinda are bent on reducing that inequity to the extent they possibly can.
If you think about it - if your goal is to return the money to society by attacking truly major problems that don't have a commensurate funding base - what could you find that's better than turning to a couple of people who are young, who are ungodly bright, whose ideas have been proven, who already have shown an ability to scale it up and do it right?
You don't get an opportunity like that ordinarily. I'm getting two people enormously successful at something, where I've had a chance to see what they've done, where I know they will keep doing it - where they've done it with their own money, so they're not living in some fantasy world - and where in general I agree with their reasoning. If I've found the right vehicle for my goal, there's no reason to wait.
Compare what I'm doing with them to my situation at
What can be more logical, in whatever you want done, than finding someone better equipped than you are to do it? Who wouldn't select Tiger Woods to take his place in a high-stakes golf game? That's how I feel about this decision about my money.
People will be very curious, I think, as to how much your decision - and its announcement at this particular time - is connected to Bill Gates' announcement in mid-June that he would phase out of his operating responsibilities at Microsoft and begin to devote most of his time to the foundation. What's the story here?
I realize that the close timing of the two announcements will suggest they're related. But they aren't in the least. The timing is just happenstance. I would be disclosing my plans right now whether or not he had announced his move - and even, in fact, if he were indefinitely keeping on with all of his work at Microsoft.
On the other hand, I'm pleased that he's going to be devoting more time to the foundation. And I think he and Melinda are pleased to know they're going to be working with more resources.
Does it occur to you that it's somewhat ironic for the second-richest man in the world to be giving untold billions to the first-richest man?
When you put it that way, it sounds pretty funny. But in truth, I'm giving it through him - and, importantly, Melinda as well - not to him.
Some people say the Gates foundation is bureaucratic, and bureaucracy is just about your No. 1 dislike. So how do you react to that charge?
I would say that most large organizations - though
What is the significance of your going on the board of the Gates foundation?
Not much. The biggest reason for my doing that is if they were ever to go down on an airplane together. Beyond that, I hope to have a constructive thought now and then. But I don't think I'm as well cut out to be a philanthropist as Bill and Melinda are. The feedback on philanthropy is very slow, and that would bother me. I'd have to be too involved with a lot of people I wouldn't want to be involved with and have to listen to more opinions than I would enjoy.
In philanthropy also, you have to make some big mistakes. I know that. But it would bother me more to make the mistakes myself, rather than having someone else make them whom I trust overall to do a good job. In general, Bill and Melinda will have a better batting average than I would.
Did you talk this huge decision over with other people before deciding to go ahead with the plan?
Yes, I talked to my children and Allen Greenberg, and to four
But I'd say everybody, and that certainly includes Allen - who knows what a bear it would have been to scale up the Buffett Foundation - came around to seeing the logic of what I was proposing to do. Now all concerned can't wait to get started - particularly me.
And frankly, I have some small hopes that what I'm doing might encourage other very rich people thinking about philanthropy to decide they didn't necessarily have to set up their own foundations but could look around for the best of those that were up and running and available to handle their money.
People do that all the time with their investments. They put their money with people they think are going to do a better job than they could. There's some real merit to extending that thought to your wealth, rather than setting up something to be run after your death by a bunch of old business cronies or a staff that eventually comes to dictate the agenda.
Some version of this plan I've got is not a crazy thing for some of the next 20 people who are going to die with $1 billion or more to adopt themselves. One problem most rich people have is that they're old, with contemporaries who are not at their peak years and who don't have much time ahead of them. I'm lucky in that respect in that I can turn to younger people.
Okay, now what does that mean for
I'd say virtually nothing. Anybody who knows me also knows how I feel about making
I've always made it clear to
Ted Turner, whose philanthropic activities I admire enormously, once told me that his hands shook when he signed a $1 billion pledge. Well, I have zero of that. To me, there's just no emotional downside to this at all.
