Warren Buffett's $40 Billion Gift to the World: Investor to Give Away Fortune

By in New York

Warren Buffett, the second richest man in the world, is to give away most of his billions of dollars to worthy causes. This act of generosity has catapulted him into the ranks of legendary philanthropists and has given wealth back its good name.

Berkshire Hathaway Chairman Warren Buffett is to donate most of his fortune to help solve some of the world's "biggest problems."
AP

Berkshire Hathaway Chairman Warren Buffett is to donate most of his fortune to help solve some of the world's "biggest problems."

When Warren Buffet married as a 22-year-old in 1952, he warned his bride Susie: "I'm going to be rich one day." Suzie didn’t get very excited. "She either didn’t care or didn’t believe me," Buffett recalled in an interview published this week in Fortune magazine. Just in case this did ever really happen, the two agreed what they would do with the money: "give it back to society."

Two years after the death of his wife, Buffett, now 75, has made their common dream a reality. On Sunday, the world's second-richest man announced that he was giving away 85 percent of his fortune, with most of it slated to be donated to the Bill and Melinda Gates Foundation. The Microsoft founder, who is the world's richest man, is also a close friend.

Buffett's sensational gift -- shares with a current value of $37.4 billion in his holding company Berkshire Hathaway, staggered over several years -- has catapulted the Omaha investor overnight into the ranks of America's legendary philanthropists: John Rockefeller, Andrew Carnegie, Henry Ford, Paul Getty -- and, last but not least, Bill Gates.

It is the breathtaking if not altogether surprising culmination of a long career, during which Buffett was always a rarity in his field: an amiable, respected, almost adored multimillionaire in an age when excessive wealth seems, if anything, suspicious and one company boss after another are ingloriously knocked off their pedestal by lawyers, reporters and rebellious shareholders. Not so in Buffett's case: Ten thousand shareholders make the annual pilgrimage to Omaha for the company's annual meeting, the "Woodstock of Capitalism," in order to listen to Buffett's folksy pearls of wisdom, peppered with quotes, and to play cards with him. His mega donation will only further cement this cult status.

The "Oracle of Omaha"

The "Oracle of Omaha" started his legendary string of investments at the tender age of 11. The son of a stockbroker traded for the first time when he bought shares in the energy company Cities Services for $38 and quickly sold them again once they reached $40. In this way he learned his first lesson in shareholding: long-term investment is better -- just a few years later the same shares had reached a value of $200.

The stock market fever really took a grip of Buffett when he studied under the world famous economist Benjamin Graham, dubbed the "Father of Value Investings," at Columbia University's Business School. Buffett finished the class with the best possible mark -- an A+ -- the one and only time Graham ever awarded this mark.

Back in Omaha, Buffett founded an investment company with his own money and loans from friends -- operating from his bedroom. From the very beginning he proved himself to be a genius. Between 1956 and 1969, his investments yielded an average annual profit of 30 percent, almost three times as much as the rest of the market -- a rate that he has for the most part maintained until this day. In 1962 he joined Berkshire Hathaway, which was then still an ailing textile company.

Over the years Buffett built up Berkshire into an enormous industrial conglomerate, which now holds stakes in Coca Cola, Wells Fargo and American Express, and has 42 subsidiaries, that sell everything from carpets, furniture, ice-cream, bricks and software, to insulation, jewellery, underwear, financial services, picture frames, kitchen appliances and milk products. Despite its size, Berkshire Hathaway has no press office, no personnel department, and no investor relations division. Indeed, the company only has 17 staffers at its Omaha headquarters.

A nose for business

Buffett himself spends most days in his office. He avoids speeches and conferences and gives the directors of his companies a free rein. "We delegate almost to the point of abdication," he wrote in his famous "Owner's Manual," the company's codebook.

Buffett personally tends towards quick decision-making. Last year when the offer to buy the trailer manufacturer Forest River came up Buffett sealed the deal in a meeting that lasted just 20 minutes. "It was easier to sell my business than to renew my driving licence," marvelled company founder Peter Liegl, who Buffett kept on as CEO.

Even though his investments can occasionally be off target, his nose is usually excellent. Those who invested $1,000 in Berkshire Hathaway 40 years ago, now have shares worth $5.5 million.

With all this success he has maintained his modesty, which makes him stand out from other brash moguls such as Donald Trump. He still lives in the same house in Omaha that he bought for $31,500 in 1958 and his salary at Berkshire is $100,000. And unlike many other wealthy people in the United States, he is not in favor of scrapping inheritance tax because he believes that wealth should be earned rather than inherited. That's why he stopped supporting his children after paying for their education.

They won't inherit anything. "Our kids are great," he said in the Fortune interview, during which he announced his huge donation. But it would be neither "right nor rational," to shower someone with money who already had every advantage. Instead his aim is to donate his wealth to the "truly major problems" in the world, "that don’t have a commensurate funding base."

To the reporter who interviewed him this sounded a bit like the testament of a dying man: "Let's cut to the obvious question -- are you ill?" she asked. To which Buffett could only smile. "No, absolutely not," he answered. "I feel terrific."

Article...
  • For reasons of data protection and privacy, your IP address will only be stored if you are a registered user of Facebook and you are currently logged in to the service. For more detailed information, please click on the "i" symbol.
  • Post to other social networks

Keep track of the news

Stay informed with our free news services:

All news from SPIEGEL International
Twitter | RSS

© SPIEGEL ONLINE 2006
All Rights Reserved
Reproduction only allowed with the permission of SPIEGELnet GmbH




European Partners
Presseurop

Politiken

Corriere della Sera

Garlasco Acquittals Overturned

Anti-Europe Fever


Facebook
Twitter