Warren Buffett Pledges around $30 Billion to Gates Foundation
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JIM LEHRER: Warren Buffett gives away most of his fortune. NewsHour correspondent Kwame Holman begins with a report on today’s announcement.
KWAME HOLMAN: … announcements, Warren Buffett himself broke the news in yesterday’s edition of Fortune magazine. Buffett, who is 75, said he’d give away 85 percent of his total wealth, most of which will be donated gradually to the Bill and Melinda Gates Foundation.
This afternoon, the three friends spoke to reporters.
WARREN BUFFETT, Billionaire Businessman: I have used the Gates Foundation as an example when I talk to students of a terribly successful organization that would, per dollar spent, as also is true with the Susan Thompson Buffett Foundation, per dollar spent, I think the results are terrific, in terms of improving the lives of people around the world.
So that would be my choice. Other people can look and see how this turns out, and maybe they will find a model that they want to emulate, if the results are as good as I anticipate they will be.
KWAME HOLMAN: Buffett, the world’s second-richest man behind Bill Gates, amassed his wealth through his insurance and investment company, Berkshire- Hathaway. The company, based in Omaha, Nebraska, bought shares in big name companies whose value kept increasing, including Proctor and Gamble, Coca-Cola, Dairy Queen, and Fruit of the Loom.
Buffett will join the Gates’ as the trustees of their foundation, the largest charitable foundation in the world. To date, the Gates Foundation has put more than $10 billion into education and global health initiatives.
During the trio’s TV interview today with PBS’s Charlie Rose, Melinda and Bill Gates talked about the impact Buffett’s donation could make.
MELINDA GATES, Wife of Bill Gates: For us, it’s just fantastic, because we look at it as doubling the impact. The diseases we’ve already been working on and the education and the inequities that we’ve been looking at for so long just basically double by Warren’s gift, and it’s incredible the depth that we’ll be able to go to on some of these global health issues.
CHARLIE ROSE, Host, “Charlie Rose”: Bill?
BILL GATES, Billionaire Businessman: Well, it’s a huge responsibility. And, in some ways, if you make mistakes with your own money, you don’t feel as bad about it as if it was someone else’s.
BILL GATES: So now we’re, you know, even more intent on doing it right. And it’s a very exciting time, the advances in medicine and other things we can do to relieve poverty. We’ve been making good progress. And with the doubling of resources, we think our impact can even more than double.
KWAME HOLMAN: The precise dollar amount of Buffett’s annual donation will be tied to the value of Berkshire’s stock. Each year, the Gates Foundation will receive about 5 percent of the outstanding Berkshire stock earmarked for it. This year, that stock is worth about $1.5 billion. The foundation is obligated to spend the money before the end of each year.
Four other charitable foundations, run by Buffett’s family members, will receive smaller donations. Today, Buffett was asked why he didn’t give more to his three children.
WARREN BUFFETT: I don’t believe in creating dynastic wealth. My children have all received money from me and my wife. They’ll receive more on my death. But they are in the privileged top 1 percent at least of the population, perhaps the top .1 percent, even.
But I don’t really believe that in a society that aspires to be meritocratic and that believes in equality of opportunity — my kids have had advantage over 99 percent of the kids in the country…
KWAME HOLMAN: Buffett also said on “Charlie Rose” his plan could pay off for his company, too.
CHARLIE ROSE: This is the right time to do it?
WARREN BUFFETT: Yes, I do, Charlie. Yes, you know, I’ve had a good chance to see what they’ve done. I feel Berkshire is positioned better than ever for the future.
One thing about is, if I had given the stock in a lump amount, there might be people that say that they were too concentrated in one stock and that sort of thing. Well, I want the well-being of their foundation to be sort of concentrated in Berkshire, because I think it’s going to do very well, so I wouldn’t want to be forced to sell it and, you know, buy government bonds or something of the sort. So, this way, I think — I don’t see how it could be any better.