Won't the foundations that are getting your stock need to sell it?
Yes, in some cases. The Buffett Foundation and the kids' foundations will have to sell their stock relatively soon after they get it, because it will be their only asset - and they'll need to raise cash to give away.
The Gates foundation will have more options because it has lots of other assets, so it will have some flexibility to choose which it should turn into cash. Bill and Melinda will make the decisions about that. I'm going to totally insulate myself from any investment decisions their foundation makes, which leaves them free to do whatever they think makes sense.
Perhaps they will decide to sell bigger portions of other assets and hang on to some
So it could be that all the shares you give annually will be sold in the market?
Yes, that may well happen. And naturally people are going to be interested in whether that selling could weigh down
Let's say the five foundations sell all the stock they get this year. If trading volume continues as it has, their selling will raise turnover to less than 17%. It would be ridiculous to think that much new selling could affect the price of the stock.
In fact, the added supply could even be beneficial in increasing the stock's liquidity and should make it more likely that
I'd say this: I would not be making the gifts if they would in any way harm
This plan seems to settle the fate, over the long term, of all your
No, what I've always said is that my family won't receive huge amounts of my net worth. That doesn't mean they'll get nothing. My children have already received some money from me and Susie and will receive more.
I still believe in the philosophy - FORTUNE quoted me saying this 20 years ago - that a very rich person should leave his kids enough to do anything but not enough to do nothing. [The FORTUNE article was "Should You Leave It All to the Children?"
Remember I said that way back when I was buying
So I'm glad to say I've got quite a bit of cash now. Overall I can - and will - use all my
The global force called the Gates Foundation
FORTUNE EXCLUSIVE: The philanthropy's impact, already immense, will be magnified by Buffett's billions.
By Carol J. Loomis, FORTUNE editor-at-large
To further its work, the foundation currently has just over $30 billion in assets, a purse built up from Bill and Melinda Gates' gifts of $26 billion and appreciation in its broadly diversified investments (which at the moment contain no Microsoft).
The $30 billion, of course, does not include the $8 billion in gifts that the foundation has made since 1994. Last year it gave $1.36 billion, and this year it expects to spend around $1.5 billion.
Now it will be Buffett and the Gateses building up the foundation together. Bill and Melinda have said that almost all their fortune will go to charity, and right now they still have an estimated net worth of $50 billion.
The foundation works heavily through partners (nongovernmental organizations, usually) and has focused on big causes. Its original giving was directed at providing
The foundation then broadened its efforts to global health, on which it now spends around 60% of its funds. Much of that is beamed at what Bill Gates calls "the Big Three diseases": malaria, HIV/AIDS, and tuberculosis. The foundation is both pushing to discover a preventive AIDS vaccine and to deliver antiretrovirals to people already afflicted with the disease.
In other areas, spending is focused on making medical "leaps" - the discovery, say, of a chemical that would block malaria-transmitting mosquitoes from smelling humans.
The
The schools effort has stuttered some as the foundation has struggled to find out what works. But CEO Patty Stonesifer says roadblocks only stiffen the foundation's resolve. "We'll be stepping up our investment here," she says, "because providing every student a quality education is key to ensuring equality of opportunity."
Buffett donates $37bn to charity
| | Warren Buffett says he was "wired at birth to allocate capital" |
Billionaire investor Warren Buffett has said he was waiting for decades to make a huge charitable donation.
He said he was overjoyed as he spoke for the first time since revealing he would donate about $37bn (£20bn) to Bill Gates' charitable foundation.
"This has been coming for 50 years," Mr Buffett said. "There's never really been any other plan in terms of where the money should go."
The donation is thought to be the largest charitable gift ever in the
Giving people a chance
Mr Buffett will hand 10 million shares in his Berkshire Hathaway firm to the Bill and Melinda Gates Foundation.
| | HAVE YOUR SAY As long as my family and I have sufficient I would give away all the excess |
News of the donation comes shortly after Mr Gates announced he is to step away from his day-to-day role at software giant Microsoft.
