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.
This 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.
So that's the plan. What follows is a conversation in which Buffett explains how he moved away from his original thinking and decided to begin giving now. The questioner is yours truly, FORTUNE editor-at-large Carol Loomis. I am a longtime friend of Buffett's, a Berkshire Hathaway shareholder, and a director of the Susan Thompson Buffett Foundation.
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Please keep me posted on the latest happenings!
See you soon,
Angie
I read a post today by Guy Kawasaki I think you might be interested in. Guy is the author of Art of the Start and is an advocate for entrepreneurs. I will share an excerpt with you here. To read the entire post, visit Guy’s blog at http://blog.guykawasaki.com/2006/06/how_to_kick_sil.html.
I especially like his discussion about engineers vs. MBAs. As an engineer with an MBA, I definitely think he makes a strong argument... check it out!Stuff You Can Do Jack About
I’m so excited to say that I’ve still ‘got it’! I’ve been in LA almost two years, so sometimes I do wonder… but yesterday, it was proven.
I hope you had a chance to read my previous blog post about the crime in
I have such an amazing group of friends there.
Sending out that e-mail helped. One of the people I sent it to has helped to arrange for my friend Paul to be interviewed on the
I’m so excited to hear that I could have a tiny impact on something in
Good luck Paul with your interview!
I know I’ve been telling you a lot lately about underperforming customer service. Today, I had an experience that was so over the top (in the other direction) that I thought I should mention it here. It’s laughable actually.
Last weekend, I went to dinner at a fancy restaurant in LA called Yamashiro. You can check out their web site at www.yamashirorestaurant.com for more details, but I’ll sum it up for you briefly here.
The Yamashiro building was built in 1911 by two brothers and is a replica of a palace in
Yamashiro has a private drive for their guests and only allow valet parking. They serve high end sushi and drinks overlooking their beautiful outdoor Japanese garden. The service and food are great, as you can imagine.
Anyway, the laughable part came today when I received a thank you note from our waiter. First of all, since when do waiters write thank you notes? Secondly, the hand writing was all bubbly and curvy. The thing is, our waiter was a man… and this is clearly not his hand writing!
Anyway, the restaurant is great! Go there, try it, and let me know if you get a random thank you note. J
What is going on in the world when Google can’t keep up their blogging site for an entire day? This has been going on for almost the entire past week and I hate it! Blogging is a very important part of things for me right now and the last thing I need in the middle of a work day is this message:
Down for Maintenance
Blogger is temporarily unavailable due to an unexpected problem.
We will be back up as soon as possible.
Update (2:20 pm PDT): We are fixing a database issue. We hope to be back up in a couple of hours.
The URL they put this on is http://www.blogger.com/sorry.html. You should be sorry! :-)
My friend Paul Ryburn posted an important message today on his blog. I hope you’ll read it below and e-mail Paul at Paul@PaulRyburn.com if you want to get involved in his new organization to help fight crime in downtown
(Keep it safe – I want to come back! J)
Angie
Thanks to everyone who e-mailed in response to my last post (Saturday), asking what's up with crime downtown and why I'm so upset and frustrated. I've received permission to post a few things, so now I'm going to tell the whole story.
A week ago Sunday, a bunch of us were sitting in Sleep Out's celebrating Memorial Day weekend. Well into the evening, my friend Mike King decided he needed some fresh air, so he went outside for a walk. He never came back. That's not unusual for downtowners - we figured he ended up at another bar, or a friend's place.
Actually, he ended up lying in the alley behind Parking Can Be Fun, out cold. He had gone for a walk around the block - he walked down
The next morning, Mike and I sat at Sleep Out's and he told me what had happened. He told me he had cancelled all his cards. "You called the police as well and filed a report, didn't you?" I asked.
"No," he replied. "They hit me from behind, so I never saw them. Without a description, what good will it do to file a report? Besides, I don't want to make Downtown look unsafe. This was just a one-time, isolated incident."
"No, it's not," I told him. "About a month ago, a friend of mine was walking to her car, in one of the
Mike started to suspect that there may have been more unreported robberies of the same type. He began to talk to people around Downtown. He talked to a friend of ours who owns a popular Downtown restaurant - out of respect to them I won't give the name, but I will say that it is in a building owned by Belz Enterprises. She told him that 5 of her employees have been mugged recently.
