A new era of American philanthropy
Earlier this week, Warren Buffett announced that he will be giving the majority of his fortune to the Bill & Melinda Gates Foundation, which has already been putting billions toward causes such as third-world health and U.S. schools. I've always admired the Gates Foundation for its relentless focus on leveraging the most social good for its dollar - for example by fighting malaria, one of the deadliest yet most-treatable diseases for a large population in the world. Apparently Buffet also admired the way it was run, and the fact that is was already scaled-up to handle large sums and large problems.
The numbers are staggering: Gates has put $31 billion into his own foundation, and still has $50 billion "burning a hole in his pocket"; Buffett will be donating stock worth $37 billion, of which $6 billion will go to family-run foundations and the remainder will go to the Gates Foundation. By comparison, John D. Rockefeller and Andrew Carnegie gave far less: in 2006 dollars they donated $7.6 billion and $4.1 billion, respectively.
What is perhaps most interesting to me is that all these tycoons - Rockefeller, Carnegie, Gates and Buffett - are following a model of corporate social responsibility that has largely been branded as insufficient: to make as much money as possible in one's lifetime, and then donate it back to society. In a way, it's a Robin Hood philosophy, and perhaps it deserves greater credibility among today's CSR proponents. On the other hand, it wouldn't seem right to earn billions through fraudulent or immoral business practices, then use the ill-gotten gains to "fix" the problems that one has helped create. In the end, I think there is a spectrum of choice, and Buffett may not be entirely on one end of that spectrum; his management style has been famous for directness, honesty, and long-term outlook.
Buffett's reasoning, as usual, is direct and common-sense. Believing that the rich should leave their children "enough money to do anything, but not enough to do nothing," he had planned to leave most of his estate to a foundation, to be run by his wife. Statistically speaking, his wife was likely to survive him, given that she was two years younger and women tend to live longer - but she died two years ago. Meanwhile, the Gates Foundation has been doing admirable work, and the Gates are still relatively young - Melinda is 41 and Bill is 50. Buffett therefore decided to "invest" his charitable dollars with a trusted and capable friend who is likely to be able to oversee their disbursement over a long time period. It was the same reasoning that had led him to invest in other people's companies through Berkshire-Hathaway, and to make so much money doing it. At the same time, it shows a remarkable humility, to put his money under someone else's name rather than his own. Ironically, Buffet is the second-richest man in the world, and he is, in a sense, giving his money to the richest man in the world.
There are several insightful articles on this big news story, including ones in Fortune Magazine and The Economist. The former seems to have broken the story, and has the original interview here: http://money.cnn.com/2006/06/25/magazines/fortune/charity2.fortune/index.htm
The numbers are staggering: Gates has put $31 billion into his own foundation, and still has $50 billion "burning a hole in his pocket"; Buffett will be donating stock worth $37 billion, of which $6 billion will go to family-run foundations and the remainder will go to the Gates Foundation. By comparison, John D. Rockefeller and Andrew Carnegie gave far less: in 2006 dollars they donated $7.6 billion and $4.1 billion, respectively.
What is perhaps most interesting to me is that all these tycoons - Rockefeller, Carnegie, Gates and Buffett - are following a model of corporate social responsibility that has largely been branded as insufficient: to make as much money as possible in one's lifetime, and then donate it back to society. In a way, it's a Robin Hood philosophy, and perhaps it deserves greater credibility among today's CSR proponents. On the other hand, it wouldn't seem right to earn billions through fraudulent or immoral business practices, then use the ill-gotten gains to "fix" the problems that one has helped create. In the end, I think there is a spectrum of choice, and Buffett may not be entirely on one end of that spectrum; his management style has been famous for directness, honesty, and long-term outlook.
Buffett's reasoning, as usual, is direct and common-sense. Believing that the rich should leave their children "enough money to do anything, but not enough to do nothing," he had planned to leave most of his estate to a foundation, to be run by his wife. Statistically speaking, his wife was likely to survive him, given that she was two years younger and women tend to live longer - but she died two years ago. Meanwhile, the Gates Foundation has been doing admirable work, and the Gates are still relatively young - Melinda is 41 and Bill is 50. Buffett therefore decided to "invest" his charitable dollars with a trusted and capable friend who is likely to be able to oversee their disbursement over a long time period. It was the same reasoning that had led him to invest in other people's companies through Berkshire-Hathaway, and to make so much money doing it. At the same time, it shows a remarkable humility, to put his money under someone else's name rather than his own. Ironically, Buffet is the second-richest man in the world, and he is, in a sense, giving his money to the richest man in the world.
There are several insightful articles on this big news story, including ones in Fortune Magazine and The Economist. The former seems to have broken the story, and has the original interview here: http://money.cnn.com/2006/06/25/magazines/fortune/charity2.fortune/index.htm
posted by Melissa Paschall at 7/07/2006 08:16:00 AM
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