Warren Buffett is celebrating his 82nd birthday today by doubling what remains of his original pledge of stock shares to the three foundations run by his children, Susan, Howard and Peter.
That means he will donate about $100 million a year to each foundation, up from an average of $64 million annually. By the time his pledge is fulfilled, the three foundations will receive what, at today's share price, amounts to $2.08 billion.
Over the past six years, the foundations already have received $1.16 billion.
“What a wonderful thing to do on his birthday,” said Peter, a New York musician and co-chairman of the Novo Foundation with his wife, Jennifer. “When he thinks about doing something, he gets excited about it. It's sort of a reverse birthday gift.”
Susan Buffett, whose Sherwood Foundation supports educational and anti-poverty programs in the Omaha area and nationally, said her father can be sentimental about birthdays. “I love that — ‘Happy birthday to his kids.' It's so sweet that he did that.”
Howard Buffett said in an email from Africa that his Howard G. Buffett Foundation would continue its work on world agricultural development, hunger and economic growth in impoverished areas. The additional funds will mean greater impact and “provide an opportunity to address hunger issues on a larger scale, including here at home.
“The money is an unbelievable gift, and we will work hard to use it well, but the confidence my dad has placed in us means more than the money.”
The first double-sized gift will go to the foundations in July 2013 as shares of Class B stock in Berkshire Hathaway Inc., the Omaha investment company Warren Buffett heads.
At today's $85-per-share price, each foundation would receive $104 million worth of stock. Each year, the three spend about the same amount as they receive from Buffett.
Buffett had thought that his first wife, Susan, would outlive him and begin using his wealth for charities, but she died in 2004. His pledges followed in 2006.
In a letter dated today to “Susie, Howie and Peter,” Buffett noted that it has been since six years since the initial pledge to donate 17.5 million shares to the three foundations.
Click here to read Buffett's letter dated Aug. 30, 2012.
He also pledged shares to the Bill & Melinda Gates Foundation and to the Susan Thompson Buffett Foundation, named after his late wife. Those pledges are unchanged.
Altogether, Buffett has donated $13.3 billion to charitable foundations since 2006. In total, his pledges could amount to another $40 billion in coming years, perhaps the largest combined charitable donation in history.
When Buffett dies, his unpledged Berkshire shares and the rest of his estate would go into the Susan Thompson Buffett Foundation, which is the largest of the four family foundations with $2.42 billion in assets. It supports a wide range of causes.
Once the increased donations take effect, the combined spending by the four Buffett family foundations most likely would surpass $500 million a year, ranking in the top 10 among U.S. charitable foundations. That doesn't count Buffett-donated money spent by the Gates Foundation.
In the letter to his children, Buffett wrote:
“I knew you would apply your considerable brains and energies in order to make the most of the funds from my gift. However, you have exceeded my high expectations. Your mother would be as proud of you as I am. I see her influence in what you are accomplishing.
“I've decided, therefore, to double the original pledge that now stands at 12,220,852 B shares. On the new base of 24,441,704 pledged shares, I will distribute 1,222,085 shares to each of the three foundations next July with that amount decreasing at 5% per year subsequently.
“Over time, I would expect the value of the annual distributions to average more than $100 million, though it will vary substantially from year to year. I'm confident you will use the money wisely, each in your own way.
The letter was a surprise, Peter and Susan said. They hadn't asked for more.
Susan Buffett said she expects the boost to mean an increase in her foundation's support for early childhood education programs, for K-12 public education and for anti-poverty programs. All three are close to her father's heart, and her late mother especially supported anti-poverty efforts.
“It all sort of mixes together,” she said, since education and reducing poverty are related. “A lot of that money is spent in Omaha.”
Sherwood supports dozens of Omaha-area programs. The Omaha Public Schools are a key beneficiary. OPS has used funding for anti-truancy programs, summer jobs, summer libraries, energy-efficiency improvements and reading and math assessments.
Other Sherwood support in Omaha has gone to Building Bright Futures, the Women's Fund of Omaha, Big Brothers Big Sisters of Omaha, Boys and Girls Clubs of Omaha, the Assistance League of Omaha, the Central High School Foundation, the Charles Drew Health Center, the Chicano Awareness Center, the Child Saving Institute, the Omaha Library Foundation, Film Streams, Joslyn Art Museum and other organizations.
Susan said her father doesn't ask for progress reports, although they talk with him about their work.
“I think it's been fun for my dad to watch all of us do very different things but all equally important things,” she said. “He sort of watches it from afar. I think he's proud of what's been going on, and he thinks there's more to do and he feels good about what we're doing.”
She said the Sherwood Foundation's support for Omaha follows her parents' example.
“We watched both of them have such a strong sense of social justice and trying to do the right thing,” she said. “It's a clear message that when you're as fortunate as we are, you'd better be out there trying to make things better for everyone else.”
She said she doesn't expect to add many employees at her foundation. “Doubling the money does not mean doubling the staff.”
Peter Buffett said he and his wife, who is president of the Novo Foundation, most likely will expand their existing program. In a sense, the foundation is like a business, and increased revenue would not cause a business to change its focus, he said.
“As you get deeper into the work, you start to see where you could do more if you had more resources,” he said. “We would definitely stick with what we're doing and with our partners and go deeper into that.”
He said the foundation could expand its work in social and emotional learning, an initiative aimed at preparing students for real life by teaching beyond the requirements of academic tests. School districts in Anchorage, Austin, Oakland, Chicago and Cleveland have found success with such programs.
The foundation also supports what are known as local living economies, a network of socially responsible communities in the U.S. and Canada.
The two programs are innovative and somewhat experimental, he said, and the added donations may allow them to expand significantly.
The Novo Foundation also supports programs that aim to empower women and girls and combat violence and exploitation of women. He said those programs are fairly well-developed and may not need additional support.
Susan Buffett said she hasn't thought in detail about what the additional money will mean and she's glad to have some time to plan.
“It will just allow us to do more good stuff,” she said.
The Omaha World-Herald Co. is owned by Berkshire Hathaway Inc.
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Buffett children's foundations
» Sherwood Foundation, headed by Susan Buffett.
Focus: early childhood education, K-12 public schools, anti-poverty programs. Much of the foundation's work is in Omaha.
» Howard G. Buffett Foundation, headed by Howard Buffett.
Focus: agricultural assistance in developing countries and aid to refugees and other impoverished people.
» Novo Foundation, headed by Peter and Jennifer Buffett.
Focus: empowering girls and women and preventing violence and exploitation; social and emotional learning, an initiative aimed at preparing students for real life; and local living economies, a network of socially responsible communities.
» Total donations from Warren Buffett to date: $1.16 billion
» Today's pledge: $2.08 billion, at today's stock price