It's been a very charitable couple of weeks. First,Bill Gates announced on June 15 that he was stepping down from daily operations to devote his time the Bill and Melinda Gates Foundation, which has about $30 billion in assets. Then this weekend, Warren Buffett announced that he's donating most of his $44 billion fortune to the Bill and Melinda Gates Foundation and four Buffett family foundations.
In a letter dated today, Buffett pledged that he would start his donations immediately with a gift of about $1.5 billion, then add to it each July with additional donations of 5% of the additional earmarked shares in Berkshire.
"In the future, I expect the value of my annual gifts to trend higher in an irregular but eventually substantial manner," says Buffett.
The donations will eventually add up to create the largest charitable foundation in the world, doubling the size of the Bill and Melinda Gates foundation.
'Venture philanthropy'But while Gates and Buffett now stand alongside other business titans-turned-philanthropists such as the Rockefellers, the Gettys and the Fords, they aren't the only names in a growing wave of donors looking to change the world using the business and investing savvy they have developed during their careers. There's also Omidyar, Brainerd and Kirsch. While they're less famous, they're worth noting, too, as "venture philanthropy" becomes the buzzword of the moment in the world of giving.
"It's a sharing of business skills in the nonprofits," says Kathleen McCarthy, director of the Center on Philanthropy at City University Graduate Center.
Take Paul Brainerd, a former journalist who founded Aldus, the developer of the desktop publishing program PageMaker. After making millions from the sale of his company, he started the Brainerd Foundation, which focuses on environmental protection in the Pacific Northwest, in 1995. From there, he founded Islandwood, a 250-acre outdoor learning center that brings kids from urban neighborhoods to Bainbridge Island, Wash., to educate them about the environment.
"I had been in the high-tech world for ten years and was increasingly dealing with attorneys and shareholders, not dealing with customers and employees," says Brainerd, 58.
As for why he went into nonprofits rather than starting another company or spending time improving his gold game, Brainerd says, "A lot of it has to do with my family values. I was always taught to give back to the community."
In addition to starting the Brainerd Foundation and Islandwood, Brainerd banded together with other successful business people such as Bill Neukom and Scott Oki -- both formerly of Microsoft -- to create Social Venture Partners. It's a nonprofit philanthropic organization that applies the tactics of venture capitalism to tackling social and environmental issues.Pierre Omidyar, founder of eBay, chose a similar model. He launched the Omidyar Network in 2004 with his wife, Pam, after leaving the corporate world. They call the organization a mission-based investment group, which means they fund for-profits and nonprofits that "promote equal access to information, tools and opportunities; connections around shared interests; and a sense of ownership for participants."
Gates changes the gameThe Bill and Melinda Gates Foundation, which was founded in 2000, focuses on global health--particularly AIDS--and education.
Gates, 50, may be the biggest of all the major philanthropists for several reasons.
"There's no comparison to anyone [else] because of the impact he's had in the business world and the philanthropic world," says Todd Cohen, editor of the Philanthropy Journal. "In the old days, they made all their money and then left it to a foundation."
Cohen says Gates differs from other business people-turned-philanthropists because he is much younger and will be able to steer the foundation for many years.
There are other options for busy tycoons who remain in the business world. With a donor-advised fund, rich people can get the fuzzy feelings associated with charitable giving without all the paperwork.
At Community Foundation Silicon Valley, donors can create a foundation with as little as $10,000. They choose where their money goes, but CFSV actually does the work of investing and distributing the dough. "The donors don't have to worry about due diligence, they don't have to worry about the back-office work," says CFSV spokeswoman Michelle McGurk.
They also get an extra tax break. CFSV is a public charity, which means anyone can donate, and it resides in a different section of the tax code than private charities. McGurk says the Internal Revenue Service gives donors to public charities a larger tax benefit.
Several Silicon Valley hotshots have foundations with CFSV, including Steve Kirsch, founder of Infoseek, and Jeff Skoll, founding president of eBay. (Skoll also has his own private foundation.) About a dozengazillionaires also have foundations with CFSV, but they're "intensely private," McGurk says.
As for Gates, Brainerd offered these words of wisdom: "Stay connected with the issues, and get out and meet people and see first-hand how they can refine grant-making to be more effective. I'm excited for him. It's a wonderful choice on his part."
-- Tara Weiss and Hannah Clark