Gates Foundation to Get Bulk of Buffett's Fortune
Monday, June 26, 2006
Investment guru Warren Buffett, whose stake in the company he founded is worth $44 billion, disclosed plans yesterday to give nearly all of it away, mostly to the world's largest charitable organization, the Bill & Melinda Gates Foundation.
That revelation in Fortune magazine comes on the heels of Microsoft Corp. co-founder Bill Gates's announcement earlier this month that he would transition from running his company to running his foundation -- and marks a golden age for philanthropic giving akin to that of a century ago, when industrialists such as Andrew Carnegie, John D. Rockefeller and Andrew W. Mellon gave vast amounts of their wealth to the arts and society.
"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," Buffett, 75, told Fortune in an interview laying out his charitable-giving plans. He said the philanthropy was encouraged by his wife, Susan, who died in 2004.
Buffett, the world's second-richest person, committed to give away his shares in his company, Berkshire Hathaway, to five foundations over time. The bulk of the shares, representing 83 percent of his pledged gift, will go to the Gates Foundation. This year, Buffett's donation to the education- and global-health-focused foundation will be worth about $1.5 billion.
"The amount that Buffett is giving is record-breaking," said Stacy Palmer, editor of the Chronicle of Philanthropy, a District-based newspaper covering the nonprofit world. "The fact that he's giving to the Gateses is unprecedented," she said, because most families have donated to causes in their own name.
Buffett's donation exceeds the amount given by the great philanthropists of the past; Carnegie's givings totaled about $380 million -- $7.6 billion in today's dollars.
Buffett's gift could more than double the size of the Gates Foundation, which already commands a $30 billion endowment. Bill Gates, the only person whose wealth outstrips Buffett's, and his wife, Melinda, have given $25.9 billion to their foundation. Bill Gates and Buffett are close friends.
The Gates Foundation got its start in 1994 and has focused much of its efforts on global health, backing the development, testing, manufacturing and delivery of vaccines for diseases such as malaria, tuberculosis and acute diarrhea that kill millions of children in developing countries every year. Without the $5.88 billion the foundation has given to global health projects, experts have said, many drug companies would have had no financial incentive to devote resources to those vaccines.
It puts about half its money into global health; the bulk of the other half is spent on education initiatives, including increasing U.S. students' high school graduation rates and upgrading technology access in schools and public libraries.
Gates, who for three decades built Microsoft into a dominant computing giant, is heading his foundation's efforts in part to see some of those projects through to completion, experts have said.
"We are awed by our friend Warren Buffett's decision to use his fortune to address the world's most challenging inequities," Bill and Melinda Gates said in a statement released yesterday. "The impact of Warren's generosity will not be fully understood for decades. As we move forward with the work, we do so with a profound sense of responsibility. Working with Warren and with our partners around the world, we have a tremendous opportunity to make a positive difference in people's lives."
Buffett and Bill and Melinda Gates are scheduled to hold a news conference today on the donation.