Business titan Warren E. Buffett, the world's second-richest person, has pledged to begin giving away 85% of his $40-billion-plus fortune in July -- most of it to the Bill and Melinda Gates Foundation. Some experts are calling it the biggest philanthropic gift ever.
The donations, to be made over a period of years in the form of more than 12 million Class B shares of Berkshire Hathaway Inc. stock, will also benefit four foundations controlled by Buffett's family. But the Gates Foundation will receive by far the biggest gift -- 10 million shares of the high-priced stock -- strengthening its mission to improve public health around the globe.
Buffett, who disclosed his plans Sunday on Fortune magazine's website, deferred comment pending a news conference today in New York with the Gateses: Bill, the chairman of Microsoft Corp., and wife Melinda, who together lead the Gates Foundation. Gates, by virtue of his vast holdings of Microsoft stock, is the wealthiest person in the world.
But Buffett told Fortune that he hoped his gift would spur other wealthy people to consider funding existing foundations instead of starting their own.
"I don't think I'm as well cut out to be a philanthropist as Bill and Melinda are," he said. "What can be more logical, in whatever you want done, than finding someone better equipped than you are to do it? 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."
At Friday's closing price, Buffett's gift to the Gates Foundation, which is already the nation's best-funded philanthropic group, was worth about $31 billion. That approximates the current assets of the $30.6-billion Gates Foundation. The foundation gave out $1.35 billion last year in grants.
"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 in a statement Sunday. "Working with Warren and with our partners around the world, we have a tremendous opportunity to make a positive difference in people's lives."
News of the gifts drew applause from international public health leaders, who have already seen the effect of the Gates Foundation's $6 billion in gifts to combat polio, rotavirus, malaria and other infectious scourges of developing nations.
"What Gates did was insert new hope for people by stimulating new knowledge, new products or just new thinking," said Dr. Anders Nordstrom, acting director general of the World Health Organization. He called Buffett's commitment "an important next step.... To use the Gates Foundation as a mechanism, from a WHO perspective, is a very good sign."
Oliver Phillips, a former UNICEF official who is now a communications consultant, agreed. "The Gates Foundation has a proven record of giving money away more quickly and in larger amounts than any other foundation out there," he said.
Despite his unpretentious bearing and frugal habits, the 75-year-old Buffett has been considered one of the world's great investors for decades. He built his wealth largely by betting early on American consumer companies that grew to massive scale and rich value, such as Coca-Cola Co. Berkshire Hathaway is the holding company that controls his assets, which include insurance and media investments.
The Nebraska native has long said that he planned to give the bulk of his money to charity instead of his three children. But Sunday's announcement was a departure -- "an abrupt change," as Buffett put it in Fortune -- from an earlier plan to "scale up" the Susan Thompson Buffett Foundation, a philanthropy named for his late wife.
Apparently Buffett's friendship with the Gateses, which dates back to 1991 and has famously included many a spirited bridge game at his Omaha home, changed all that. As Bill Gates wrote in a review of one of Buffett's books, the two share a love of business, mathematical puzzles and red meat.
"I think his jokes are all funny," wrote Gates, who announced this month that in two years he will leave day-to-day management of Microsoft to devote himself fully to the work of the foundation. "I think his dietary practices -- lots of burgers and Cokes -- are excellent. In short, I'm a fan."
Now their mutual admiration will have a formal expression: Buffett will soon become a trustee of the Gates Foundation, a representative of the organization confirmed Sunday.
"The biggest reason for my doing that is if [the Gateses] were ever to go down on an airplane together," Buffett told Fortune. "Beyond that, I hope to have a constructive thought now and then."
Buffett's pledge requires that Bill or Melinda Gates be actively involved in the foundation.