The man known as "the sage of
However, he said the appropriate vehicle for doing so do had only become apparent in the past year.
"I am not an enthusiast of dynastic wealth, particularly when the alternative is six billion people having that much poorer hands in life than we have, having a chance to benefit from the money," he said.
Mr Gates said it was Mr Buffett's support for philanthropy which had persuaded him to set up the foundation in the first place.
| | Bill and Melinda Gates Foundation Fund of $29.1bn $10.5bn in grants since 1994 Aims: reducing poverty and improving health and access to education Largest grant: $1bn to the United Negro College Fund 70% of aid spent outside US
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"It is a big challenge to make sure this money gets used in the right way," he said of the donation.
"But it is one we are thrilled about."
The foundation aims to fight disease and promote education around the world, particularly in developing countries.
"There is no reason why we can't cure the top 20 diseases," Mr Gates - who will give up his day-to-day role at Microsoft in 2008 to concentrate on the foundation's work - said.
BBC business editor Robert Peston said the size of the foundation's cash pile dwarfed that of other organisations, and compared it with the $12bn annual budget of the United Nations.
He added that the foundation was "an extraordinary new force in the voluntary sector".
New will
Mr Buffett is worth an estimated $44bn, according to Forbes magazine.
As well as donating to the Gates foundation, he also pledged shares for his three children and a substantial gift for a foundation named for his late wife, Susan Thompson Buffett.
All the gifts will be awarded yearly, with 5% of each donation passed on each year, it was announced.
He confirmed his decision in letters to the recipients, and said he would write a new will to ensure the money continues to be distributed after his death.
In making his award, Mr Buffett - who plays bridge with Mr Gates - said he chose to distribute his wealth to an existing foundation out of respect for its current work.
One of the terms of the donation is that at least one of Bill or Melinda Gates continues to be involved with the foundation.
The foundation has evolved into one of the leading philanthropical organisations in the world, listing as one of its primary goals "reducing the 'unconscionable disparity' that exists between the way that we live and the way that the people of the developing world live".
Simple life
Stacy Palmer, editor of the Chronicle of Philanthropy, said that Mr Buffett's donation was the largest made by one person in the
| | TOP FIVE BILLIONAIRES Bill Gates (US, Microsoft) - Warren Buffett (US, investor) - $42bn Carlos Slim ( Ingvar Kamprad ( Lakshmi Mittal (
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She explained that Mr Buffett's largesse eclipses the charitable donations of such well-known givers as John D Rockefeller and Andrew Carnegie.
Despite his huge wealth, Mr Buffett has modest tastes, is called a "cola and hamburger kind of guy", plays the ukulele, and still lives in the same house he bought in his home town of
Mr Buffett has stated that the death of his wife Susan was one of the reasons behind his donation to the Gates Foundation, because he had thought she would outlive him and handle the dispersal of his wealth.
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http://news.bbc.co.uk/go/pr/fr/-/1/hi/business/5115920.stm
Published: 2006/06/26
Warren Buffett's Unprecedented Generosity
The 'Oracle of Omaha
Buffett, 75, the CEO of the Omaha, Neb.-based company Berkshire Hathaway, is worth $44 billion, according to Fortune magazine.
Fortune reports that Buffett will donate 85 percent of his fortune amassed from stock in the Berkshire Hathaway company to five foundations.
The donations, which will come from Buffett's Berkshire Hathaway shares, would amount to about $37 billion, based on current values.
Five-sixths of the money reportedly will go to The Bill & Melinda Gates Foundation, which specializes in finding cures for diseases that plague impoverished nations.
His first annual donation is expected to be about $1.5 billion. The only catch, according to Fortune, is that Buffett wants his money to be used by the foundation the same year he donates it.
The rest of the money will go to four other foundations headed by Buffett's three children, and to the foundation in his late wife's name.
