Letters from Buffett
As part of his plan, Warren Buffett is sending letters to each of the five foundations that will be receiving his gifts. The letters may be found on Berkshire Hathaway's Web site. (See the letters)


This 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.....

http://money.cnn.com/2006/06/25/maga...ex.htm?cnn=yes

Cliffs: 75 year old buffet to donate 5/6th of the 40 billion to Bill Gates' foundation. The other 1/6th going to his childrens foundations. Everything that is left when he dies will be donated to philatrophy, most likely Gates' foundation again.

Very nice to see that he's actually going to use it for some good and not just give it to his kids.

85% of his donation went to the Bill & Melinda Foundation, making the foundation worth $60 billion.

Crazy.

Thats crazy...

wtf? give a guy who's already rich beyond imagination, even more money

Originally Posted by KWghost

wtf? give a guy who's already rich beyond imagination, even more money

It's for charity and research. The Gates' foundation does extensive research to help fight things ranging from AIDS/HIV, Malaria, Tuberculosis. They also use the money for academic puporses. Schools, bursaries, etc. Don't worry, Bill won't be touching a penny of that money.

that makes me so happy. I got so mad when rich actors, singers, whatever just horde their money. No one needs as much as they make. I'm glad that he is giving so much back because he knows the money won't mean much to him soon.

And he's still got $4B to retire comfortably on

Good show

Matt

think of the amount of people the Gates' will be able to help with this, that's pretty amazing.

They could feed a friggin continent

Originally Posted by Slawek

think of the amount of people the Gates' will be able to help with this, that's pretty amazing.

They could feed a friggin continent

They estimated that it take will about 2 years to have the foundation set up to actually make proper use of the money. $1.5 Billion will be the initial donation towards the Gates' fund.

Yah honestly, after $1 Billion what the hell do you do with the rest really? It's nice to see the money will not go wasted.

word on the street is that Bill Gates has actually quit microsoft and he now just runs his charity

that's my new goal - - to have enough money to own and operate a world wide charity

Originally Posted by drivers_wanted1

word on the street is that Bill Gates has actually quit microsoft and he now just runs his charity

that's my new goal - - to have enough money to own and operate a world wide charity

he's leaving in two years, he can't just give them two weeks notice and call it a day. but ya, well done, super nerd is doing something worthwhile.

to buffet for being so humble (guy still lives in a house he bought like 50 years ago) and doing this before he taps out.

lol - -- k guys i'm givin my 2 weeks - - Don - your in charge now.- - LATER!

WOAH! Thats Crazy!