How to give away $150 billion
A version of this article originally appeared in CNBC’s Inside Wealth newsletter with Robert Frank, a weekly guide to high-net-worth investors and consumers. become a member to receive future editions straight to your inbox.
Peter Buffett’s reaction when he learned that he and his siblings would be tasked with donating their father Warren Buffett’s fortune was clear.
“I didn’t want that,” Peter Buffett told CNBC. “I called him I went up and he said, ‘I want to go out.’ ‘I don’t blame you,’ he said. “Obviously this puts a lot of pressure on us.”
In 2024, Warren Buffett announced that after his death, his fortune would be transferred to a new charity run by his three children, Susan A. (Susie) Buffett, Howard G. (Howie) Buffett, and Peter Buffett. The 95-year-old’s fortune is currently estimated at more than $150 billion, according to Bloomberg.
To add to this challenge, the legendary investor requested that all the money be distributed within 10 years of his death. Another problem: All three must agree unanimously on how to distribute the funds.
The size of Buffett’s fortune means his children will need to donate at least $15 billion a year, according to data from Giving USA through 2024; This amounts to approximately 4% of annual charitable giving in America. The amounts are likely to increase further over time as Buffett’s wealth continues to grow.
“This is something that absolutely no one has done as a family,” Howie Buffett said.
Susie Buffett adds: “That’s a lot of money.”
The inheritance suddenly thrust the unremarkable Buffett children into the spotlight. After Warren Buffett’s death, Susie, Howie, and Peter will become the three most important philanthropists in the world, scrutinized by the media, widely followed by other wealthy donors, and faced with demands for funds.
In a rare interview with CNBC’s Becky Quick, three Buffett heirs said their worldviews, priorities and approaches to philanthropy began in the Buffett family. The children were living middle-class or upper-middle-class lives as their father’s fortune began to grow. They went to public school by bus every day. They did chores and had jobs for an allowance.
They said Warren Buffett drove a blue Volkswagen Beetle growing up. Their mother, Susan T. Buffett, volunteered with various groups and hosted exchange students from around the world. Susie Buffett remembers when she was in grade school and had to fill out a census form listing her father’s occupation and her mother told her to write “security analyst.”
“I thought you were checking burglar alarms,” Susie Buffett said.
The Buffett children have grown to be philanthropists as they continue to start their own families and find their own purpose. The longtime Berkshire Hathaway CEO has given shares of the company to each of three children’s foundations annually since 2006, giving each of them more than 20 years of philanthropic experience.
Susie Buffett lives in Omaha, Nebraska and focuses on early childhood education and social justice through the Susan Thompson Buffett Foundation and the Sherwood Foundation. Howie Buffett, who lives in Illinois and serves as chairman of the Howard G. Buffett Foundation, devotes much of his time and resources to working on food security and conflict resolution abroad. Peter Buffett, who lives in upstate New York and leads the NoVo Foundation, works on health and economic programs for women and children.
They say Warren Buffett did not give the brothers clear instructions about the money. Peter Buffett said his only guidance is to use it for those “less fortunate.” Warren Buffett explained his confidence in giving them so much money and so much discretion in his 2024 Thanksgiving letter.
“I know the three of them well and trust them completely,” he wrote. “The period 2006-2024 gave me the chance to observe each of my children at work, and they learned a lot about large-scale philanthropy and human behavior. They enjoy being financially comfortable but are not preoccupied with wealth. Their mother, from whom they learned these values, would be very proud of them. So am I.”
Susie, Howie, and Peter will likely focus on different goals and also fund some joint efforts. The requirement that all expenditures be made by consensus is both a challenge and a blessing, they say, because each sibling can blame each other if they don’t want to fund a cause.
“It makes it really easy to say no,” Susie Buffett said. “It’s like, ‘I’m sorry, I’d like to do this, but my siblings would hate it. So call them over.'”
