Charlie Rose - An Exclusive Hour with
Warren Buffett and Bill and Melinda Gates
An exclusive hour-long conversation about
a new partnership in philanthropy with
Warren Buffett and Bill and Melinda Gates.
NEW YORK (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.
This news was indeed stunning. Buffett, 75, has for decades said his wealth would go to philanthropy but has just as steadily indicated the handoff would be made at his death. Now he was revising the timetable.
"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.
Up to now, the two Gateses have been the only trustees of their foundation. But as his plan gets underway, Buffett will be joining them. Bill Gates says he and his wife are "thrilled" by that and by knowing that Buffett's money will allow the foundation to "both deepen and accelerate" its work. "The generosity and trust Warren has shown," Gates adds, "is incredible." Beginning in July and continuing every year, Buffett will give a set, annually declining number of Berkshire B shares - starting with 602,500 in 2006 and then decreasing by 5% per year - to the five foundations. The gifts to the Gates foundation will be made either by Buffett or through his estate as long as at least one of the pair -- Bill, now 50, or Melinda, 41 -- is active in it.
Berkshire's price on the date of each gift will determine its dollar value. Were B shares, for example, to be $3,071 in July - that was their close on June 23 - Buffett's 2006 gift to the foundation, 500,000 shares, would be worth about $1.5 billion. With so much new money to handle, the foundation will be given two years to resize its operations. But it will then be required by the terms of Buffett's gift to annually spend the dollar amount of his contributions as well as those it is already making from its existing assets. At the moment, $1.5 billion would roughly double the foundation's yearly benefactions. But the $1.5 billion has little relevance to the value of Buffett's future gifts, since their amount will depend on the price of Berkshire's stock when they are made. If the stock rises yearly, on average, by even a modest amount - say, 6% - the gain will more than offset the annual 5% decline in the number of shares given. Under those circumstances, the value of Buffett's contributions will rise.
Buffett himself thinks that will happen. Or to state that proposition more directly: He believes the price of Berkshire, and with it the dollar size of the contributions, will trend upward - perhaps over time increasing substantially. 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. Counting the gifts to all five foundations, Buffett will gradually but sharply reduce his holdings of Berkshire (Charts) stock. He now owns close to 31% of the company-worth nearly $44 billion in late June - and that proportion will ultimately be cut to around 5%. Sticking to his long-term intentions, Buffett says the residual 5%, worth about $6.8 billion today, will in time go for philanthropy also, perhaps in his lifetime and, if not, at his death.
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. And if Buffett is right in thinking that Berkshire's price will trend upward, the eventual amount given could far exceed that figure.
So that's the plan. What follows is a conversation in which Buffett explains how he moved away from his original thinking and decided to begin giving now. The questioner is yours truly, FORTUNE editor-at-large Carol Loomis. I am a longtime friend of Buffett's, a Berkshire Hathaway shareholder, and a director of the Susan Thompson Buffett Foundation.
http://money.cnn.com/2006/06/25/magazines/fortune/charity1.fortune/
Warren Edward Buffett, the second richest man in the world, has committed to give away 85% of his $44 billion fortune, most of which would be going to the Bill and Melinda Gates Foundation. Buffet will also join the board of Gates Foundation.
The longer answer is that over the years I had gotten to know Bill and Melinda Gates well, spent a lot of time with them having fun and, way beyond that, had grown to admire what they were doing with their foundation. I've seen them give presentations about its programs, and I'm always amazed at the enthusiasm and passion and energy they're pouring into their work. They've gone at it, you might say, with both head and heart.
This makes it the single largest monetary donation in history. Bill Gates recently announced plans to retire from Microsoft in 2008 to focus his attention on philanthropy.
This news was indeed stunning. Buffett, 75, has for decades said his wealth would go to philanthropy but has just as steadily indicated the handoff would be made at his death. Now he was revising the timetable.
http://labnol.blogspot.com/2006/06/warren-buffet-gives-away-wealth-to.html
Most of Warren Buffet's Fortune Going to Bill Gates' Foundation
NewsMax.com Wires
Monday, June 26, 2006
The world's second-richest man, Warren Buffett, became one of the world's biggest philanthropists Sunday with the announcement that he would bequeath the bulk of his roughly $44 billion fortune to the foundation established by billionaire Bill Gates and his wife.
The decision to start giving next month through annual stock donations represents a stark reversal for the investment wizard, who for years had said his wealth would be pledged to philanthropies after his death.
Buffett's gift will radically boost the resources of the Bill and Melinda Gates Foundation, which is already the world's largest philanthropy with assets of more than $29 billion.
Earlier this month, the world's richest man and Microsoft Corp. co-founder decided to give up his daily duties at the software company in 2008 to spend more time at his foundation, which is considered a leader in international public health, particularly in the fight against HIV, malaria and tuberculosis.
Gates also serves as a board member of Berkshire Hathaway Inc., Buffett's investment conglomerate, and the men socialize regularly.
The 75-year-old Berkshire chairman and CEO had been expected to leave his vast holdings of Berkshire stock largely to the Susan Thompson Buffett Foundation, begun by Buffett and his late wife. That foundation has given millions of dollars to hospitals, universities and teachers, as well as to Planned Parenthood and other abortion rights groups.
Buffett said he plans to give away 12,050,000 Class B shares of Berkshire Hathaway stock to the foundations, but he will have to convert some of his 474,998 Class A shares to complete the gifts. one Class A share, which sold for $92,100 on Friday, can be converted into 30 Class B shares, which sold for $3,071 Friday.
