Buffett Siblings’ Giving Is More Ambitious in Wake of Big Infusion

A year ago, when Warren E. Buffett pledged a billion dollars’ worth of stock in his holding company, Berkshire

Hathaway, to each of the foundations established by his three children, he said he would pay out 5 percent of the remaining shares to the foundations every July.

He wrote at the time that the increasing price of the stock — since 1965, it has compounded at an annual rate of 21 percent — should offset the declining share count over the long term and give the children more money to spend each year.

“Over time,” he wrote, “the increase may be substantial.”

That didn’t take long.

The value of Berkshire stock has risen by nearly 20 percent from a year ago. As a result, the Buffett foundations will each receive about $60-million from Mr. Buffett next month, up from his $52-million contribution in July 2006.

“The shares are up a lot,” says Howard Buffett, the middle sibling and a farmer and photographer in Decatur, Ill. “We like it when that happens.”

In the Spotlight

The gifts have allowed the three adult children — Howard, Susie (who lives close to her father in Omaha), and Peter (a musician in New York) — to become much more ambitious with their philanthropy.

The gifts are also raising the profile of the siblings, who have thus far enjoyed relatively normal and quiet lives for the offspring of one of the world’s richest men.

Vogue ran a glowing profile of Susie in its May issue that included tributes from Bono and Bill Clinton. The July issue of Vanity Fair, which focuses on Africa, includes a photograph of the three Buffett children together. (Each has made gifts worth $1-million or more to charities focused on Africa in the past year.)

But the three also face a certain pressure to find worthy causes for the millions of dollars sitting in their newly flush foundations. Warren Buffett has urged his three children not to sit on his gifts. “Since you will be receiving gifts annually, there is no need for you to build large reserves,” he wrote to them last summer.

Two of the siblings have more or less spent the gift they received last year.

Susie’s Sherwood Foundation has made grants over the past 12 months worth $48-million, and the Howard G. Buffett Foundation has spent $52-million. Peter, who said immediately after his father’s pledge that he would take time to formulate a grant-making strategy, gave away about $15-million and has committed roughly $30-million over the past 12 months through his NoVo Foundation (Novo means “change, alter, invent” in Latin).

The three foundations are already showing a willingness to make big grants and to take risks, which Warren Buffett also advocated in his letters to the children. Susie is putting about $20-million per year into a separate foundation, the Buffett Early Childhood Fund, whose focus includes building high-quality child-care centers in at least 10 states. Howard will spend about $20-million per year to start an effort to improve water quality in 13 countries in Africa and Central America. Peter Buffett is giving $15-million over six years to the International Rescue Committee for a project aimed at educating children in war-torn countries in western Africa.

Warren Buffett declined to be interviewed for this article. But Howard, who is also on Berkshire’s board, says his father is pleased with how the gifts are being handled.

“I think he feels better than ever about the decision he made,” Howard Buffett says.

‘Strategic Planning’

The siblings established the foundations in 1999 with gifts from their parents; their mother, Susan, died in 2004. The pledges made last summer by Mr. Buffett will eventually increase the three foundations’ annual giving at least eightfold.

Surprisingly, the three foundations aren’t being bombarded with grant requests. Only Howard is seeing a sharp increase in requests, and most of those are from conservation groups — an area of declining importance at his foundation. “We’ve kept a reasonably low profile, and the people we meet really appreciate the fact that we’re in strategic-planning mode,” Peter says.

Peter and Susie are at their foundation offices five days a week, and Howard probably would be, were he not traveling internationally two-thirds of the year, almost exclusively for foundation work.

Each of the foundations is hiring new employees, though in keeping with their father’s frugal ways, they will continue to operate with far fewer employees than is the average for billion-dollar foundations. (Howard balked when a local firm wanted $14,000 to produce the foundation’s annual report. Instead, he is putting it together himself.)

Susie Buffett’s foundation has the biggest staff, at nine, including three employees of the Buffett Early Childhood Fund. Two staff members at the Sherwood Foundation focus on public education in Omaha and another focuses on general giving in that city. Ms. Buffett is moving her offices from the 14th floor of the Kiewit Plaza office building — the same floor where her father works — to the second floor, to accommodate the larger staff.

