Are Warren Buffett’s Views on Giving the Best for Philanthropy?

To the Editor:

As a fellow investment manager who has succeeded for institutional and individual clients for over 40 years, I understand the reasons behind Warren Buffett’s desire to hold on to his money until he dies instead of giving it away now (“Warren Buffett Holds Firm Opinions on How — and When — to Donate,” November 13). With a higher base of capital, Mr. Buffett’s wealth is likely to produce that much more in the future, especially if it experiences the fantastic compounding his money has produced over the years.

But there are legitimate questions and concerns that accompany a strategy of limiting the current distribution of an accumulation of wealth that is already gigantic.

First, the needs for enhanced philanthropy are more desperate now than they have been for many decades. Most American cities (and plenty of suburbs, too) have serious problems that simply must be overcome soon or we’ll all suffer the negative consequences. While money is not the sole solution, a billion here and a billion there, properly placed now, can produce dramatic results.

Second, philanthropy badly needs the thinking of creative people like Mr. Buffett, especially while they are alive and at their peaks. Mr. Buffett’s personal attention to the use of his philanthropic dollars would almost certainly be more valuable than the decisions of anyone else he might designate.

Third, the very structure of a huge charitable foundation that is set up after a person dies actually inhibits its ability to accomplish great things. Foundations are like investment portfolios: The larger they are, the harder it is to avoid mediocre-to-poor performance. The capital left to any founda- tion established by Mr. Buffett would constitute a massive amount of money to give away wisely, even if the trustees donated only the minimum (5 per cent) encouraged by government each year.

Fourth, because of inflation, money that is spent 20 years or so from now will have to “go some” to accomplish what it could today. How could it ever make up for the consequences of a full generation being deprived of improvements?

Fifth, if name recognition or just plain enjoyment are important to Mr. Buffett, it would be better for him to make an impact now. Andrew Carnegie, whose giving is considered a model, had the double pleasure of seeing the productivity of the libraries he built while he was alive, as well as knowing that so many more of these good works were to succeed him. That’s what I call the ideal legacy.

Sixth, leaving the responsibilities of a large foundation to children can have large drawbacks. Mr. Buffett’s children seem to be worthy of that responsibility, but there is no guarantee that future heirs or appointees will exercise their duties in an efficient, highly productive way.

Seventh, an unfavorable economic environment could manifest a bitterness on the part of the American citizenry that could produce negative legislation and other actions directed at the very rich. Americans are currently fascinated with the successes of the wealthy, but this could easily shift to anger, even revenge. Is it coincidental that the recent decline in the stock market paralleled an active “billionaire bashing” on the Internet, in this case directed against Bill Gates? The best defense against this is to reduce our nation’s problems now.

Finally, because of the great admiration that people have for

Mr. Buffett, a shift to a more proactive position could have a tremendous positive influence on philanthropy — an achievement for which he would be remembered for decades to come, an inspiration that few others can duplicate. This, combined with Mr. Buffett’s potential current financial impacts, would produce far superior results for America than his present policy.

Claude Rosenberg
Former Chairman
RCM Capital Management
San Francisco

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To the Editor:

Your recent article on Warren E. Buffett draws from the No. 1 principle in fund raising: Listen to the donor. If Mr. Buffett wishes to distribute his wealth after his death and after the continued increase of his wealth, those wishes should be honored.

Mr. Buffett’s statement that “Society will get a greater benefit from my money later than if I do it now” draws from the current emphasis of non-profits to cultivate planned giving. But many people are still critical of his decision to wait.

Maybe we should all take a step back and remember to listen.

Warren M. Davis
Development Manager
National Kidney Foundation of Illinois
Chicago