Warren Buffett gives bulk of fortune to Gates Foundation
Warren Buffett recently announced that he would give away most of his fortune to the Bill and Melinda Gates Foundation starting this year.
BY A CORRESPONDENT
June 26, 2006
Warren Buffett, the world's second-richest man (after Bill Gates) is going to part with a substantial part of his wealth starting this July. Most of the money will go to the Bill & Melinda Gates Foundation.
Warren Buffett, the Chairman and chief executive officer of Berkshire Hathaway Inc., has pledged 85% of his Berkshire Hathaway stock to five philanthropic foundations.
Unlike the way other mega-rich individuals have gone about giving out their money, Warren Buffett, like Bill Gates, is going about donating his wealth in a very methodical manner.
A dominant five-sixths of the shares will go to the world's largest philanthropic organization, the $30 billion Bill & Melinda Gates Foundation. As of now, Bill Gates and Melinda Gates are the trustees of the Foundation, but Warren Buffett will also join them as a trustee.
Beginning in July 2006 and continuing every year, Warren Buffett will give a pre-determined, annually declining number of Berkshire B shares to the five foundations. The number of shares that will be given out in 2006 will be 602,500 in 2006 and will decline by 5 % every year.
The first gift would be worth around $1.5 billion and the value will only increase over the years.
In 2006, 500,000 shares will be donated to the Foundation and in 2007, 475,000 shares, that is 5 per cent of the 9.5m remaining after the 2006 gift, will be donated and so on each year.
There are, however, conditions. The first condition is that the gifts will be made to the Gates Foundation as long as either Bill Gates or Melinda Gates are involved in the policy decisions of the Foundation.
The second condition is that the Foundation should meet all legal requirements; Buffett's donation must be considered charitable and not be subject to tax as a gift. Warren Buffett's third condition is the value of the Foundation's annual spend must be 5% of its net assets as well as the value of Warren Buffett's gift for that year. If the Foundation spends more than this amount, then it be carried forward and adjusted with the next year's spend.
At the current share price of Berkshire Hathaway, Warren Buffett's cumulative gifts for 2006 will be around $315 million. The contributions will be made to Susan Thompson Buffett Foundation and to the foundations headed by Buffett's children: Susan, Howard, and Peter. The Susan Thompson Buffett Foundation, earlier known as the Buffett Foundation, focuses on areas such as reproductive health, family planning, pro-choice causes, and preventing the spread of nuclear weapons.
According to a report in Fortune magazine, Bill Gates says he and his wife are happy that Buffett's contribution will allow the Fondation to deepen and accelerate its work.