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Old 06-27-2006, 10:25 AM   #1
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Warren Buffet

Yesterday my mom was telling me that Warren Buffet decided to give his money away, rather than include it in his will. I just found this article (below). Based on the figures given there, the Bill & Melinda Gates Foundation alone is set to receive roughly $31 billion!

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NEW YORK (FORTUNE Magazine) - We were sitting in a Manhattan living room on a spring afternoon, and Warren Buffett had a Cherry Coke in his hand as usual. But this unremarkable scene was about to take a surprising turn.

"Brace yourself," Buffett warned with a grin. He then described a momentous change in his thinking. Within months, he said, he would begin to give away his Berkshire Hathaway fortune, then and now worth well over $40 billion.

his 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.

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

Wow! I don't know much about Warren Buffet, but what I know, I love. I had the pleasure of sitting by him when I heard Bono speak in 2002. I never would've guessed he was the second richest person. I thought he was a college professor until someone tapped me on the shoulder and said, "do you know who that is?!?"
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Old 06-27-2006, 10:52 AM   #2
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I saw this on the news last night. Buffet was asked about why he chose the Gates Foundation and he simply said they are the best at generating results. Having amassed 40 odd billion dollars making those types of investment decisions what a huge shot of inspiration that sustainable change IS possible!

Also coming on the heels of Bill Gates retiring from day to day management of Microsoft to focus on his foundation...wow...it's incredible to think what can be accomplished and as 2 of the most admired and respected gurus of the corporate world, what a fantastic example they both have set.
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Old 06-27-2006, 10:57 AM   #3
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this was fantastic, and i heard a quote from him in regards to his kids -- he wanted to "give them enough to do anything, but not enough to do nothing."

to me, this move gets into the whole culture of nepotism (a certain president comes to mind) and how corrosive and, bluntly, un-American and anti-Democratic it is, and it further indicts the stupidity of repealing the Estate Tax (lol at "the death tax"). we are not and should not ever be a country of landed gentry who pass along gobs of money to their biological offspring -- it seems to me that we often place too much emphasis on the importance of the biological nuclear family. love your family, take care of them, but do not think that merely because they are your own genetic material that they are somehow more worthy of beneficence than others. when your kids are so privileged that they have everything they could need, why flood them with more cash?
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Old 06-27-2006, 11:01 AM   #4
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Warren and I are both from Omaha.
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Old 06-27-2006, 11:59 AM   #5
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This is great.
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Old 06-27-2006, 12:31 PM   #6
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Amazing men! Should be really interesting to watch what Bill Gates does in the next few years.
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Old 06-27-2006, 03:09 PM   #7
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Quote:
Originally posted by Irvine511
"give them enough to do anything, but not enough to do nothing."
Nice quote. A WOW moment for me when I heard this. Wouldn't it be great to make a fortune and then see it all going to make a real difference.
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Old 06-27-2006, 03:29 PM   #8
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Quote:
Originally posted by adrball


Nice quote. A WOW moment for me when I heard this. Wouldn't it be great to make a fortune and then see it all going to make a real difference.
Yes - I thought the same thing when I read it. I would love to see a "competiton" emerge betweent the richest people on who can give the most.
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Old 06-27-2006, 03:30 PM   #9
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This is great news, I just hope that we are able to see real tangible results to the Gates' great charity work.
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Old 06-27-2006, 03:36 PM   #10
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Quote:
Originally posted by AEON


Yes - I thought the same thing when I read it. I would love to see a "competiton" emerge betweent the richest people on who can give the most.
Just come to Grand Rapids, Michigan! There's nothing that's not named after the de Voses, van Andels, or Meijers. It's become very political; it's not about just giving for the sake of giving anymore. Not that I'm really complaining. Their money has been put to great uses, despite their motives.
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Old 06-27-2006, 06:34 PM   #11
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I hope this money will do great things. I think Warren Buffett still seems like an old fashioned man with good values. I love how he said that when his rich friends bemoan the cycle of dependency of welfare, he turns it on them and talks about the cycle of dependency of their kids inheriting their wealth.
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Old 06-27-2006, 08:43 PM   #12
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A whole lot cooler, to do something like like this without holding a press conference.


*do your good deeds in secret*
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Old 06-27-2006, 08:47 PM   #13
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Quote:
Originally posted by the iron horse
A whole lot cooler, to do something like like this without holding a press conference.


*do your good deeds in secret*
If it spotlights the charity in a positive way I can't see anything negative here.
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Old 06-27-2006, 10:08 PM   #14
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Quote:
Originally posted by the iron horse
A whole lot cooler, to do something like like this without holding a press conference.


*do your good deeds in secret*
Kinda hard to keep $30 billion dollars a secret
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Old 06-27-2006, 10:11 PM   #15
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http://www.businessweek.com/pdfs/2005/0548_philsco.pdf


Lotsa rich people give away their money so it's not an uncommon event. The amount of the donation is definitely uncommon.

Bill & Melinda Gates along with Warren Buffett were on Charlie Rose for the full hour last night and it was a great interview. They mentioned Bono of course and his good works too.
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