Howard is expanding his Decatur, Ill., office, to make room for his seven employees, including three newly hired program staff members focused on agriculture and water projects.

Peter’s NoVo Foundation has just four staff members, including Peter and his wife, Jennifer, but the foundation anticipates adding a few more employees over the next year. The foundation is moving to a new office in midtown Manhattan and doubling its space, to 3,500 square feet. While Peter and Jennifer received modest salaries in the past from the foundation, they now work without pay.

Big Grants

Warren Buffett urged his children to avoid making small contributions to causes “that would likely proceed without your help,” and, to a large extent, they are heeding his advice. Susie continues to make a number of small grants to Omaha charities for operating support, as she did before her father’s gift. But for the most part she is not increasing the size of those gifts, preferring to concentrate her spending on her passion for education.

“We have a huge opportunity to do some really significant stuff,” she says.

The Buffett Early Childhood Fund is helping to build a network of high-quality child-care centers, known as Educare Centers. The fund provides matching grants to cities that want to start such centers, and has given the Ounce of Prevention Fund, which created the first Educare Center in Chicago, a $1.1-million grant to provide technical assistance to the new centers.

The Bill & Melinda Gates Foundation, which received the biggest philanthropic pledge from Mr. Buffett, may help bring as many as two Educare Centers to Washington State. (All three foundations share at least one grant-making interest with the Gates foundation. Gates is considering collaborating on agricultural projects with Howard and has invested in a microfinance organization that Peter’s NoVo Foundation is also supporting.)

“Our idea is to build 12 to 15 centers in 10 to 12 states,” says Michael Burke, program director of the Buffett Early Childhood Fund. “That will give us a robust research sample, and we think we’ll be able to say something dramatic about what it takes to provide high-quality service and ensure that more low-income kids grow up ready and eager to learn.”

The early-childhood fund is also making grants for advocacy and research. Last year, the fund gave $2.5-million to the Birth to Five Policy Alliance, which supports 11 charities that are working to improve state policies for at-risk children.

Both the Sherwood Foundation and the early-childhood fund are supporting a new government-nonprofit partnership in Omaha called Building Bright Futures, which seeks to support children from needy families, starting at their birth and continuing through college. The effort, which started in April, will focus on early-childhood education, tutoring, truancy prevention, college scholarships, and other forms of aid.

“We’re trying to do something that’s never been done before,” says Ms. Buffett, who has already put about $500,000 toward the effort. “The way this has been put together, I just think there’s no way it won’t work.”

Ms. Buffett also has made several gifts to Omaha Public Schools, such as paying for all-day kindergarten in some schools that were previously offering just a half day of classes.

She has made two endowment gifts — $1.4-million to Girls Inc., a national organization that offers programs meant to inspire girls to be “strong, smart, and bold,” and $6-million to the Omaha Theater Company, which presents children’s theater to nearly 500,000 kids each year.

She is wary that other charities will misinterpret the latter gift and solicit her for arts support. Since the theater company goes into the Omaha Public Schools and works with many low-income children, she views it as a social-services organization. “I don’t want to be labeled as an arts person,” Ms. Buffett says. “That’s not what I do.”

World Traveler

Howard Buffett has always concentrated his giving abroad, but with his foundation’s new spending power, he is shifting his focus from conservation organizations to humanitarian organizations. In 2003, 85 percent of the grants from the Howard G. Buffett Foundation went to conservation organizations, including those that protect cheetahs and mountain gorillas in Africa. In 2006, he says, as much as 80 percent of his grants went to humanitarian causes.

Mr. Buffett estimates that he spends eight months of the year traveling internationally, mostly in Africa. He likes to steer money to dangerous and war-torn areas, including countries that many other foundations view as too unstable for philanthropic investment.

“The way I look at it,” he says, “these are the most vulnerable people in the world.”

He has worked closely with CARE, the international relief organization, on several projects. In 2006, he gave $2-million to help farmers in Mozambique adopt new and more-productive farming techniques. He also gave $1-million to improve water quality, sanitation, food security, and job skills for displaced people in the Darfur region of Sudan.

His foundation is giving $1.5-million over three years to BanComún de la Frontera, a microfinance organization in Mexico, to help women near towns that border the United States start their own businesses. Some of the money will be used to try to measure whether the access to credit reduces illegal immigration into the United States.

