Buffett philanthropy: America's largest

[Nords]

(Mods, do we have a charity/philanthropy forum yet?  Otherwise I'll just leave this here.)

Here's an interesting analysis of where Buffett's giving away his money:

http://www.insidephilanthropy.com/home/2014/6/13/the-buffett-universe-a-surprising-look-at-the-most-powerful.html

Warren Buffett and his three kids now give away more money annually than any family in the world. Yet since that giving goes through different vehicles and to disparate causes, people don't often stop and study the big picture, or appreciate just how much financial and human capital the Buffetts have mobilized for their giving, and how far their reach now extends.

The size of Buffett's remaining wealth is both underappreciated and hard to fathom. His fortune is thirteen times larger than the average net worth of other billionaires on the Forbes 400 list and about six times larger than the endowment of the Ford Foundation.

According to a recent article in the New York Times, Buffett has given $13 billion so far to the Gates Foundation in Berkshire Hathaway stock and is committed to giving additional stock worth $42.1 billion. More specifically, Buffett pledged in 2006 to give the Gates Foundation five percent of his remaining shares every year, assuming certain conditions are met. Since then, shares of Berkshire Hathaway have more than doubled in value, and so Buffett's annual contributions to the Gates Foundation now amounts to over $2 billion annually.

While Bill Gates's money forms the core of that foundation's endowment, Warren Buffett is giving more than Gates on an annual basis to fund its operations. A lot more: According to the Times article, Bill Gates gave just $3.7 billion to the foundation between 2002 and 2012, less than a third of what Buffett has given to it in recent years.

Buffett has also given or committed to give stock to his kids' foundations, estimated in 2012 to have a value of $2.5 billion for each foundation. But since Berkshire Hathaway stock has soared by over 50 percent since 2012, the value of Buffett's commitments to each of those family foundations is now closer to $4 billion.

And even that figure may understimate how much money will end up in the kids' foundations. In 2012, Buffett said that his combined commitments to Gates and his kids accounted for 90 percent of his stock holdings. Which raises the question: What will happen to the remaining 10 percent, now worth an estimated $6.5 billion? I'd bet on the kids' foundations getting that money.

I remember when he first set up the annual donations to the Gates Foundation that people were concerned it would crash the stock price.  The GF would have to sell so many shares in a frantic attempt to comply with Buffett's terms that the share price would be beaten down with selling pressure.  Seems pretty silly in hindsight, especially considering that the greater share float (and the BNSF acquisition a few years later) got the stock into the S&P500 and greatly improved its options trading. 

One of my reactions to the article was "Cool, I'll bequeath it like Buffett and send our donations to the Gates Foundation."  On the other hand, though, I still have a hard time donating money to a foundation run by a billionaire.  It seems better to focus locally and on something more mundane like college scholarships.

[electriceagle]

Are there problems in your local area that you understand (because you live there and are involved)? Give a combination of your money and your time to help solve those problems.

Its wonderful that Gates and Buffett are willing to give so much wealth to good causes, but dollar-for-dollar, they are going to be less effective than an average person who is active in their own community as they will not have the time to filter the organizations that look good but do little or are exciting but circular.

[warfreak2]

Its wonderful that Gates and Buffett are willing to give so much wealth to good causes, but dollar-for-dollar, they are going to be less effective than an average person who is active in their own community as they will not have the time to filter the organizations that look good but do little or are exciting but circular.

As I understand it, this is what Bill Gates does with his life now.

[matchewed]

Yeah to my knowledge Gates has them prove with metrics their effectiveness, both cost and actual.

I'm a big fan personally of setting up at least one scholarship. I'll worry about the details some other day but have started tentative research on it.

[Jennifer in Ottawa]

One of my reactions to the article was "Cool, I'll bequeath it like Buffett and send our donations to the Gates Foundation."  On the other hand, though, I still have a hard time donating money to a foundation run by a billionaire.  It seems better to focus locally and on something more mundane like college scholarships.

Philanthropists like Bill Gates and Warren Buffet are best placed to do things to help humanity as a whole, to take on large scale projects. They will never be able to run out of money regardless of what they do unless they divest themselves of their entire share portfolio and simply stop generating more cash.

As individuals we are most effective within our local communities.  With our time, our skills and a little bit of our cash we can do much to improve the quality of life for those in our immediate reach.

[TreeTired]

It seems better to focus locally

   I agree 100%.    It doesn't bother me one iota that the Gates foundation is run by a billionaire.   On the contrary,  it makes me think that less money goes to admin expense and more goes to actual needs that the foundation supports.   My reason for not giving to the Gates foundation is that what difference would my hundred or even thousand dollars make?   I would rather give locally where it makes a difference.

