Warren 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 Buffett released Sunday and will execute today, represent a singular and historic act of charitable giving that vaults Buffett into the top tier of industrialists and entrepreneurs such as Andrew Carnegie, John D. Rockefeller Sr., Henry Ford, J. Paul Getty, W.K. Kellogg and Bill Gates himself, all men whose fortunes have endowed some of the world’s richest private foundations.
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 is already the United States’ largest grantmaking foundation, with current assets of almost $30 billion, and Buffett’s contribution may permanently solidify that philanthropy’s standing as the biggest and most influential organization of its kind.
Buffett will join Bill and Melinda Gates as a trustee of their foundation.
The immense size of the assets that will be at the disposal of the Gates Foundation is apparent when compared with the U.N. Educational, Scientific and Cultural Organization, 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, Buffett’s contribution might eventually allow the foundation to more than double that amount annually once he transfers his stock contributions.
However, Buffett’s contribution will not be made all at once, but in 5 percent annual increments. Moreover, the distribution could change if Buffett dies before the entire sum is transferred. 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.
Buffett, 75, and Gates, 50, have become close business associates and confidants since they met in 1991, and the linking of their fortunes and legacies through the Gates Foundation marks the latest development 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.
A joint interview of Gates and Buffett with Charlie Rose will be broadcast on PBS tonight.
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.
“I’m not sure any time in history we’ve ever seen someone give away a sum of money that large to another foundation,” said Gene Tempel, executive director of the Center on Philanthropy at Indiana University. “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 Buffett’s donations were first disclosed on the Fortune.com website Sunday and will also be outlined in Fortune magazine’s July 10 issue.
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 caused him to “get going” now.
The other four charities that Buffett will divide about $6 billion in Berkshire stock among are the Susan Thompson Buffett Foundation, which emphasizes family planning, abortion rights and anti-nuclear-proliferation issues; the Howard G. Buffett Foundation, which is named after and run by one of Buffett’s two sons and focuses on environmental and conservation issues; the Susan A. Buffett Foundation, which is named after and run by Buffett’s daughter and supports educational opportunities for children in low-income families; and the NoVo Foundation, run by Buffett’s other son, Peter Buffett, and focused on education and human rights.