Buffett is expected to discuss his donation and philanthropy in
Mellody Hobson, "Good Morning America's" financial contributor and president of Ariel Capital Management, said Buffett's act of generosity was a defining moment in the history of business and philanthropy.
"There are some really smart people in government, but business leaders are often in a better position to help because they are not encumbered by the status quo and can more easily think out of the box," Hobson said.
Private Sector Philanthropy
The private sector often has more money at its disposal as well.
For example, the Red Cross' budget is $3.4 billion, a little more than one-tenth of The Gates Foundation assets, $29.1 billion. According to the Financial Times, it's the world's largest charity.
"Once the Buffett donation is complete, there would be enough money to fund the Red Cross for 20 years," Hobson said. "It's the same story for
Gates and Buffett have been friends for years.
"They have a lot of fun together," said Carol Loomis, the editor at large of Fortune magazine. "They play some bridge together. They've been on trips."
Gates and Buffett share the philosophy that giving your children too much money is a burden, not a gift, and is not a rational thing to do with all that wealth.
Seven years ago, Buffett told ABC News' "Nightline" that being born into wealth did not entitle his children to fortune.
You Can't Take It With You
"Buffett once told Fortune magazine: 'A very rich person would leave his kids enough to do anything, but not enough to do nothing,'" Hobson said.
"He says he and his wife talked about it and decided they shouldn't pass huge amounts of money along to their children. They believe their kids were born with the advantages of wealth, and grew up with great opportunities because of that. He says they had a gigantic head start, and that dynastic megawealth would further tilt the playing field in
Buffett is rich, observers say, but he has simple tastes and a simple philosophy.
"The money has never meant much to him," Loomis said. "He still lives in the same house he lived in 40 years ago. He just is not interested in spending a lot of money."
Buffett, often called "Oracle of Omaha" for his uncanny ability to understand financial markets, is the first person to make a donation large enough to rival the money that the Gateses have spent on the foundation.
An unsigned statement from The Gates Foundation said Bill and Melinda Gates were "awed" by Buffett's decision.
According to Fortune magazine, Buffett will join The Gates Foundation as a trustee once his donations begin.
Fortune magazine estimates Bill Gates' wealth at approximately $50 billion and has named him the world's richest person for 12 consecutive years. In 1999, toward the end of the dot-com boom, Gates' holdings briefly topped $100 billion.
Gates told the magazine that he and his wife were "thrilled" at the idea of having a new partner, and that Buffett's money would "both deepen and accelerate" what the foundation was trying to accomplish.
"The generosity and trust
Starting next month, Buffett will give a set of Berkshire B stock to the selected charities, Fortune said. Each year, the number of stocks he donates will decline by 5 percent.
Either Buffet or his estate will continue to give to The Gates Foundation as long as Bill or Melinda Gates remain part of it, according to Fortune.
A Tradition of Giving
Buffett and Gates are part of a long tradition of business moguls giving to charity.
In the last century, John D. Rockefeller and Andrew Carnegie each gave what would be about $7 billion each in today's dollars. The money founded libraries and preserved land.
Buffett says he and Gates may eventually have more than $60 billion and be able to "attack truly major problems."
Although many other wealthy people give money away, Hobson said that "Buffett's donations dwarf them all."
"He'll give The Gates Foundation about $1.5 billion in 2006 alone," Hobson said. "That's more than a billion dollars more than the top philanthropist in 2005, Cordelia Scaife May, and the next biggest, who happens to be Bill Gates himself."
ABC News' Dan Harris contributed to this report.
Copyright © 2006 ABC News Internet Ventures
Warren Buffett's Fortune
The world's biggest philanthropic foundation just got a whole lot bigger.
