Billions Donated to Charity

Anonymous Philanthropist writes " Warren Buffet , the world's second-richest man, announced over the weekend that he will soon donate 85% of his entire net worth, weighing in at around $37 Billion, to charities, with over 80% of it going to the Bill and Melinda Gates Foundation. This makes it the single largest monetary donation in history."

Comments

Before anyone asks...

[mjmalone]

From A conversation with Warren Buffett:

People will be very curious, I think, as to how much your decision - and its announcement at this particular time - is connected to Bill Gates' announcement in mid-June that he would phase out of his operating responsibilities at Microsoft and begin to devote most of his time to the foundation. What's the story here?

I realize that the close timing of the two announcements will suggest they're related. But they aren't in the least. The timing is just happenstance. I would be disclosing my plans right now whether or not he had announced his move - and even, in fact, if he were indefinitely keeping on with all of his work at Microsoft.

On the other hand, I'm pleased that he's going to be devoting more time to the foundation. And I think he and Melinda are pleased to know they're going to be working with more resources.

Although, it's hard to believe that the timing is entirely coincidental... especially since Bill said he'd be leaving Microsoft over the next two years, and Warren said:

With so much new money to handle, the foundation will be given two years to resize its operations.

Re:Before anyone asks...

[MMaestro]

And frankly the truth is the good Carnegie has done really have out lived the harm he did.

Uh, not really. Carnegie's complete and utter destruction of the unions cripped industrial growth for decades due to his tactics. The lack of a minimum wage (pay wages in the CENTS per day and the Ford Model T was priced at a 'cheap' $350), the methodology of simply decreasing workers' pay instead of increasing productivity or quality (sales are down? Fire some workers while maintaining the status quo!) and his own self-proclaimed "it was necessary at the time for the growth of the nation" while creating a permanent lower working class group of people in the U.S. (Oh yeah, building libraries is real helpful at a time when child labor is commonplace.)

Carnegie was a fool, even in retrospect. By the time his charities were felt by the masses, his company had already left its mark. Corporate intimidation and bullying was used for decades (and arguably to this day). Violence between factory owners and factory workers sparked on and off WELL into the 20th century. Unions have NEVER shaken off the image of essentially being puppet creations made by the corporations for calming the masses (unions in the U.S. are a joke compared to European counterparts and in many cases are being dismantled in some industries).

Re:Before anyone asks...

[Saige]

Do you have any clue what you're talking about?

No estate taxes are paid until the estate is over $1.5 million from a single adult, and $3 million from a married couple. Anyone who has a large enough estate to get taxed is not, by any means, considered part of the "middle class", let alone poor. $1.8 million puts the estate into the top %0.05 of the nation. And then there's the fact that family farms and businesses get even more exemptions.

Only the rich are even subject to the estate tax.

Claiming that the estate tax affects poor and middle class folks is completely and totally a baldfaced lie.

Re:No free rides

[mjmalone]

From A Conversation with Warren Buffett

This plan seems to settle the fate, over the long term, of all your Berkshire shares. Does that mean you're giving nothing to your family in straight-out gifts?

No, what I've always said is that my family won't receive huge amounts of my net worth. That doesn't mean they'll get nothing. My children have already received some money from me and Susie and will receive more.

I still believe in the philosophy - FORTUNE quoted me saying this 20 years ago - that a very rich person should leave his kids enough to do anything but not enough to do nothing.

I believe he also said that he'd be giving the remaining 15% to charity when he died. Buffett is a pretty good guy, actually.

Re:Sensible CEO salary

[MarkByers]

CEOs frequently get only $1 per year. Steve Jobs for example. Their salary is not their largest source of income.

Re:85%!

[mccp]

"Today, with a $60 billion fortune, Gates is both hated and loved. Unlike many, he has promised to contribute over 90% of his wealth to charities when the big guy calls his number." 90% of the richest man is more than 85% of the second richest man. Gates is just being more low-key about it.

Re:No, it IS funny. And you can't be serious.

