Corporate Titans Create a Colossal Charity

By Brooke A. Masters and Yuki Noguchi
Washington Post Staff Writers
Tuesday, June 27, 2006

NEW YORK, June 26 -- Warren Buffett and Bill Gates stood side by side today as the new face of philanthropy, promising a charitable foundation unlike any the world has seen and one that will test the limits of what a single group can do against global problems of health, poverty and education.

Buffett's decision to sign over nearly $31 billion of his company's stock to the Bill & Melinda Gates Foundation creates a Microsoft of the charity world, a colossus that by law and under Buffett's conditions will have to give away $3 billion a year by 2009.

The foundation, already the nation's largest with a $30 billion endowment that has largely come from Bill Gates, will hand out more per year than the gross domestic product of nearly 40 countries, including Mongolia, Togo and Zimbabwe. The sheer size of the amount, which is larger than UNICEF's 2005 budget of $2.7 billion, is one of the reasons the Gates Foundation thinks it can make significant inroads with campaigns against AIDS, tuberculosis and malaria. The foundation's funding is considered a crucial part of the scientific effort to cure diseases that mostly or entirely afflict the developing world.

On the other hand, the foundation's annual outlay would amount to 5.3 percent of this year's federal education budget and is only slightly larger than the combined school budgets of Fairfax and Prince William counties. Most of the foundation's education efforts and many of its health programs have yet to come to fruition, and they face bureaucratic, political and logistical hurdles.

Two weeks ago, Bill Gates said that in two years, he will step down from daily responsibilities at Microsoft Corp., the software company he co-founded in 1975, to work full time on the foundation's many challenges.

Philanthropy experts say Gates and his wife have already shaped a new approach of giving by using a relentlessly competitive business model that involves investing in many projects, so that while some fail, others are bound to succeed. Rather than staff the foundation with experts, the Gateses back top people in each field as needed and work to create commercial markets for vaccines and other products to lure profit-seeking corporations.

Buffett, in turn, said that by giving his money to the Gates Foundation, he is simply following good investing strategy: Put your assets in the hands of trusted managers and give them the freedom to make decisions. He said he hoped that other wealthy friends "might pick up on this model" and make dazzling donations.

"I would hope they act now," Buffett said at a gathering within the marbled halls of the main New York Public Library, a system that was founded and nurtured by an earlier generation of philanthropists, including John Jacob Astor and Andrew Carnegie.

Those whom global capitalism has made rich, he said, should help the world's less fortunate. "We really owe it to society to give back," Gates said at press conference about the donation.

Leaders of philanthropic foundations said Buffett's donation was a historic event that they hoped would build momentum in the donor community.

"You have an innovator and a world business leader -- the combination of the two making such a huge personal investment of time and wealth, it does raise the bar and raise the profile of philanthropy," said Thomas M. Springer, senior editor at the W.K. Kellogg Foundation, a $7 billion organization.

Springer said the challenge will be for the Gates Foundation to resist temptation to try to do too much with the funding it has. Three billion dollars is a lot to spend in a year, he said.

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