KWAME HOLMAN: The full interview with Warren Buffett and Bill and Melinda Gates will be aired tonight on the “Charlie Rose Show” on most PBS stations.
Why is Buffett giving now?
JIM LEHRER: And now, Margaret Warner has more on the story.
MARGARET WARNER: For a closer look at Warren Buffett's announcement and its significance, I'm joined by Carol Loomis, editor at large at Fortune magazine, who broke this story on its Web site yesterday. She's also a longtime friend of Warren Buffett's, a Berkshire-Hathaway shareholder, and a director of the Susan Thompson Buffett Foundation. Named for Buffett's late wife, it's one of the four smaller foundations that will also receive some of his fortune.
And Eugene Tempel, the executive director of the Center on Philanthropy at Indiana University.
Welcome to you, both.
Ms. Loomis, you know Warren Buffett well. Why do you think that this man who has never given much to charity in the past is doing this now?
CAROL LOOMIS, Editor at Large, Fortune Magazine: I think it's pretty clear that it was tied to the death of his wife, the sudden and quite tragic death of his wife in July of 2004. She and Warren had always assumed that she would outlive him and she would become the person who distributed his money.
But now that he found out that she hadn't outlived him, he realized he needed to rethink his whole plan for giving. And the more he thought, the more he realized that it was time to begin doing it now.
MARGARET WARNER: And is he giving virtually all of it to the Gates Foundation because he's always been personally committed to its rather specific focus, or is it because he believes in them?
CAROL LOOMIS: I think it's because he believes in them, and he's had a chance the last few years to get closely acquainted with what they're doing. He's seen presentations in which they show how passionate they are, and how interested, and how much intelligence they're putting into it.
And he's become more and more impressed. I've heard him talk about that over the years. He just thinks that they have done wonderfully and thinks they're the Tiger Woods of foundations. So he thought this was the right thing to do.
The Buffett-Gates relationship
MARGARET WARNER: And tell us about their friendship. How did the two men become such close friends? And what's their friendship based on?
CAROL LOOMIS: They became friends in 1991 because they had a mutual friend, Meg Greenfield of the Washington Post. She had a house in Seattle, and she knew the Gates' family. And she knew warren through the Washington Post.
So she told the two men that they should get together, and she suggested they do it with -- Kate Graham was coming out to see her in Washington. And Warren actually was very anxious to do it from the moment that he heard about it. Bill Gates wasn't sure why he wanted to meet this investor, but now he knows.
MARGARET WARNER: Mr. Tempel, how does what Warren Buffett is doing with his money compare to what the great industrialists of the 20th century, of the earlier 20th century -- I'm thinking about the Carnegies or the Fords or Rockefellers -- the way they gave their money?
EUGENE TEMPEL, Executive Director, Center on Philanthropy: Well, I think, first of all, Warren Buffett's announcement today is certainly the largest philanthropic gift ever announced by an individual. And, really, it dwarfs the money even that Carnegie gave, if you adjust it in today's dollars.
So it's by far the largest gift ever given. And I think that, compared to the way Carnegie and Rockefeller and others tried to solve issues of the time -- for example, the health of Americans, problems in the South, et cetera -- Mr. Buffett's gift, together with that of the Gates Foundation gift, is trying to deal with problems that are just as serious and just as intractable, but on a much grander scale, a global scale, rather than just a local scale or a regional scale.
MARGARET WARNER: And how unusual is it for people who give away this kind of money -- not that anyone has given away this kind of money -- but a large amount of money, to do it through a foundation named for someone else, rather than wanting to control it themselves and have it under a foundation named for them?
EUGENE TEMPEL: Well, this is a very unusual gift. I think this is the thing that surprised most of us who study philanthropy, is that someone would give a gift of this size, a gift of -- even a gift of a smaller size would generally go into a private foundation that one would establish with his or her own ideas, search out his or her own mission.
But the fact that a gift of this size goes into the Gates Foundation, based on the record of success of the Gates Foundation has had with these, dealing with these issues, I think that's what makes it so unusual.
