By now, everyone in the world knows that super-investor Warren Buffet has given away his billions to the Bill and Melinda Gates Foundation. I don't have a lot to add to the commentary that's already been bantered back and forth since he made the announcement, but I did find a very interesting interview with Buffet on Yahoo. There were several thoughts I wanted to share/comment on, so let's get started:
And someone who was compounding money at a high rate, I thought, was the better party to be taking care of the philanthropy that was to be done 20 years out, while the people compounding at a lower rate should logically take care of the current philanthropy.
Interesting thought to say the least -- that if you're making great returns on your money you should give in the future, but if you're not, you should give now. Is this a cop-out for someone reluctantly entering philanthropy? (Yes, it's hard to criticize someone who just gave away billions, but that's my job here.) ;-)
Certainly neither Susie nor I ever thought we should pass huge amounts of money along to our children. Our kids are great. But I would argue that when your kids have all the advantages anyway, in terms of how they grow up and the opportunities they have for education, including what they learn at home - I would say it's neither right nor rational to be flooding them with money.
I'm not sure how much he's leaving them -- maybe only a "few million" or so each -- but I'm sure they're not being left out in the cold.
We haven't decided how much we'll leave our adult children (for now, while our kids are young, we'll leave them everything), but it's an interesting discussion -- if you have a decent amount of wealth. If anything, I think we'll prefer to give it to them while we're alive in the form of house downpayments and the like.
Does it occur to you that it's somewhat ironic for the second-richest man in the world to be giving untold billions to the first-richest man?
When you put it that way, it sounds pretty funny. But in truth, I'm giving it through him - and, importantly, Melinda as well - not to him.
Ha! I thought the same thing when I heard this as well. Seems like the rich do keep getting richer, huh? ;-)
I have some small hopes that what I'm doing might encourage other very rich people thinking about philanthropy to decide they didn't necessarily have to set up their own foundations but could look around for the best of those that were up and running and available to handle their money.
People do that all the time with their investments. They put their money with people they think are going to do a better job than they could. There's some real merit to extending that thought to your wealth, rather than setting up something to be run after your death by a bunch of old business cronies or a staff that eventually comes to dictate the agenda.
An interesting comparison -- giving to investing. Yes, it's true, if someone else is already doing what you want to do with your giving, why not just join them and save yourself a ton of money in foundation fees, expenses, salaries, etc.? It would make your money go much farther.
This plan seems to settle the fate, over the long term, of all your Berkshire shares. Does that mean you're giving nothing to your family in straight-out gifts?
No, what I've always said is that my family won't receive huge amounts of my net worth. That doesn't mean they'll get nothing. My children have already received some money from me and Susie and will receive more.
I still believe in the philosophy - FORTUNE quoted me saying this 20 years ago - that a very rich person should leave his kids enough to do anything but not enough to do nothing.
So I'm glad to say I've got quite a bit of cash now. Overall I can - and will - use all my Berkshire shares for philanthropic purposes and will have plenty left over to provide well for all those close to me.
I didn't think he'd leave them out in the cold. The simple fact of the matter is that his entire family can get a very small portion of his net worth and still be left with a sizeable fortune -- that's how big his holdings are.
Awesome. Thank you for publishing this.
I've been reading more about Warren Buffet as I become interested in personal finance and investing. He seems to have a lot of critics from both the Left and the Right, and I can't fathom it. I can't find any reason for it. Here's a guy who has slowly, steadfastly amassed a fortune and is now using it to better the world. From what I know of him, he's a hero. And yet many people view him as evil.
In fact, I've spent the last two hours working on an entry about Buffet and Gates. Ted Rall wrote a nasty piece on them, and it just confounds me. Rall seems to be complaining that Buffet is so rich that he couldn't possible have gotten that way ethically. Insane!
Anyhow: I'll be sure to use this Yahoo! piece in my research. Be sure to check Get Rich Slowly tomorrow for my thoughts about Buffet.
(Ugh, there goes all my HTML. I hate that.)
Posted by: J.D. @ Get Rich Slowly | July 11, 2006 at 03:00 PM
I've posted my Buffet piece:
http://www.getrichslowly.org/blog/2006/07/14/editorial-in-defense-of-warren-buffet/
It refers back here.
Posted by: J.D. @ Get Rich Slowly | July 14, 2006 at 09:25 AM