http://money.cnn.com/2006/06/25/magazin ... tm?cnn=yes

Warren Buffett gives away his fortune
FORTUNE EXCLUSIVE: The world's second richest man - who's now worth $44 billion - tells editor-at-large Carol Loomis he will start giving away 85% of his wealth in July - most of it to the Bill & Melinda Gates Foundation.
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.
is 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.

That's fucking awesome. Send some of that over heea.

From everything I have learned about the man, he seems like a truly good guy. Completely self made, walks around his home town and just acts like a normal guy, foresaw the internet bubble . . . very neat.

He also happens to be one of my fraternity brothers.

We're you both part of Lambda Lambda Lambda?

Seriously, it is a pretty amazing thing to see and he seems like a truly generous man. It's good to see when beyond-rich people do something like this.

The Sage of Omaha is apparently going to go down in history for doing what virtually nobody of his stature has ever been prepared to. The more I think about this the more impressed I am.

I like this much more than the Bono approach...

Please elaborate. What is the "Bono approach"? How is it not helpful?

Because it's all a display...inactive and immobile. Bono looks good because he's got the "world's ear," and politicians get a photo op with a rock star. But it changes nothing.

You'd have to work damn hard to prove to me that Bono's meanderings have had a larger effect on the world than he could if he used his pocketbook instead.

If you think advertising works then Bono has been quite successful in advertising his causes. If you think Amensty International works then you can to a large degree thank Bono. The director of Amnesty International has publically recognized Bono and U2 for giving it recognition in North America especially.
The people who shit on Bono could also shit on Buffet for keeping 5% of hs wealth but are conspicuously silent.
You talk of Bono's lack of use of his piocketbook. What percentage of his income has he donated or not donated?

I would be willing to bet that Bono hasn't donated 1% of his wealth. The comparison's today aren't even fair to Buffet and Bono if Buffet goes through with his promises. This last time, Geldof and Bono went out and sought to change government policy in regards to aid to Africa. A year plus has rolled around, and all's we're hearing is that governments aren't living up to the lofty expectations that were held, and those that made promises haven't lived up to them. The World Food Program can't even get donors to feed millions of hungry people in the Horn of Africa now, maybe fifty million dollars is needed to do that. Bono has tea with Bush one morning and pretends like everything's changed, and then just last week Bush goes to Vienna and says, "we're giving more to Africa than ever before." Well what the fuck, it's not very difficult to up the ante when you're spending more on bridge to nowhere than on an entire continent of people living on less than two dollars a day. And then they go on about their lives like saints, and everybody treats them like saints, and Bono takes that to the bank. Make no mistake about it, Bono was gonna END poverty as we know it. And it was gonna start with you, and end at the government. We were gonna make our voices heard, and with the snap of a finger, change the world. Well, we didn't. We made concert promoters, and artists, and Bono, and fuck it...everyone that was associated with that sham a SHIT ton of money. More money than will ever go to Africa. And through it all, he couldn't even ask for five dollars from the people that went. Or five dollars to watch it on pay per view. He went after governments THAT AREN'T GONNA FIX THIS! It's a disgrace. And all the while Bono is just so fucking filthy rich.

You guys can say all you want that Bono is the savior of poor people and the voice to the poor people. Oh, he's bringing attention to it! ZOMG! Wow! That doesn't help anyone. What Buffet is doing...holy shit man.

FORTY BILLION DOLLARS!

Jesus.

Let me put this in perspective for you. That is TEN TIMES the amount that the US government gives for ALL of Africa, who is the largest single donator in the world. Wow. In other words, Bono would have to convince Mr. Bush to X10 his current aid to Africa to compair.

I've said this before and I'll say it again. This isn't a problem that's gonna be solved by governments and it's not gonna get solved by governments. This is OUR responsibility to fix. OURS! You, and me, and your neighbors. We're the ones who need to donate money, and ensure it is spent properly. It is our responsibility to fix this catastrophe. It's our responsibility to go over there, ourselves, and sweat a little bit. Or else nothing is gonna get done. A rockstar going up on a stage a year ago promising to end poverty and change the course of global government policy didn't do shit, and it will never do shit. And making people aware of it isn't gonna do shit unless WE actually do something to change and fix what he's talking about. Placing the responsibility on the shoulders of governments is such a cop-out.

What Buffet is doing is soooo unbelievably admirable. Donating this immense fortune to this cause...now that is something that might motivate people to do something themselves, instead of whining and crying to the government to do it for us.

I should have never said the word Bono...

I think giving money OR bringing light to a situation are admirable things to do. Maybe something that Bono did or that was caused by Bono led the way for Buffett's amazing donation.

Any time a celebrity uses his or her media time to shed light on a worthy cause, I think it's a good thing. I also think it's a good thing when wealthy people, celebrities or not, give large amounts of cash to said causes. Neither is a waste.

Agreed, but Bono is given way more credit than is warranted by the results of his actions. It's like saying you're going to get the car moving by sitting in the rear passenger side and waving.

Wiliam Easterly has a good book that argues that debt relief to governments is the WORST possible policy to reduce poverty...

That said...Bono has me convinced...next time I fill out a form that asks for an emergency contact....fuck it...I'm listing Bono...he'll be there!

I'm not completely up on all of this so maybe I missed something. Did Bono do something really bad, or did he try to make something great happen and it didn't (or hasn't yet) so now he's a douchebag?

I'm not a giant Bono fan, I just want to make sure I understand what's going on here.

I'm not sure why this is a Bono bashing thread. The article about Buffett didn't even mention him. Sure, he's a little full of himself, but it seems to me he's always tried to do the right thing. And besides, who really knows how much money he donates to charity?


And a huge thumbs up to Mr. Buffett. Nice to see some good news getting some airtime for a change.

I don't think anyone is dissing Bono, but it bothers me when he's pleading for money to save Africa but drives around in a Maserati and purchases god-knows what else. Granted, I'm guilty of this as well to a smaller extent, but I don't drive around cars that are worth the equilavent of a small hospital in a third-world country.

So yes, both are admirable, but Buffet's putting his money where his mouth is, so kudos to him.

As true and genuine as his donations will be, I'm pretty sure Mr. Buffet will still be driving a nice car.

sounds like a hell of a guy...i wonder how much jimmy is worth?

Good point. We're all so grumpy and jaded that we must be Daily Show watchers.

Let's get back to task. We should be spending at LEAST as much time spouting Buffett's awesomeness as we would any villians misdeeds.



Who's your daddy?

I bet Bono would consider this kind of move when he's 75. Age is a factor here.