Friday night I was having dinner with some friends, and I filled them in on Downtown's recent crime wave. They told me that a friend of theirs had been walking up
That was when I really started to feel unsafe. I make that
Now I can't make that walk anymore. My quality of life has now been affected by crime. So Karen, Russell, Nate, everyone else at E&H, if I come in less often on the weekends, I hope you'll understand. I also feel bad for people who are buying condos at The Lofts and CityHouse or who rent at South Bluffs, and are being told that they're only a 10-minute walk from
So Friday night after dinner, my friends went to get a beer and I decided to take a walk. I walked down to
Later I walked home. As I crossed the intersection at Main and
I'm becoming paranoid. After I got home that night, I paced the floor of my apartment for a good two hours, trying to calm down. About 3 in the morning I looked out the window. I can see
Then the guys got in the car and drove off, and I realized I hadn't witnessed a break-in. I had witnessed four guys get in the car they owned (or their parents owned) and drive home. Now I'm seeing crime even in places where it doesn't exist.
As I walked home earlier that evening, I watched a cop set the light at Union and
I'll be okay. I've always been street smart. I walk in well-lit areas downtown, as close to the middle of the street as possible. I approach dumpsters and other large objects behind which people could hide with extreme caution. But I worry about my neighbors. There are several single females who live in my apartment building who walk their dogs after dark, using the alley behind the building as a shortcut to Court Square. I think of my new neighbor who just moved in a couple of weeks ago, and how she and I grabbed a bite to eat at LoLo's one night and had a great time, and how sad it makes me to think of her being knocked out and robbed while she's walking her dog. I passed on the crime info to the security guard in my building. He said he'd let everyone know. My building is hiring a new courtesy guard to work Monday and Tuesday. Previously we had only had a guard Wednesday through Sunday. I commend the owners for taking that step.
I'm sitting here typing this post at the Flying Saucer. Many of the waitresses here have become my friends. I worry about them. I wonder how many of them have been mugged walking to their cars, considering a business a block away has seen 5 of its employees get mugged? The Saucer has had a pretty high turnover the past few months. I wonder if any waitresses have quit because of the crime downtown?
I'm sitting at the
Take a look at the Memphis Police Department's Crime Mapper. Try searching for all crimes that have occurred in the past month within half a mile of Union and
I'm frustrated. I'm angry. A lot of other people are too. I feel like the neighborhood I love is being taken away from me. Actually, I think downtown is still pretty safe overall, but I also think we're approaching a tipping point, where if we don't fight back now, the criminals will take over for good by the end of the summer. That's bad for all of Downtown. Own a condo in the area? Your property values will decline as a result. Own a business? Your revenue will decline because people will be afraid to come down here. This is not just a problem for the people who get robbed or attacked. This is a problem for all of us. We must work together to fight the crime.
What can you do to help? First of all, if you're robbed, for God's sake, file a police report. Even if you have no idea who robbed you, at least the cops will know where they need to step up their patrols. If you see suspicious activity, call the police and report it. The Downtown Precinct's number is 525-9800; that hopefully will get you a better response time than the main 545-COPS line.
Several of my friends and I, including my friend Mike who was robbed, plan to put together an organization to share crime information, raise awareness of criminal activity downtown, and lobby the people in power to do something. If you'd like to be a part of this, e-mail me. If you've been a recent crime victim or if you know of people who have, please e-mail me and let me know. The information you send won't be posted on this blog if you tell me you wish it to remain private. If you can get us in touch with a Henry Turley, Jack Belz, Kevin Kane, media outlet or other person/business that has the power to get things done, please e-mail me.
Please forward a link to this post to anyone you feel should see it. Thanks.
With all that in mind, I'm thinking the look should be 'fashion-creative'. I have a few options... the two winners so far are a lace black dress, a crouched black dress, or a red dress with jewel accents. I'm also thinking I'll wear scary-tie-up-the-leg high heels, so I hope they have parking that's not too long of a walk.
For the wedding, I'm thinking I'll either go with a plain black dress, or maybe a cute light green dress I have. The green dress has a matching scarf and it would honestly be the best choice if I weren't 5'10". Given that I'm tall, it's just slightly short enough to make people feel a tinge of surprise when they see me. And, I'm just not sure if that's the whole vibe I'll be going for in Salt Lake.
See you at the ball!
Alright, that's it-- my first official deal of the week. I hope you enjoyed it!
Happy Saturday. :-)
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