"Great News for the World"
Warren Buffett's gift of $31 billion to the Bill and Melinda Gates Foundation is the largest gift in history by a multiple of 20, excluding the Gateses' $29 billion gift (see BusinessWeek.com, 6/27/06, "Buffett's Mega-Gift"). It will eventually drive the Gates Foundation's endowment to double its size. Indeed, the endowment of the Gates Foundation—already the richest in the U.S.—will be larger than the combined endowments of the other 9 foundations on the top 10 list.
After Buffett's announcement at the New York Public Library on June 26, Melissa Berman, chief executive and president of Rockefeller Philanthropy Advisors in New York City, spoke with BusinessWeek.com's Bremen Leak on the significance of the gift and the impact it will have on charitable giving in the U.S. Edited excerpts of their conversation follow:
It must have been extraordinary to witness such a historic moment in philanthropy. As someone who advises donors on a daily basis, what was your initial reaction to the announcement this morning?
This is great news for the world—period. The capacity that these donors will have to make an impact on the world with their own donations and innovative partnerships is incredible. Warren Buffett's gift was very unique.
Are these sorts of partnerships becoming more common?
They're very unusual. It's rare to have that kind of relationship, but I believe we'll start to see more of them. We're looking at the beginning of a new era as to how people start to think about leverage and impact.
There has been a lot of interest over the last 10 years about impact. Now we're starting to see more on leverage. This year we advised $130 million in philanthropic activity. Our donors are more and more interested in applying metrics to their philanthropy. And increasingly, they're focusing on getting the best caliber thinking—through their own experience or through that of advisors.
Who approached whom in this particular partnership?
It was very clear that Warren Buffett has been thinking about this for a long time. He showed a great deal of respect to Bill and Melinda Gates and was very direct in saying that donors need to find the same caliber of talent in people who help them give away their wealth as in those who help them produce their wealth.
Is it possible that a $31-billion gift could give the Gates Foundation an unfair advantage in terms of its size or influence when compared to smaller nonprofits?
The Gates Foundation is already the largest in the U.S. in terms of its grant-giving capacity. Shortly, it will be four to five times the size of the next largest foundation. But it will take some time to get to that point.
We don't typically think about nonprofit groups as having an unfair advantage. With gifts like this one, we might consider it an outsize opportunity. Bill Gates was quick to point out that the size of the problems—global poverty, education, climate challenges, and so on—is much greater than the pool of funds available to solve them. So there is a great opportunity for others to form partnerships to try to remedy some of these problems together.
Will the Gateses broaden their spectrum to include initiatives from Buffett’s agenda such as reproductive health or nuclear weapons reduction?
It is entirely possible that the Gateses will expand their horizons, but the causes they support and those of Warren Buffet are very closely interrelated. The environment, global health, education, civic institutions, market institutions&all of these forces are becoming increasingly inseparable.
In terms of health issues, the Gates Foundation is very open in the broadest sense of the word. I think that we'll have to wait and see how the thinking of the Gates Foundation on environmental issues evolves.
Until his wife died in 2004, Warren Buffett had said that he planned to give away his wealth at his death. How might giving while living in this case have a greater impact?
The Gates Foundation is in the position of having Warren Buffett as a trustee. He's an incredible asset.
It's very noble for someone to look around and say there is an organization that doesn’t happen to have his name on it but can do the most good with his gifts. A philanthropist can have a greater impact through the grants than through the name above the door.
Is the Gates Foundation—or anyone—equipped to handle this magnitude of gift?
Warren Buffett has been very thoughtful in having a ramp-up period of a couple of years. I'm confident that the Gateses have been bringing together experts to help them manage the new funds. It's their hallmark to bring together the most creative partners. Who wouldn't want to help the Gates Foundation utilize this gift?
This gift is going to inspire many, many potential donors who have been milling over the question that Warren Buffett so effectually answered today—that is, is it better to leave your donations in a will or to give while living?