But I really like what Warren Buffett said in the interview today when he said that, you know, 50 years ago, seven people gave him $105,000 to invest because they thought he could do it better than they could. And so, 50 years later, he does the same thing by giving this philanthropy to someone that he thinks can do philanthropy better than he can.
Foundation has a record of success
MARGARET WARNER: Carol Loomis, do you agree with that, that it's not out of character for a man like Warren Buffett to give away this much money and let someone else control, basically, how it will be spent?
CAROL LOOMIS: I don't think it's out of character at all. Warren has always -- he doesn't have that many opportunities to find somebody smarter than he is or at least as smart. But he has always been very receptive to doing the rational thing with money or the rational thing about anything.
And he realizes that it is very rational to be giving this money to Bill and Melinda or, as he says, giving it through them to the recipients of their philanthropy. And he's delighted with doing this and will never, I don't think, have any regrets.
MARGARET WARNER: Mr. Tempel, as Ms. Loomis just indicated, and I'm sure you know, the money that he gives each year, he is requiring the Gates to spend that year. And so, at least this coming year, if they had to do that, it would immediately double the amount they give, because they give about $1.3-1.5 billion, and this will double that.
How hard is it for any foundation to ramp up that quickly and to do that and still spend the money wisely and well?
EUGENE TEMPEL: Well, I think, you know, first one must say that it is difficult to give away money wisely, and that's the challenge that every foundation faces. And I think, even today, Bill Gates alluded to that or discussed that fact.
I think what gives the Bill and Melinda Gates Foundation a leg up on this is that they don't do this by themselves. They use partnerships. They use experts, and they use intermediaries to help them carry out philanthropy.
So there are challenges to look at those intermediaries, see if they can, in fact, increase their capacity. And so it won't be just adding staff to the Bill and Melinda Gates Foundation, but it will in fact be trying to expand the capacity of the intermediaries, the expertise, the consultants that they use to help them carry out these projects.
And that's a much more realistic approach than if you were simply giving this to a foundation that used only its own staff to make grants. And I'm convinced, also, that this is one of the things that Warren Buffett saw as a piece of wisdom in the way Bill and Melinda Gates do their work.
Education and global health arena
MARGARET WARNER: Now, the Gates Foundation has been under way for over 10 years. What is their track record on spending wisely and getting results?
EUGENE TEMPEL: Well, I think one would have to look at all their programs. They certainly, as they said today, they certainly have made mistakes. They've made investments and taken risks that may not have panned out exactly as they thought.
But their program in the United States and education, I think, has won a great deal of respect. Again, they're dealing with a large intractable problem, trying to look at the public school problems in the United States. And there's a lot to be done there, so there's a lot to be spent to make progress.
And I think their work in the global health arena has been cutting edge, bringing experts in, having the right kinds of debates, looking at new vaccines, new approaches, trying to solve immediate problems at the same time that they take the longer-term view about how these problems might be solved, rather than just dealing with the symptoms, dealing with the roots of the problems.
So I think they've had a very good track record.
MARGARET WARNER: And, Carol Loomis, Warren Buffett is considered a fairly private man, yet this was a very public rollout. Why do you think he did it this way?
CAROL LOOMIS: Well, I don't think you can give away that much money and keep it quiet. That's probably one of the things.
But also, I think he thought there was a -- as he says, he has small hopes that, by his doing this and kind of setting the model, that it could be that other philanthropists, other wealthy people who have some thought of being philanthropists, would decide instead to look around at the existing models, the existing foundations, and maybe giving to them rather than staffing up, building up a foundation with all the staff that that takes.
He actually thinks that this might make a change for the better in the way that money is given away in the future. And, perhaps, it will work out that way.
MARGARET WARNER: Carol Loomis and Eugene Temple, thank you, both.
EUGENE TEMPEL: You're welcome.
CAROL LOOMIS: Thank you.