As the Buffetts prepare for a historic fundraising campaign, here are five principles and strategies they say they base on the effective use of capital and philanthropy:
1. Flexibility
Because the world is constantly changing with needs, philanthropists must adapt quickly. The general causes they support may vary, as well as the individual organizations and people they support.
Warren Buffett “always said, ‘This is what I think is important right now. I don’t know if that’ll be true 20 years after I’m dead or 10 years from now,'” Susie Buffett recalled.
Financing programs in Africa, for example, often require working with governments, and that’s changing, Howie Buffett said.
“We work in a lot of places where things can happen quickly, like Eastern Congo. So you need flexibility,” he said.
2. Embrace risk and failure
Howie Buffett called philanthropy “the venture capital of the world” and said foundations should make bigger investments even if they fail.
“Sometimes things don’t work out the way you think they will,” Susie Buffett added. “Sometimes that’s a good thing. You learn from it.”
In Omaha, he added, being out of the spotlight also allows for more experimentation.
“My staff has told me many times, ‘It’s refreshing to be in a place where we can screw up, where we can make mistakes,'” Susie Buffett said, noting that her team rarely goes to conferences, other nonprofit leaders are more reluctant to take risks and are “afraid to go back and talk about things that might not work.”
But not all failures are worth celebrating: “If you really screwed up and did something you shouldn’t have done, that’s okay,” said Howie Buffett, “but if you failed for reasons that you knew could be challenging, then that’s okay.”
3. Seeing is believing
Philanthropists can read all the reports and research on a topic, but there is no substitute for seeing a problem or population in person.
“I’ve been to Africa 97 times, and for the 98th time Howie Buffett said, “If I go to Africa, I’ll learn something new.” “Every time you put yourself in a dynamic environment you see something.”
His brother Peter has his own saying: “You won’t know unless you go.”
Peter Buffett said he felt he could “change the world” when he started his foundation. He later visited Sierra Leone, Liberia and Bangladesh and said the scale of the need was “huge.” “We slowly retreated.”
His current projects include helping the community of Kingston, New York, near his home; here he can stay close to the fabric of daily life and learn which causes are most effective.
“I needed to be in a place where I could actually be there every day,” he said.
4. Trust but verify
Giving away more than $150 billion would require writing huge checks worth hundreds of millions, even billions, of dollars. Usually only governments and large institutions can afford such large gifts. However, as Howie Buffett said, “I don’t really trust them to make good decisions, otherwise they have big expenses.”
Developing trust and responsibility is very important. Howie Buffett said grant letters always include a clause stating that they can terminate the money at any time for any reason. It also includes a “free extension” provision, which requires remaining funds from a budgeted project to be returned rather than spent on other projects.
Over time, he said, he found nonprofits and groups they could trust.
“We have five or six partners to whom we regularly give tens of millions of dollars a year,” he said. “And we’ve built that trust. You know how they work. They know what your expectations are.”
Trust also includes sharing negative outcomes: “If there’s bad news, I want every bad news,” Susie Buffett said. “You have to be very open with people, like, ‘I want to hear everything.'”
5. Efficiency
Just as Warren Buffett has a low-cost structure in his life and in Berkshire, the Buffett family has learned to make the most of every dollar in their philanthropy.
Howie Buffett said his foundation’s “distribution percentage,” or operating costs versus money distributed, is just 1.3%.
“It just got ingrained in us,” he said. “We know that’s what our father expects us to do.”
Having a lean staff and a small team also allows for quick decision-making, similar to the culture at Berkshire.
“I’ve been in places where I’ve made a $50 million decision after a two-hour meeting,” Howie Buffett said. “It’s like, ‘We want to do this, we’re going to spend the money.’
Moving quickly with bold bets goes against many foundations that can challenge decision-makers and bureaucratic layers.
“They have to have a board meeting, then the trustees have to look at it and vote on it, and that delays everything,” Susie Buffett said. “People are always surprised that we do this.”