The gifts would be worth nearly $37 billion based on Friday's closing share price.
Buffett's assistant Debbie Bosanek said Buffett would not be available to comment Sunday. But letters outlining the gifts were posted on the company's Web site, and Buffett explained his decision in an interview with a Fortune magazine editor, Carol Loomis. She has edited Buffett's annual letter to shareholders for several years.
Buffett told Fortune that he decided to start giving his money away now because he has been impressed with Bill and Melinda Gates and the work they've done through their foundation. And he decided it would be easier to give to a large foundation instead of trying to expand his own foundation.
"What can be more logical, in whatever you want done, than finding someone better equipped than you are to do it?" Buffett told the magazine. "Who wouldn't select Tiger Woods to take his place in a high-stakes golf game? That's how I feel about this decision about my money."
Andy Kilpatrick, a stockbroker who wrote "Of Permanent Value, the Story of Warren Buffett," called the announcement remarkable, but said he always expected something more to develop from the relationship between Buffett and Gates.
"It's Buffett and Gates merging in a way for charitable purposes," Kilpatrick said.
Buffett has long said limiting the spread of nuclear weapons is the greatest challenge facing mankind. And Kilpatrick said Buffett probably agrees with the Gateses' concerns about population control, disease and education.
In a statement, Bill and Melinda Gates applauded Buffett's decision.
"We are awed by our friend Warren Buffett's decision to use his fortune to address the world's most challenging inequities, and we are humbled that he has chosen to direct a large portion of it to the Bill & Melinda Gates Foundation," the couple said.
Buffett suggested that his children should focus their charitable resources on needs that would not be met otherwise.
"Focus the new funds and your energy on a relatively few activities in which HGB (Howard G. Buffett Foundation) can make an important difference," Buffett wrote. He included the same paragraph of advice in the letters to each of his children.
Buffett said he plans to earmark 10 million B shares for the Gates Foundation, 1 million B shares for the Susan Thompson Buffett Foundation named in honor of his wife and 350,000 shares for the three foundations run by each of his children.
Buffett plans to give each foundation 5 percent of his total pledge each year in July.
In the interview with Fortune, Buffett acknowledged that the foundations may sell off the Berkshire stock to raise cash. But Buffett said he doesn't think that will affect the price of the stock because the gifts will be spread over time.
"I would not be making the gifts if they would in any way harm Berkshire's shareholders," Buffett told Fortune. "And they won't."
But Kilpatrick said this announcement is still likely to prompt some people to sell Berkshire stock on Monday morning. Kilpatrick said he doesn't think this will hurt the company in the long run especially because it might be added to the S&P 500 index in the future, which would help the stock.
Buffett's health has been the subject of speculation. He has said a succession plan is in place at Berkshire but refuses to name a successor.
In the letters, Buffett wrote, "My doctor tells me that I am in excellent health, and I certainly feel that I am."
Berkshire owns a diverse mix of more than 60 companies, including insurance, furniture, carpet, jewelry, restaurants and utility firms. And it has major investments in such companies as H&R Block Inc., Anheuser-Busch Cos. and Coca-Cola Co.
http://www.newsmax.com/archives/articles/2006/6/25/165901.shtml?s=lh
Warren Buffet to Donate Billions to Bill Gates Foundation
Buffet pledges aproximately $30 billlion to the B&MG Foundation
Warren Buffet, considered to be the most respected Wall Street investor of the century, announced that he will be donating $30 billion worth of common stock from his company to the Bill and Melinda Gates Foundation. Buffet is the Chairman and CEO of Berkshire Hathaway, a company focused on investments in a diverse number of industries.
According to Buffet, he will be donating roughly $44 billion in total to philanthropic causes which is about 85% of his total net fortune. Buffet told reporters that his decisions to give such a significant amount to the Bill and Melinda Gates Foundation is due to Bill Gates’ decision recently to step back from his responsibilities at Microsoft to focus more on the foundation. Many analysts and people in general view the Bill and Melinda Gates Foundation to be the world's most respectable charitable foundation due to Bill Gates' involvement and how critical he is about where money is spent and who it is given to.
Buffet will award 5% of the total gift to the Gates Foundation every year until the balance is complete. The remaining $14 billion will be donated to other foundations and charities as well as Buffet's children. on many occasions, Buffet has stated that he would only leave a few "hundred thousand" per child.
http://www.dailytech.com/article.aspx?newsid=3024
June 27, 2006
Bill Gates, Warren Buffet and Innovation in the Non-Profit Sector.
Bruce Nussbaum
Lots of folks don't see either Bill Gates or Warren Buffet as innovators. Buffet often says he doesn't "get" technology and doesn't invest in it. Much of his company's money is in insurance. And you know the rap on Microsoft so there is little to add to that.
But the Bill and Melinda Gates Foundation does have a deserved reputation for innovation. By applying tough performance metrics in a non-profit space--drugs and vaccines for fighting and preventing malaria, tuberculosis and AIDS--this, the biggest charity in the world, is making significant progress. By making strategic investments with key partners, it acts more like a Silicon Valley VC firm than a traditional charity or foundation. It's a novel non-profit model, perhaps not for everyone. The Ford and Rockefeller Foundations have made huge inroads in battling disease and hunger over the decades. But for people looking for new models of organizational innovation, the Bill and Melinda Gates Foundation is a place to examine.
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