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Bob Hope once said, “If you don’t have charity in your heart, you have the worst kind of heart trouble.” If this is the case, 76-year-old Warren Buffett must be feeling pretty healthy right now. The world’s second richest man is giving away most of his fortune.
Not only is Warren Buffett giving away a very large chunk of his US$42 billion worth – 85 percent in fact – he is giving the bulk of it to the world’s richest man, Bill Gates – or more specifically, to the Bill and Melinda Gates Foundation.
Buffett’s actual donation will be in the form of annually gifted stocks from his company, investing firm, Berkshire Hathaway. This gift will double the foundation’s current annual spending of US$1.5 billion.
The very nature of stocks and the extended time frame make it impossible to gauge the exact worth of the gift but given Buffett’s own expectations for the value of the shares, the total worth could be much more than the current estimated value of US$36 billion.
What’s even more remarkable about this gift is that Buffett and his family have foundations of their own – his own one is in honour of his dead wife. And while those too will receive something, The Bill and Melinda Gates Foundation will take the lion’s share of the shares by far.
Buffett has considered the task of giving away his money with the same astuteness that he put into making it. Starting with $100 in his early twenties, he traded his way to fortune. In spite of his wealth, Warren Buffett is a notoriously frugal man. He even still resides in the grey stucco home in Omaha, Nebraska that he bought for US$31,500 in 1958. He’s a man for whom the object is not so much money but rather the pursuit of it.
“I was wired at birth to allocate capital.” – Warren Buffett at a press conference in New York.
Buffett has carefully considered the allocation of his latest and most profound investment.
“Bill reads many thousands of pages annually, keeping up with medical advances and means of delivering help. Melinda, often with Bill along, travels the world looking at how well good intentions are being converted into good results.” – Warren Buffett in an interview with Fortune.
The Bill and Melinda Gates Foundation was founded in 2000, since which time they have devoted more than US$10 billion to developing projects and programmes for education within the United States and to fight illnesses and disease in some of the world’s most deprived areas.
It’s a very big task and a task which is increasingly becoming the major focus for Bill and his wife, Melinda. In June of this year, he announced plans for his transition out of his day-to-day role with Microsoft, which will allow him to spend more time with the foundation. The change-over will take place over a two-year period to ensure that there is a smooth and orderly transfer of Gates’ daily Microsoft responsibilities.
Chief Technical Officer, Ray Ozzie will immediately assume the title of Chief Software Architect and begin working alongside Gates on all technical architecture and product oversight responsibilities. Chief Technical Officer, Craig Mundie will take the new title of Chief Research and Strategy Officer, and will work closely with Gates to assume his responsibility for the company’s research and incubation efforts.
After July 2008, Gates will continue to serve as the company’s chairman and an advisor on key development projects but his main focus will be the foundation.
“This was a hard decision for me,” Gates said. “I’m very lucky to have two passions that I feel are so important and so challenging.” – Bill Gates in a statement released by Microsoft.
It might seem a major transition from Bill, the Software Mogul to Bill, the Philanthropist. But, just like Warren Buffett, Bill Gates has made a point of utilising the same techniques that made him a success in the corporate world to solving problems in the Third World.
With 240 staff (a number expected to rapidly rise), and a worth on the scale of a company like Disney, The Bill and Melinda Gates Foundation carries out its task of handing out money in a similar fashion to a company that is out to make it. The Foundation outsources much of its work, choosing to back specialist schemes that focus in on particular areas (any schemes that are not performing will be replaced) and applies a benefit-to-cost ratio to all of its “investments.”
The foundation is, in many ways, a leading example of the term “philanthrocapitalism,” an approach that uses business techniques to provide more efficient and effective philanthropy, which, in turn, promotes clarity and accountability; and a view that a foundation’s task is not just one of handing out money, but of forging alliances and building networks with government, industry and among fragmented groups of charities. This is a style of conduct that hasn’t gone unnoticed by Buffett, who considers the Gates Foundation a very sound philanthropic investment, “per dollar very effective.”
“He came to Melinda and me, and suggested that our foundation could be the recipient, because it would be easier to scale up than his own family’s foundations.” – Bill Gates speaking to Fortune.
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