[arebelspy]

Maybe it's me, but nearly everyone within hundreds, perhaps thousands of miles of me has it pretty well off, so giving locally is a way to minimize, not maximize the value of my dollar.  There are people in the world so much worse off than anyone I've ever met, and helping them, even if some more goes to overhead, is still much more effective overall, in my mind.

But everyone has to go with what they're comfortable with.  Local giving has always made me uncomfortable when I compare the people it's going to versus other people around the world.  :)

[Nords]

Local giving has always made me uncomfortable when I compare the people it's going to versus other people around the world.  :)

To cold-heartedly mangle Peter Singer's approach (http://www.thelifeyoucansave.org/), I never know whether to help those with the highest potential human capital (in our local society) or to send our philanthropy to places with much smaller potential human capital-- but where more lives can be saved per dollar. 

It's also frustrating to see overseas philanthropy become an assumed commitment to lifetime support.  How long have we been pouring funds into African poverty?  How much money has been spent?  When will things start to turn around?

Meanwhile thousands of American students use college scholarships every year, and arguably their earnings (and their contribution to society) have a much higher return on investment.  However that might be short-term thinking compared to the long-term prospects of sinking billions of dollars into an entire African continent.

You never know which approach is going to pay off.  I guess that's why the Gates Foundation is trying to both fix American primary education and to eradicate malaria.

It seems hard to believe that this logic would lead to "philanthropic diversification"...

[Cassie]

I really believe in giving locally to groups that help people and animals.  I think that we have a responsibility to worry about our own citizens first before worrying about those in other countries. 75& of the mentally ill in this country are homeless.  It is a big problem that we as a society need to address.  Yes some homeless are homeless by choice but most are not.  Many schools now offer free breakfast/lunch because their families do not make enough $ to feed them properly. Now people will start arguing if their parents are wasting their $. Some will be and some won't be.  It doesn't matter in the big picture-kids should not suffer for problems not of their own making.  At one point in my life I was a social worker and it really opened my eyes to what is happening no matter where you live.  I do not begrudge if people want to give to others in other countries but I believe we need to take care of our citizens first.

[arebelspy]

You never know which approach is going to pay off.  I guess that's why the Gates Foundation is trying to both fix American primary education and to eradicate malaria.

It seems hard to believe that this logic would lead to "philanthropic diversification"...

Good point.

Then again, neither of your two approaches necessarily lead to helping local homeless/hungry (which many "local" charities focus on), as they may not have much potential capital or potential for life saved per dollar.

But it did make me think about the idea of splitting monies due to uncertainty, so thanks.

I really believe in giving locally to groups that help people and animals.  I think that we have a responsibility to worry about our own citizens first before worrying about those in other countries. 75& of the mentally ill in this country are homeless.  It is a big problem that we as a society need to address.  Yes some homeless are homeless by choice but most are not.  Many schools now offer free breakfast/lunch because their families do not make enough $ to feed them properly. Now people will start arguing if their parents are wasting their $. Some will be and some won't be.  It doesn't matter in the big picture-kids should not suffer for problems not of their own making.  At one point in my life I was a social worker and it really opened my eyes to what is happening no matter where you live.  I do not begrudge if people want to give to others in other countries but I believe we need to take care of our citizens first.

Basically the opposite of what I was saying.  :)

Almost all of those people have a way to get food into their bellies, get a roof over their head, etc.

I'm not saying we shouldn't help them, but there are so many people in impoverished areas that have no food and are literally starving to death.  No education, etc.

Adding a little more help for someone who has such a cushy life, relatively speaking, doesn't feel like something I can justify.

[LalsConstant]

Just an anecdote.   I was in grad school when a terrible drought was ravaging rural China.  Our association of grad students was all set to raise donations for relief (pretty hilarious in hindsight who has less money than grad students?).

That's when our finance professor,  who was Chinese and I mean she came to the US from mainland China (amazing lady in every regard she had quite the story) told us during a dull moment of her lecture to not donate any money to China's drought relief.

She explained very carefully (her English for non technical topics was a bit limited so she had to go slowly ) that very little of the donation would actually ever reach those who were suffering.   She was even having trouble sending money to some of her affected relatives directly.

The point here isn't global vs local per se, the point is find out what is going on to at least some extent.  It is one of life's ironies that sometimes you can put a more advantaged person ahead more easily than you could help someone in the most dire straits imaginable.

