From an exclusive interview with Carol Loomis, 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.
“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 Berkshire stock to five foundations. A dominant five-sixths of the shares will go to the world’s largest philanthropic organization, the $30 billion Bill & Melinda Gates Foundation, whose principals are close friends of Buffett’s (a connection that began in 1991, when a mutual friend introduced Buffett and Bill Gates).
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 U.S. libraries and high schools.
The other foundation gifts that Buffett is making will also occur annually and start in July. At Berkshire’s current price, the combined 2006 total of these gifts will be $315 million. The contributions will go to foundations headed by Buffett’s three children, Susan, Howard, and Peter, and to the Susan Thompson Buffett Foundation.
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.
Because the value of Buffett’s gifts are tied to a future, unknowable price of Berkshire, there is no way to put a total dollar value on them. But the number of shares earmarked to be given have a huge value today: $37 billion.
That alone would be the largest philanthropic gift in history.
Buffet and the Gates are proponents of human-based charities rather than the pie-in-the-sky variety. His decision will probably provoke a few of the same sort of detractors, as well.
Folks interested in the whole interview can read it here.
Respect, thats the only word I can think of to describe this man. If only all leaders and business heads would follow his lead. One of the last to treat his employees well and think of others besides himself. Kudos Mr. Buffet
Laudable intentions, indeed.
But why didn’t he give away directly? Why give all that money to his friend? Everybody knows that charities add overhead. By adding a “middle man”, Mr. Buffett threw away maybe as much as 50 cents for every dollar.
Also, I’d like to know how much of that money will be used in “donations” of computers running Windows (a nice way to funnel money into Microsoft, methinks).
It’s his money, I know, but since he’ll probably be getting the tax benefits, I think it should be investigated…
Its good to see the two richest people in the world doing this. I hope it caches on, STOP BITCHING ABOUT MICROSOFT ALREADY. *ahem* thanks,
Rob
Rob, I agree. Stop trying to downplay the charitable contributions of the Gateses and Mr. Buffet by making it look like Gates is just out for more sales.
@ Wanderly
I’m sure that Buffet is passing his money through the Gates foundation to make sure that it actually goes to help people. It’s not like he can just go stand on the streetcorner with a few billion dollars in his pocket and hand it to every poor-looking person he sees. I read that the Gates Foundation is the largest philanthropist organization in America, so maybe that’s why Buffet chose them….hmmm…..think about it, and while you’re at it, get that stick out of your ass.
Who would have thought you could make that much money singing “Margaritaville”…..
Gosh, the sheer imagination of our modern heroes leaves the rest of us stunned, for sure. The second richest man in the world has thought long and hard and decided to give his fortune to (no… wrong guess) the richest man in the world.
with a steaming mound of 2nd-rate software, bill gates has amassed a fortune the size of which has never been seen in the history of humanity.
if there’s anyone i trust to dole out charity with laser-like precision and effeciency, it’ s bill gates.
Whether or not you trust the foundation’s efficiency is only relevant if you donate to the foundation. Even if the charity were incredibly inefficient, it would still rate higher than passing the bulk of the fortune to spoiled heirs, as other wealthy families in America have traditionally done. That said, Buffett seems like the kind of investor who always did his homework, so the fact that he is donating so much money to the Gates Foundation is one of the more powerful and credible endorsements I can imagine.
I can’t imagine anything cooler than this, except for the possibility that it turns into a trend. In the grand scope of things, it may just be a drop in the bucket, but I look forward to reading about what the foundation accomplishes. Here’s hoping Warren’s around a while so he has the opportunity to enjoy the show, as well.
It makes sense to contribute to a charity already up and running. The overhead and staff are already in place and to go alone would only duplicate the efforts. To have a charity with your own name on it only stokes the ego.
This is also a tribute to Gates from Buffet for doing a worthwhile thing. I wish the best for both of them.
He’s cheating the government out of its 55% estate tax. How can he be so greedy? Why should this super rich guy get to dictate where his money goes, instead of letting the government get its fair share?
Actually, “taxation is theft” or not, Buffett criticised plans to attempt to reduce said estate tax, saying that (close paraphrase) it shouldn’t matter in a supposedly meritocratic society whose womb you popped out of… and he said that his own kids were cool with the donation too…
Yeah, except Buffett has just evaded the estate tax for most of his estate. My guess is his kids will be administering the money, so they’ll be living off the funds anyways, only paying taxes on their nominal salary. So estate taxes for the medium rich, foundations and lawyers for the really rich.
#13 AB CD, the estate tax is targeted at those who DON’T give their money to charity. What is it you don’t understand about that? Why do you want to accuse someone who is giving such a HUGE sum of money to charity of somehow using it as a tax advantage for his heirs? The fact is, his family would inherit MUCH more, even AFTER the estate tax, than they will ever get from administration fees. Do you really think they could possibly drain over half the money as some sort of “fee” for simply passing the money on to the Gates Foundation?
You seem to have some sort of large intestinal blockage… Oh look, it’s your head!
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