Buffett, Gates unite on $60 billion foundation

By Jonathan Stempel

NEW YORK (Reuters) – Warren Buffett on Monday signed over
much of his $44 billion fortune to the Bill & Melinda Gates
Foundation, uniting the world’s two richest people in a bid to
fight disease, reduce poverty and improve education.

The roughly $30.7 billion donation doubles the Gates
Foundation’s size to $60 billion, five times larger than any
other U.S. charitable group and bigger than the gross domestic
product of Kuwait.

Bill Gates, the world’s richest person, co-founded and
remains chairman of software company Microsoft Corp..

His friend and bridge partner Buffett, 75, became known as
the Sage of Omaha as he built the world’s second biggest
personal fortune running Berkshire Hathaway Inc., an insurance
and investment company.

“I am not an enthusiast for dynastic wealth, particularly
when the alternative is 6 billion people having much poorer
hands in life than we have,” Buffett said at a signing ceremony
with the Gateses at the New York Public Library.

Gates, 50, this month said he plans in July 2008 to step
down from his day-to-day Microsoft role to focus on his
foundation, one of the goals of which is to improve access to
technology in U.S. public libraries. It also focuses on
fighting diseases such as HIV/AIDS, tuberculosis and malaria.

Buffett pledged 10 million Berkshire Class B shares to the
Gates Foundation. He also pledged 2.05 million Class B shares
to foundations in the name of his late wife, Susan, who died in
2004, and for his three children, Susie, Howard and Peter.

The total donations of about $37.1 billion amount to 85
percent of Buffett’s net worth and constitute the largest
single act of U.S. charitable giving ever.

Buffett made the donations fewer than four months after he
said Berkshire’s board had identified a successor for him.

At a news conference, Gates said serious talks about a
donation to the Gates Foundation began early this year.

Buffett’s gift to that foundation will be in stages and
conditioned on money being distributed the year it is donated.

The foundation gave away $1.36 billion in 2005, so
Buffett’s first gift of $1.5 billion, in July, may double its
spending.

“This is his life’s work,” Gates said at the library
ceremony. “Now that the money is going to be as much Warren’s
as the money my job helped generate, it’s almost scary.”

He said the extra funds will let the foundation “deepen,
accelerate what we do.”

Time magazine last year named the Gateses and Irish singer
Bono of the band U2 its “Persons of the Year” for 2005, citing
their charitable and philanthropic pursuits.

HIGHER VALUE?

Both Buffett and Gates emphasized the importance of keeping
philanthropy separate from Berkshire’s day-to-day operations.

Buffett’s donations of Berkshire shares means the ultimate
value of his gifts will be tied to the company’s share price.

He downplayed speculation about the impact on Berkshire,
saying he would not have acted if he thought it would hurt the
company’s shares or intrinsic value.

“I am having so much fun at doing what I do,” he said at
the news conference. “To say I’m going to spend a high
percentage of my time in some other area, it’s not realistic.”

Berkshire shares fell as much as 2.9 percent on Monday as
investors looked toward Buffett’s eventual retirement and the
possible sale by the foundations of Berkshire stock to fund
giving.

“Those who are selling haven’t thought this through,” said
Thomas Russo, a principal at Gardner, Russo & Gardner, which
owns Berkshire stock. “Warren will no longer have to distract
himself with charitable donations and can focus on the
company.”

Berkshire owns large stakes in such blue-chip companies as
American Express Co. and Coca-Cola Co. and owns some 50
businesses, including Dairy Queen ice cream, Fruit of the Loom
underwear and Geico auto insurance.

While Berkshire shares have lagged the Standard & Poor 500
index over the last two years, they have far outgained the
benchmark since Buffett took over Berkshire, then a struggling
textile maker, in 1965.

At the library ceremony, Buffett made the gifts official,
first signing letters for his children’s foundations.

“The first three letters are easy to sign,” he said. “I
just sign ‘Dad.”‘