Buffett's Bequest May Spur the Wealthy to Consider Team Giving
Jeffrey Byrne Quoted in Buffett article

July 3 (Bloomberg Online)

Warren Buffett's $30.7 billion donation to the Bill & Melinda Gates Foundation may have created a new model for disposing of wealth: team giving.

The decision by the Berkshire Hathaway Inc. chairman, who could easily have started and put his own name on the world's largest foundation, will encourage other wealthy people to partner with friends and associates when donating their assets, Eugene Tempel, executive director of Indiana University's Center on Philanthropy, said in a telephone interview.

The veteran philanthropist David Rockefeller, 91, said Buffett's bequest stood out as "unpretentious.''

"This is a very significant change in how people think about transferring wealth,'' said Paul Comstock, president of Paul L. Comstock Co., a wealth advisory firm in Houston. "This is clearly a message that is new in many respects where private families are coming together -- I call it joint venture philanthropy.''

The Buffett gift, announced June 26, comes as charitable giving in the U.S. is on the rise. It increased 6.1 percent to $260.3 billion in 2005 over the previous year, according to a survey published last month by Indiana University. An estimated $45 trillion will be transferred to heirs, government and charitable organizations by 2052, according to a Boston College study.

It's been "maybe the bronze or silver era'' of giving, said Paul Schervish, director of Boston College's Center on Wealth and Philanthropy. He and others, including estate advisers, say a new era may have arrived.

Taking Note

"My feeling is very strongly that those people who are wondering what can we do with our wealth will be encouraged to do something similar,'' Bruce Bickel, 63, a senior managing director of PNC Wealth Management in Pittsburgh who advises 18 family foundations, said in a phone interview. "I think they will say, `If he can do that at his level, I can do that at my level.'''

The Gates Foundation, launched in 1994, is the largest charitable foundation in the U.S. with assets of $29.1 billion, according to the most recent Chronicle of Philanthropy survey. It led all foundations in gifts awarded in 2005 with $1.36 billion, followed by the Ford Foundation with $532.6 million, the survey said.

Buffett, with a fortune of $44 billion, is the second- richest man in the world behind Bill Gates.

Within hours of the news of Buffett's decision, wealth managers and estate planners nationwide were "abuzz'' about the transaction as a new option for their clients, said Jeffrey Byrne, a fund-raising consultant in Kansas City, Missouri.

The new model, said Schervish, is to "find a philanthropic leader with the brainpower and organizational skills to give away money well.''

Banding Together

"What may happen is that we find other billionaires -- two to five or three to five of them -- who are friends maybe starting another foundation together,'' Schervish said.

Buffett's example also will encourage people to transfer their assets before they die, said Richard Steinberg, a professor of economics and philanthropic studies at Indiana University- Purdue University Indianapolis.

"One of the things that's particularly remarkable about it is the degree to which it is done in such an unpretentious way, that he's doing it in partnership with the Gates Foundation,'' Rockefeller said in a telephone interview. "It sets a wonderful example to all of us who make gifts to recognize that one can do important things without doing it in a way that produces a great splash for them.''

Rockefeller said Buffett's reluctance to be "self-serving'' with the gift was a "good lesson'' for him.

"I've tried to do this in the past myself, but this makes me all the more aware of the fact that his way is the right way to do it,'' said Rockefeller, the former chairman of Chase Manhattan Bank.

Where It Goes

In 2003, benefactors in the U.S. gave 12.2 percent of their estates to charity, 22.7 percent to pay their tax bills and 65.1 percent to heirs, according to the 2005 Center on Wealth and Philanthropy study of U.S. tax returns.

For estates worth more than $20 million, about 31.6 percent went to charity, 37.1 percent to taxes and 31.3 percent to heirs, the study said.

"The gift from Warren Buffett may stimulate greater philanthropy among those who created wealth in the late 20th Century,'' Tempel said. "I think what Bill Gates and Warren Buffett believe is that there are other people who have wealth and who haven't yet decided to do philanthropy and they want them to give it to philanthropy.''

The luster that Buffett's gift adds to his legacy may nudge those sitting on multimillion-dollar fortunes to consider what they'll be leaving behind, said Naomi Levine, executive director of the New York University Center for Philanthropy and Fundraising.

"Nobody wants to be forgotten, and this is one way of assuring your legacy in the future,'' Levine said. "I'd rather be remembered for giving money to a foundation to help education or medical research instead of building a 40-room mansion in Southampton.''

To contact the reporter on this story: Patrick Cole in New York at pcole3@Bloomberg.net.