Tuesday,
BELIEVING THAT billionaires should leave their kids enough to do anything but not enough to do nothing, Warren E. Buffett always planned to devote most of his fortune to philanthropy. But he did not plan to do it while still living, and he did not plan to endow somebody else's foundation. On Sunday, Mr. Buffett, who is 75 and in good health, announced a change of mind. The world's second-richest man will start giving his wealth away next month, and most of it will go to the charity founded by the world's richest couple: the Bill & Melinda Gates Foundation. (Mr. Buffett and Ms. Gates are directors of The Washington Post
Andrew Carnegie gave away $7.2 billion, measured in today's dollars. John D. Rockefeller and his eponymous son gave away a combined $12.6 billion. Mr. Buffett's donation to the Gates Foundation of 10 million shares in his investment company, Berkshire Hathaway Inc., is worth $30.7 billion at today's share price and may be worth substantially more by the time all the stock is handed over. But the scale of Mr. Buffett's philanthropy is matched by its good sense. Rather than insisting that his name be engraved on libraries and concert halls built with his money, Mr. Buffett has chosen to give through fellow billionaires who have already figured out how to use philanthropic money effectively. Like the master investor that he is, Mr. Buffett has identified star managers and taken a stake in their enterprise.
It would be nice if this example inspired others. Smallish private foundations often achieve less than might be hoped: Some have large overheads relative to grants; others hold down staff costs but compromise on professional standards. On the other hand, larger and well-run philanthropic foundations can be wonderful things: They are at least as sophisticated as government programs but are untrammeled by the oversight and second-guessing that necessarily come with taxpayers' money. This frees them to concentrate their resources on a few big challenges without regard to political considerations and to make long-term commitments that governments have trouble sustaining. Before the Gates Foundation became involved in global health, vaccine makers had all but withdrawn from the developing world because they couldn't predict when public money would be available to finance vaccine purchases. By endowing a vaccine purchase fund with $1.5 billion, the Gates Foundation transformed incentives for the vaccine industry. The increased inoculation rate in poor countries has already saved more than a million lives.
The Gates Foundation had already been expanding: It expects to give away $1.5 billion this year, up from about $1.2 billion two years ago. Mr. Buffett wants his money used at a rate of about $1.5 billion per year, meaning that the pace of grants will double. This is bound to present challenges for an outfit that employs just over 200 people. But the Gates Foundation's mix of scientists and business types has already proved its creativity. "What can be more logical, in whatever you want done, than finding someone better equipped than you are to do it?" Mr. Buffett told Fortune magazine as he explained his decision to go with the Gates team. "Who wouldn't select Tiger Woods to take his place in a high-stakes golf game?"
© 2006 The Washington Post Company
Buffett to Give Bulk of His Fortune to Gates Charity
By TIMOTHY L. O'BRIEN and STEPHANIE SAUL
Correction Appended
Warren E. Buffett, the chairman of Berkshire Hathaway Inc. and one of the world's wealthiest men, plans to donate the bulk of his $44 billion fortune to the Bill & Melinda Gates Foundation and four other philanthropies starting in July.
The donations, outlined in a series of letters that Mr. Buffett released yesterday and will execute today, represent a singular and historic act of charitable giving that vaults him into the top tier of industrialists and entrepreneurs like Andrew Carnegie, John D. Rockefeller Sr., Henry Ford, J. Paul Getty, W. K. Kellogg and Mr. Gates himself, all men whose fortunes have endowed some of the world's richest private foundations.
Mr. Buffett plans to give away 85 percent of his fortune, or about $37.4 billion, all in
The immense size of the assets at the disposal of the Gates Foundation as a result of the partnership is apparent when compared with the United Nations Educational, Scientific and Cultural Organization, or Unesco, which had a budget of $610 million for 2004-05. The Gates Foundation made $1.36 billion in grant payments in 2005; at a minimum, Mr. Buffett's contribution may eventually allow the foundation to more than double that amount annually once he transfers all of his stock.
