Buffett doubles reach of Bill, Melinda Gates Foundation
With Warren Buffett's announcement that he will be sending about $1.5 billion every year to the Bill & Melinda Gates Foundation, the charity has a new, happy challenge: how to distribute twice as much money each year.
In a letter dated Monday, Buffett told Bill and Melinda Gates that the first donation of Berkshire Hathaway Inc. stock would go to the foundation next month.
The foundation, which has assets of $29.1 billion, spends money on world health, poverty and increasing access to technology in developing countries. In the United States, it focuses on education and technology in public libraries.
The money from Buffett, 75, comes with a significant catch. The letter says Buffett wants all his money to be distributed in the year it is donated, not added to the foundation's assets for future giving. The foundation gave away $1.36 billion in 2005, so the Buffett commitment would effectively double its spending.
Buffett said he plans to give away 12,050,000 Class B shares of Berkshire Hathaway stock to five foundations, which also include 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.
The gifts would be worth nearly $37 billion, which represents the bulk of the $44 billion that Buffet's stock holdings are worth today. Five-sixths of the shares will be earmarked for the Gates Foundation.
In his letter to the Gates Foundation, Buffett said he admired the foundation and wanted to "materially extend it future capabilities." Until now, all the money given away by the Gates Foundation has come from the couple.
A statement issued Sunday by the Gates Foundation and signed by Bill and Melinda Gates spoke of their relationship with Buffett over the past 15 years and his influence on their philanthropy.
"Warren has not only an amazing intellect but also a strong sense of justice. Warren's wisdom will help us do a better job and make it more fun at the same time," they said. The couple said they were "awed" by Buffett's decision.
The Buffett pledge also requires that Bill and Melinda Gates remain alive and active in the policy-setting and administration of the foundation. Buffett plans to give each foundation 5 percent of his total pledge each year in July.
Bill Gates, the world's richest man, announced earlier this month that he would be stepping back from his day-to-day responsibilities at Microsoft Corp. in July 2008 so he can spend more time on the Seattle-based foundation. The foundation followed his announcement by saying Melinda Gates would also be taking a more active role in their philanthropic work.
Buffett, the world's second-richest man, said in an interview with Fortune magazine that the timing of the two announcements -- one week apart -- was just "happenstance."
Buffett's gift is "really significant," not just for its size but for its potential to encourage other giving, said Diana Aviv, president and CEO of Independent Sector, a nonprofit coalition of about 550 charities, foundations and corporate giving programs that includes The Gates Foundation.
"I'm sure there are lots of young, wealthy individuals who have made their fortunes and who are watching this very carefully," she said. "These business leaders are icons."