Buffett to give bulk of his fortune to Gates charity
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 Berkshire stock. Of that amount, he will channel the greatest share, about $31 billion, into the Gates Foundation. The Gates Foundation, dedicated to improving health and education, especially in poor nations, is already the United States’ largest grant-making foundation, with current assets of almost $30 billion. Mr. Buffett’s huge contribution may permanently solidify that philanthropy’s standing as the biggest and most influential organization of its kind. Mr. Buffett will join Mr. and Mrs. Gates as a trustee of their foundation.
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 Berkshire, and Mr. Gates said early last year that he personally owned about $300 million worth of Berkshire stock.
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 Berkshire, which is based in Omaha, into one of the world’s largest and most successful insurers. Along the way, he has also assembled a stable of holdings in well-known media, consumer products and energy concerns; navigated the stock market with legendary prowess; and offered folksy, astute guidelines for proper corporate governance and investment savvy.
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 Milano School for Management and Urban Policy at the New School, which has a large nonprofit-management department, said Mr. Buffett’s historic contribution to the Gates Foundation was in character.
“It’s egoless,” he said. “Warren’s name is not on the door.” Autor: Timothy L. O’brien