Mr. Buffett's contribution will not be made all at once, but rather in smaller annual increments. Moreover, the distribution could change in an as-yet unspecified way if Mr. Buffett dies before the entire sum is paid. The terms of the donation also require the continued active participation of at least one of the Gateses for the payments to continue.
The second-largest charitable foundation in the country is the Ford Foundation, with an endowment of $11.6 billion.
Mr. Buffett, 75, and Mr. Gates, 50, have become extremely close business associates and confidants since they met in 1991, and the linking of their fortunes and their legacies through the Gates Foundation marks the latest twist in their friendship. In addition to traveling together and regularly playing online bridge games, the two men routinely seek out each other's advice on personal and business matters.
The formation of the charitable partnership between the Gateses and Mr. Buffett was accompanied by a publicity campaign that was hard to ignore, starting with a full-page advertisement today in The New York Times about a joint interview with Charlie Rose that will be broadcast on PBS tonight.
Today's joint public appearances were to begin with what was billed as a "chat" between the philanthropists at the New York Public Library at 11 a.m., followed by a one-hour news conference at a Manhattan hotel.
Mr. Gates, who announced about two weeks ago that he planned to devote less of his time to his role as Microsoft chairman starting in 2008 so he could focus on his foundation, joined Berkshire's board of directors last year. Mr. Buffett is a Microsoft investor through
Gene Tempel, executive director of the Center on Philanthropy at Indiana University, said, "I'm not sure anytime in history we've ever seen someone give away a sum of money that large to another foundation," referring to Mr. Buffett's donation to the Gates Foundation. "Most people with this sum of money would try to create their own foundation in their own image; he's entrusting it to someone with whom he's had a good close relationship but who is 25 years his junior, who might be around to make sure it is used properly."
Details about Mr. Buffett's donations were first disclosed yesterday online at Fortune.com. They will also be outlined in a Fortune magazine cover article in its July 10th issue.
Mr. Buffett had insisted that he would wait until his death to make a sizable charitable bequest, but he told Fortune that the death of his wife, Susan, in 2004, his admiration for the Gateses and his certainty about how to dispose of his wealth had caused him to "get going" now.
The donation from Mr. Buffett "continues to increase the size of the Gates Foundation and the size and scope of the projects they can undertake," Mr. Tempel said. "They will have organizational challenges in determining how they manage that, how they create the kind of partnerships and staffing that can carry out the work."
The other charities that Mr. Buffett will divide about $6 billion in stock among are the Susan Thompson Buffett Foundation, which is named after Mr. Buffett's wife and emphasizes family planning, abortion rights and anti-nuclear proliferation issues; the Howard G. Buffett Foundation, which is named after and run by one of Mr. Buffett's two sons and focuses on environmental and conservation issues; the Susan A. Buffett Foundation, which is named after and run by Mr. Buffett's daughter and supports educational opportunities for low-income children; and the NoVo Foundation, which is run by Mr. Buffett's other son, Peter Buffett, and has focused on education and human rights.
Over the last four decades, Mr. Buffett has built
One of his companies, the General Re Corporation, is the subject of a continuing federal investigation into possible financial crimes. Mr. Buffett has not been accused of any wrongdoing in the matter.
In his letters yesterday to the Gates Foundation and the four other beneficiaries, Mr. Buffett said that he had talented managers waiting to succeed him and that the Berkshire shares were "an ideal asset to underpin the long-term well-being of a foundation" because his company had "a multitude of diversified and powerful streams of earnings, Gibraltar-like financial strength, and a deeply-imbedded culture of acting in the best interests of shareholders."
Fred P. Hochberg, dean of the
"It's egoless," he said. "
Correction:
A chart on Monday with the continuation of a front-page article about plans by the billionaire investor Warren E. Buffett to donate most of his fortune to the Bill and Melinda Gates Foundation omitted two of the largest philanthropic foundations. The Robert Wood Johnson Foundation has an endowment of $9 billion, and the Lilly Endowment $8.6 billion.
posted by B at 3:31 PM
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