Philanthropy News Digest: Warren Buffett's gift to the Gates Foundation has been described as "historic" and "unprecedented." Is that an accurate characterization?
Doug Bauer: It is. Mr. Buffett's gift is unprecedented in its size and structure, as well as in the fact that it is going to substantially increase the grantmaking of someone else's foundation. It was also a selfless act, and a very smart move on his part.
PND: Why do you think Buffett chose to do this now?
DB: From everything I've read and heard, I think there were two reasons. First, it was his expectation that his late wife, Susan, would outlive him and be responsible for the family's philanthropy. When she passed away in 2004, Mr. Buffett needed to rethink the original plan for their charitable giving. Second, and on a parallel track, he developed a meaningful relationship with Bill and then with Melinda Gates. In the process — and this is a key point — he came to respect and trust their approach to philanthropy. He admires their stewardship of the Gates Foundation and how they approach and attack the problems they have chosen to address. In the end, I think it was the convergence of these two dynamics that led him to make his extraordinary gift.
PND: Some have described his decision to join forces with the Gateses as a new model for philanthropy. Is that the way you see it, or is this a unique situation?
DB: Well, the gift, and the way it has been structured, is obviously perfectly acceptable within IRS rules and regulations. So, is it a new model? I don't know. Is it an interesting strategy? Is it a unique strategy? I think it's both. Donors with that kind of wealth usually decide to create their own foundation. They put their name on it and run it by themselves, or have family members run it. If Mr. Buffett had decided to do that, he would have created a foundation a bit larger than the Bill and Melinda Gates Foundation, which would have made it the largest foundation in the country. The fact that he didn't do that, that he decided instead to put the money in an existing foundation with the infrastructure in place to handle a gift of that size, is both smart and fascinating. Is it a new model? I'm not sure. Is it an interesting strategy, a strategy of the highest order in terms of potential impact? Without question.
PND: In watching the Webcast of the announcement, I got the sense that Melinda Gates is a force to be reckoned with. Do you have any information or insight about the kind of role she plays at the Gates Foundation?
DB: Based on what I have read and heard from colleagues and peers in the field, I would certainly say she is. But let's remember one thing. Melinda Gates is a trustee of the Gates Foundation. In fact, she's currently one of only two trustees of the foundation, her husband being the other. Mr. Buffett will be the third, which in itself says a lot. So, is she a force? Absolutely. Is she an equal player? I think she is. And when you talk to people in the global health field, in public education — two areas where the Gateses have chosen to invest in a major way — it's clear she has a strong voice and a strong set of opinions about what the foundation can and should do.
PND: The Gates Foundation has been praised for the efficiency and effectiveness of its grantmaking, especially over the last five or six years, as it has ramped up its global health and public education programs. Mr. Buffett's gift will double the size of the foundation and the dollar amount of its grantmaking. What kind of impact will that have on the foundation's ability to deliver meaningful results in an efficient manner?
DB: That's a good question. You know, there's a very interesting clause attached to the gift that stipulates a two-year ramp up period. I think Mr. Buffett understands and Bill and Melinda Gates understand how difficult it will be to spend this money well. You're right, the foundation has been incredibly efficient to date. If you think about it, the Ford Foundation, which is about one-third the size of the Gates Foundation in terms of assets, has between seven hundred and eight hundred people on staff, while the Gates Foundation employs about two hundred and fifty people. Obviously, that number will grow. With more money to spend, there will be more grantees, which means more due diligence work and more monitoring and evaluation of grants. But you have to be impressed with what they've been able to do up until now, and given the Gateses' insistence on getting results, I think the foundation will continue to be both efficient and effective in its grantmaking, even at twice its current size.
PND: There's been a lot of talk about the estate tax since Mr. Buffett made his announcement. Will his vocal opposition to repeal of the tax and the platform his gift has created for his views affect the terms of that debate?
DB: Well, I hope so. I hope Mr. Buffett's voice is heard in some of the circles that have been pushing for repeal of the tax. My own feeling is that Congress and the philanthropic community and other stakeholders in the debate will find a middle ground on repeal. We can't get rid of the estate tax. The revenues it generates are going to be needed in the coming decades for a whole range of things, including Social Security and Medicare for the seventy million baby boomers who will reach retirement age over the next twenty years, and I'm just glad that Mr. Buffett feels as strongly about the issue as he does.
— Mitch Nauffts