Buffett Donates $1.6 Billion in Biggest Gift Since 2008 Crisis
Billionaire Warren Buffett has made his largest donation since the 2008 financial crisis. Photographer: Peter Foley/Bloomberg
July 6 (Bloomberg) -- Bloomberg's Betty Liu reports on major newsmakers in today's Movers & Shakers. (Source: Bloomberg)
Warren Buffett, the billionaire who has promised to give away 99 percent of his fortune to charity, made his largest donation since the 2008 financial crisis after profits at his Berkshire Hathaway Inc. jumped.
The value of Buffett’s annual gift to the foundation established by Bill Gates rose 28 percent to $1.6 billion from $1.25 billion last year. The donation, made in Berkshire Class B stock, was accompanied by gifts totaling $328 million in shares to three charities run by Buffett’s children and another named for his late first wife, according to a July 2 filing.
Buffett, 79, is depleting the world’s third-largest personal fortune in installments. The step-by-step approach means Buffett will control Omaha, Nebraska-based Berkshire as long as he lives. His chosen charities are counting on Berkshire profits to fund programs aimed at easing world hunger, boosting education in the U.S. and promoting access to abortions.
“It’s good that he’s staying with his plan,” said Daniel Borochoff, president and founder of the American Institute of Philanthropy, a Chicago-based charity watchdog. “Other wealthy donors are stepping back from their giving plans” after the economic crisis.
The gift value was calculated from the July 1 closing price of $78.81. The filing didn’t contain a dollar total.
Berkshire rose 35 percent on the New York Stock Exchange in the 12 months ended July 1, the day Buffett made the gifts. A stock-market rally helped increase Berkshire profits 61 percent last year. The $27 billion takeover of railroad Burlington Northern Santa Fe Corp., Buffett’s biggest, may boost Berkshire results further as the U.S. economy improves.
Less Giving
The financial crisis lowered charitable giving in the U.S. by 3.6 percent to $303.75 billion in 2009, according to a study by Indiana University and GivingUSA Foundation. Buffett’s gift to the Bill & Melinda Gates Foundation last year fell about 31 percent from $1.8 billion in 2008 as Berkshire shares slumped.
“Financial markets, for better or for worse, drive how people feel” about giving, said Nancy Raybin, chairman of Giving Institute, a consultant to non-profit groups.
Buffett, whose wealth was estimated at $47 billion by Forbes magazine in March, announced his philanthropic plans in 2006. He pledged about 85 percent of his Berkshire holdings to the Gates Foundation, the Susan Thompson Buffett Foundation, the Howard G. Buffett Foundation, the Sherwood Foundation and the NoVo Foundation. In a Fortune magazine op-ed last month, Buffett said more than 99 percent of his wealth would go to charity.
‘Giving Pledge’
Buffett and Bill Gates, co-founder of Microsoft Corp. and world’s second-richest man behind Mexico’s Carlos Slim, are pressing fellow billionaires to give more. On June 16, the two men and Gates’s wife Melinda Gates announced a campaign called “The Giving Pledge” to induce the wealthiest individuals and couples to commit half their fortunes to charity.
Buffett, who has given away more than $9 billion in Berkshire stock in the last five years, said in 2006 that his company is an “ideal asset” for charities because of its stability and earnings power. Since announcing his charity pledge four years ago, Berkshire has advanced 27 percent, beating the 18 percent slide in the Standard & Poor’s 500 Index.
Buffett has arranged that the shares promised to each charity will be delivered after his death. During his lifetime, the number of shares he hands over is scheduled to decline by 5 percent each year. Increases in Berkshire’s stock price should more than make up for the reductions, Buffett has said.
“You can reasonably expect the value of Berkshire shares to increase, in an irregular manner, by an amount that more than compensates for the decline in the number of shares that will be distributed,” Buffett said letters to the charities in 2006.
Gates Foundation
The Gates Foundation, with a $35 billion endowment, combats disease and global poverty, and funds U.S. education programs. Last year, The Susan Thompson Buffett Foundation, named for Buffett’s first wife, who died in 2005, gave more than $2 million each to Cambridge, Massachusetts-based Abortion Access Project Inc. and Washington-based Catholics for Choice and more than $40 million to Ipas, which works to expand the availability of safe abortions and provides reproductive health care. Buffett remarried in 2006.
Gates, 54, is a Berkshire director.
To contact the reporter on this story: Andrew Frye in New York at afrye@bloomberg.net.
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