CEO Warren Buffett has resigned from the board of the world’s largest charitable foundation, but he’s ending his tenure on a high note: he said he’s halfway to his goal of giving away most of his wealth.
Buffett said he was leaving the board of the Bill and Melinda Gates Foundation in a Wednesday letter. That’s a significant shake-up at the foundation, where there are only three board members: Buffett and Bill and Melinda Gates, who created the charitable organization in 2000.
The foundation’s future was called into question when Bill and Melinda Gates announced they were divorcing in May, but foundation leaders said at the time that the couple’s split would change nothing at the foundation.
“I know Warren’s departure raises questions about the foundation’s governance,” Gates Foundation CEO Mark Suzman said in an email to foundation staff Wednesday. Suzman said he, Buffett and the Gateses have been actively discussing “approaches to strengthen our governance” in the wake of the divorce announcement. Suzman said he would release more information in July.
‘In 2006, I pledged to distribute all of my Berkshire Hathaway shares — more than 99% of my net worth — to philanthropy. With today’s $4.1 billion distribution, I’m halfway there.’
Buffett, 90, noted that his departure from the Gates Foundation board comes as he’s winding down other activities; he’s stepped down from all other corporate boards other than Berkshire Hathaway’s.
Buffett also said Wednesday that he had achieved a personal milestone by giving some $41 billion to the Gates Foundation and four other foundations run by Buffett family members.
“In 2006, I pledged to distribute all of my Berkshire Hathaway shares — more than 99% of my net worth — to philanthropy. With today’s $4.1 billion distribution, I’m halfway there,” Buffett wrote. Buffett’s current estimated net worth is $104.4 billion, according to Forbes.
He added, “After 16 years of pursuing my philanthropic plan, I’m delighted with its workings.”
‘I am truly grateful for his wisdom’
The Gates Foundation’s share of the $4.1 billion donation Buffett announced Wednesday was more than $3.2 billion, which brings the total amount he’s given to the Gates Foundation to nearly $33 billion, Suzman said. The other foundations that receive funding from Buffett are run by his family members. They are the Susan Thompson Buffett Foundation, the Howard G. Buffett Foundation, the Sherwood Foundation and the NoVo Foundation.
“The impact of his prodigious generosity is hard to quantify,” Suzman said. Buffett’s largesse has helped save millions of lives through the foundation’s work on vaccines and eradicating deadly diseases such as HIV, tuberculosis and malaria, Suzman said, and it has also helped lift millions of people out of poverty.
“More than ten years ago, when we first got word of Warren’s gift to our foundation, we were speechless,” Bill Gates said in a statement. “It was the biggest single gift anyone had ever given anybody for anything.” He added, “But the value of Warren’s gift goes beyond anything that can be measured. I am truly grateful for his wisdom and leadership, and most of all for his enduring friendship.”
Melinda French Gates said, “What made Warren’s extraordinary investment in the foundation so meaningful was not only its amount but what it represented: an unwavering belief that everyone deserves to live a healthy, fulfilling life and an optimism that a world like that is possible.”
‘Tax deductions are important to many’
In his letter, Buffett also indirectly touched on recent revelations in the investigative news outlet ProPublica about billionaires, including himself, who pay very little in federal income taxes. Buffett, who has previously said that the ultra-rich should be taxed more, said Wednesday that his philanthropic activities have led to a tax break of about 40 cents per $1,000 he’s donated.
He explained that he doesn’t get as big a tax break as he could for his philanthropy because he has relatively little income; most of his wealth comes from “tax-paying businesses that I own through my Berkshire stockholdings, and Berkshire regularly reinvests earnings to further grow its output, employment and earnings.”
Buffett, who has previously said that the ultra-rich should be taxed more, said that his philanthropic activities have led to a tax break of about 40 cents per $1,000 he’s donated.
Buffett added, “Nevertheless, tax deductions are important to many — particularly to the super-rich — who give large amounts of cash or securities to philanthropy. It is fitting that Congress periodically revisits the tax policy for charitable contributions, particularly in respect to donors who get ‘imaginative.’”
Typically donors are allowed to deduct the value of charitable donations from their taxable income, though they usually have to itemize their deductions to claim the tax break. (In 2020, under the Cares Act, donors were allowed to deduct up to $300 in charitable contributions without itemizing.)
One critic of billionaire philanthropy took issue with Buffett’s description of his tax situation. “Buffett underestimates the taxpayer’s subsidy for his private philanthropy,” said Chuck Collins of the Institute for Policy Studies, a left-leaning think tank. “The taxpayer subsidy is much larger for the super-wealthy.”
For every dollar a billionaire gives to their own foundation or a charity, the taxpayer chips in as much as 74 cents in the form of lost tax revenue, Collins said, citing research on charitable tax reform.
“This is because billionaires are not just reducing their annual income tax, but also their reducing or eliminating future estate, gift, and capital gains taxes,” Collins said. He added that the U.S. should consider capping the lifetime tax deduction for charitable giving to half a billion dollars.
A bill recently introduced in Congress would tweak some tax laws related to charitable giving through donor-advised funds, but would not change the tax deductions individuals receive for donations they make directly to charities.
The ‘heroes’ of philanthropy
Buffett said in 2006 that he would hand over the bulk of his wealth to philanthropy, and that much of it would go to the foundation run by Microsoft co-founder Bill Gates and his wife Melinda.
In 2010, Buffett and the Gateses announced The Giving Pledge, and invited their fellow billionaires to join them. Signers of the pledge agree to give away most of their wealth either during their lifetimes or when they die.
Meeting that goal has proved challenging for many of the pledgers, because their money accumulates faster than they can give it away.
Buffett said in the letter that he doesn’t count himself among the “heroes” of philanthropy. That designation, he said, goes to people who devote real time to working with people to better their lives, he said. That’s not something he’s done, Buffett said. He’s said he’s taken a hands-off approach and that even his role at the Gates Foundation was an “inactive” one.
View more information: https://www.marketwatch.com/story/warren-buffett-leaves-gates-foundation-board-and-says-hes-halfway-in-giving-away-most-of-his-fortune-11624461847