[Leisured]

Local giving has always made me uncomfortable when I compare the people it's going to versus other people around the world.  :)

Good point, arebelspy. I am Australian, and the Australian welfare system catches nearly everyone who needs welfare in its net. My favourite charity is the Australian Fred Hollows Foundation, which specialises in removing cataracts from the eyes of people in poor countries. I understand that the operation takes place while the patients sits in a chair, and the bandages are removed the next day. Improved sight makes an enormous difference to someone who is going blind and in a country with no welfare. Furthermore, the aid goes directly to the person who needs it, not in money, but in a sight saving operation. No politicians or other powerful people are involved.

[arebelspy]

The point here isn't global vs local per se, the point is find out what is going on to at least some extent.  It is one of life's ironies that sometimes you can put a more advantaged person ahead more easily than you could help someone in the most dire straits imaginable.

Absolutely true, but not relevant to my local vs. global point.

You should make sure the money you're donating is being used effectively, but do so with a charity working in an area where it can be the most effective.

In fact, I'd go so far as to say that if 90% of your money is wasted on a global charity, the 10% that's used would be far more effective in terms of "life changing" for people than if 90% was used locally and 10% wasted.

And I'm sure, with research, you could do much better than that.

So yes, your point is correct - make sure the money isn't wasted.  Pick proven charities.  But because some overseas charities waste money doesn't mean you shouldn't donate to global charities, and pick local ones that may waste less.  It just means you shouldn't donate to those global charities, but find better ones.  :)

[arebelspy]

Local giving has always made me uncomfortable when I compare the people it's going to versus other people around the world.  :)

Good point, arebelspy. I am Australian, and the Australian welfare system catches nearly everyone who needs welfare in its net.

This is exactly what I mean.  Here in the States there is so much outreach and support, and even the poor's life is pretty good compared to people who are literally starving elsewhere, that it's hard to justify me giving them a slightly better life compared to the drastic life-changing that can be done overseas.  I think that's true of pretty much any first world country.

My favourite charity is the Australian Fred Hollows Foundation, which specialises in removing cataracts from the eyes of people in poor countries. I understand that the operation takes place while the patients sits in a chair, and the bandages are removed the next day. Improved sight makes an enormous difference to someone who is going blind and in a country with no welfare. Furthermore, the aid goes directly to the person who needs it, not in money, but in a sight saving operation. No politicians or other powerful people are involved.

That sounds incredible.  Thank you for sharing.

[LalsConstant]

The point I was after is that donations to certain geographic and political areas is inherently useless because corrupt governments and evil people can stop it before it gets there.

One thing the professor told us was the government confiscated most of the donations to keep the people ignorant that people in the rest of the world cared.

General goodwill yet pervades the societies of those most able to help, creating a cultural naivete one must consider.   Donating to some parts of the world may only be bolstering a corrupt state a warlord etc.

I don't have any moral high ground to say what people should donate to myself.  Good just sort of spills over.  Donating tuition so someone becomes a mechanical engineer instead of a drug dealer could lead to that person being able to retire at 35 and go build power grids in the developing world for all I know.

[Leisured]

Further on the Fred Hollows Foundation, for those interested. The late Fred Hollows was an irrepressible Australian eye surgeon who delivered basic eye treatment among Australian aborigines in remote parts of Australia. Eye treatment need not require elaborate and expensive facilities. He saw the potential for delivering basic eye treatment, mainly cataract surgery, in poor countries, and founded the Fred Hollows Foundation.

The Hollows Foundation just delivers basic eye surgery, usually removing cataracts, and trains local people in these methods. It gives no money, and the beneficiaries are exclusively those with cataracts.

TV advertisements in Australia often show Fred removing bandages from the eyes of a patient, and then asking the patient how many fingers he is holding up. Job satisfaction.

http://www.hollows.org.au/

https://www.youtube.com/watch?v=gkgdFPpc900

Be inspired.

[Leisured]

Another world charity, Mercy Ships. A Mercy Ship is a floating hospital, staffed by volunteers, which stays in a port in a poor country for a few months, treats local people with severe medical problems which is beyond the scope of local doctors, mainly due to lack of facilities, drugs or money. The patients are the beneficiaries. More than half the world’s population live in or near a port.

Medically trained volunteers have to pay their living expenses, but I understand that it is usual for church groups and service organizations to raise funds to pay the living expenses of a medical professional on board a mercy ship.

http://www.mercyships.org/

https://www.youtube.com/watch?v=qHWdOq2e_V8&list=PL50CF8FD420F62280

Be inspired.

[greenmimama]

Have any of you read "Half the Sky"?  It talks about how we can best give our money to help those around the world and where we have given before that hasn't worked at all. The tops are quite heavy and it took me awhile to get through it, it was emotionally very taxing to see how other women in the world live.