[ScentCone]

this is only possible due to a system in which the vast majority are pushed into poverty and a tiny minority accumulate nearly all the wealth

You're falling into the classic "the pie is only so big" trap. Do you really think that if Bill Gates and MS had never happened (likewise with, say, IBM or Sun or anyone/everyone else) that poor people would have somehow had a share of his billions in their pockets, instead? They don't call it "making" money for nothing: you do something people want and are willing to buy, and that creates demand and sets a price. Those people do the same with what they do for a living (or don't do it, if they don't produce anything, of course). The point is that vast fortunes have been made by lots of people because of MS's economic activity and innovation (yes, innovation - despite the groupthink, they do some of that, and their marketing vigor is no small bit all by itself, and is something that lots of other less-innovative companies copy, BTW). Some of that income has been earned by people like school bus drivers with some of their 401k in a mutual fund that has invested in MS's future.

This notion that the only reason Michael Jordon is rich is because someone else is now poor... or that Michael Moore's $200M from making his silly "documentary" is money that those movie-goers would have otherwise have used to buy applesauce for starving babies... it's nonsense. No matter how much people resent successful businesses (or just what their thriftier neighbor is able to buy for not having wasted so much on stupid crap), it's usually just that: frustration at not having cowboyed up and done the same sort of work themselves, and created value where it didn't exist before. The really busy people make the pie bigger. We can split hairs over whether or not Netscape might one day have made some piece of that pie bigger than MS made it - but would you say that Netscape's early pile of cash and investment somehow made poor people poorer? Or that Red Hat does?

Re:seriously

[bagsc]

Despite having a grant of over a billion dollars it only seems to have about 20 students ?!?

Grants are generally structured so that half of the money they make gets reinvested in the grant, and half goes out to the cause. So a $1 bil grant with professional managers might make 8% this yeat, 4% gets reinvested, and the other 4% goes out to scholarships. Obviously, $40 million should get more than 20 students a full ride, but the initial years have marketing costs and structural costs that have to come out of that 4%. The point, however, is that this grant goes on indefinately growing, and when its giving out >100 full rides a year in a couple of years, it will definitely be a major source of money to the scholarship system.

But while it's easy to be dazzled by the sheer numbers here I'm not at all sure that I trust the B&MG Foundation to spend their money in a way that would be selected by the masses

Sheer numbers aren't the important part of non-profits, its the management. Lots of people get into the non-profit sector thinking its not business, and without adequate budgetary and fiscal discipline. BMGF is notable because it has excellent management, and it isnt one of those charities where most of the money disappears, or is spent inefficiently. I hope you can at least respect that.

Re:Kudos, but a question

[Jah-Wren Ryel]

One common - or at least I've encountered it a few times - criticism of the Gates foundation is their funding for AIDS medicines. Instead of funding the development of in-country production facilities to make AIDS medicines for local distribution, they fund the purchase of western manufactured medicines.

The criticism comes from the fact that most 2nd and 3rd world countries disregard western medical patents and pay no royalties to "Big Pharma" in the West. By ignoring such patents, the same money buys signficantly more locally produced drugs than it does imported drugs from the West.

So by purchasing drugs from the West, the Gates foundation is supporting a questionable intellectual property rights system that itself directly benefits Microsoft at the expense of the people whom the charity is suppossed to be serving.

The obvious response that "Big Pharma" would never invest in the development of such drugs without incentives of royalties is hard to evaluate. Some would argue that there are enough patients in the West to pay for the development, and that without the charity money, the 3rd world would make no purchases anyway. But when the charity gets to be the size of Gates Foundation, it is possible (I really don't know either way) that "Big Pharma" would factor in the charitable purchases as part of the expected return on investment in new drugs.

Whatever the case, it is at least an interesting criticism of the Gates Foundation's policies with respect to intellectual property law and Microsoft's indirect benefit.

Re:In light of recent events

[kzarling]

I, for one, welcome our chair-throwing icon overlord.