The foundation’s “global water initiative” may be its most-ambitious project. The foundation is working with local organizations in three clusters of countries to help supply safe and adequate water supplies to rural areas. Howard will put $5-million to $6-million per year into each of the three clusters — eastern Africa, western Sahel (countries such as Burkina Faso and Ghana), and Central America. He is also spending a few million more on water projects in other areas.

He anticipates that at least a quarter of his foundation’s spending in coming years will go to the global water initiative.

Howard, who is 52, vows to spend all of the assets in his foundation by 2045, which may come before his death.

The fearless traveler chuckles at the prospect of outliving his foundation. “I figure I’ll either be eaten by a polar bear or shot somewhere by the time that happens,” he says.

Devising a Plan

Peter Buffett and his staff members at the NoVo Foundatoin plan to unveil a strategy and announce their grant-making guidelines sometime this fall. Over the past year, Peter, who serves as chairman of the foundation, his wife, Jennifer, who is president, and the foundation’s executive director, Bob Dandrew, have been meeting with nongovernmental organizations and charities to fine-tune their strategy.

The NoVo Foundation will focus on empowering women, improving education, promoting civic engagement, and the use of technology for social action.

“The foundation’s assets increased so much that we really had to step back and think through how we want to operate in the world,” Peter says. “We’re on the cusp of being able to come up with all these wonderful things. It’s almost ready to come out of the oven.”

Although the NoVo foundation will retain a special focus on women, Peter now talks about “gender balance” and not overlooking the needs of men. “If we do only educating of girls and microlending to women, we’ll have a bunch of dumb, poor men in the world,” he says.

Like his brother and sister, Peter already has demonstrated a desire to focus his dollars for maximum impact.

The NoVo Foundation met with the International Rescue Committee several times over a couple of months on a grant that would help children in Liberia and other countries in western Africa.

Susan Kotcher, director of major gifts at the International Rescue Committee, says the charity initially sought a $300,000 grant, but the NoVo Foundation asked for a more-ambitious proposal. The two sides ultimately agreed on a $15-million grant over six years for a variety of services in Africa, including school construction and teacher training.

“They encouraged the IRC to think big,” Ms. Kotcher says. “We’re not in the habit yet of asking for a $15-million gift from private donors.”

After the gift was announced, the International Rescue Committee encouraged Peter and Jennifer to visit Sierra Leone and Liberia, countries plagued by civil war until the past few years, to see where the foundation’s money was being put to work.

Peter — whose ideal day is being cloistered in a music studio — says he agreed to go, even though he describes himself as a traveling “wimp” compared with his globe-trotting brother. They spent about a week, visiting refugee camps, a vocational school, and a school that teaches girls how to make and mend clothes.

“The most stunning thing is to just drive around country and see what a city freshly out of civil war looks like,” Peter says. He suspects he saw former child soldiers at one school. “They would never say they were child soldiers,” he says, “but you look on those faces and they are hardened faces. They’ve seen a lot.”

Women for Women International, which provides financial assistance, education, and business loans to women in war-torn countries, recently sought a $1.5-million grant from the NoVo Foundation to start a capital campaign that would allow it to buy the centers in which it operates.

But Mr. Dandrew, the foundation’s executive director, says the charity has so much promise that it should be making investments that will help it expand its operations, such as creating a more robust fund-raising office and starting businesses in the countries in which it works that could hire the charity’s female clients.

NoVo ended up giving the charity $3.95-million over two years to strengthen its operations.

Billions Remain

Even as they adapt to their new wealth, it is possible that the foundations operated by the Buffett children will receive an additional gift from their father in the future.

Mr. Buffett, who is 76, owns about $8-billion worth of Berkshire stock that hasn’t been pledged, and in the company’s 2006 annual report he stated that all those funds would be used “for philanthropic purposes” within 10 years of the closing of his estate.

Susie Buffett says her father has discussed his plans with the three children, but she notes that he may live for another 20 years or more, and that his plans could evolve. Warren Buffett’s gift to the Bill & Melinda Gates Foundation and his children’s foundations last summer came as a surprise; he previously had said he planned to leave all his Berkshire stock to his late wife’s foundation.

“He has talked to us, and I’m not comfortable talking about it,” Susie says. “He may change his mind again.”