Key Points
-
Warren Buffett said he plans to donate nearly all of his $140 billion personal fortune before he dies.
-
This week, he announced plans to give away $6 billion to four foundations.
-
The plan calls for him to donate all his Berkshire holdings by 2034.
- 10 stocks we like better than Berkshire Hathaway ›
Twenty years ago, Warren Buffett pledged to donate all of his vast wealth to charities.
“My pledge: More than 99% of my wealth will go to philanthropy during my lifetime or at death. Measured by dollars, this commitment is large. In a comparative sense, though, many individuals give more to others every day,” Buffett wrote back in 2010.
This week, Buffett, now the retired former CEO of Berkshire Hathaway (NYSE: BRKA) (NYSE: BRKB) put that pledge into action. On July 14, Buffett announced that he will convert 8,000 Berkshire Hathaway Class A shares into 12 million Berkshire Hathaway Class B shares to donate the 12 million B shares to four foundations.
Valued at around $490 per Class B share, that would amount to about $5.9 billion.
Buffett will donate 9 million shares to the Susan Thompson Buffett Foundation and 1 million shares each to the Sherwood Foundation, the Howard G. Buffett Foundation, and the NoVo Foundation. All four foundations have direct ties to Buffett family members. Notably absent from the donation list is the Bill Gates Foundation, which Buffett had donated to for years.
$140 billion in eight years
This marks an acceleration of donations, as Buffett has set a goal to give away all of his $140 billion in wealth to charities by Dec. 31, 2034.
It will be given away over the next eight years, in pieces, to avoid rattling the Berkshire Hathaway stock price too much. Berkshire B shares are down about 1% since the announcement, so it had minimal impact.
Buffett now owns 188,290 class A shares, which trade at around $733,000 each, and 1,162 class B shares, which trade at around $490 each.
“My goal is to dispose of all of my Berkshire shares within about eight years. As I explained last year, my children are unfortunately growing older. I have every hope that the three of them are able to carry out the disposal of my shares by Dec. 31, 2034,” Buffett said in a July 14 release. “Of course, mortality is unpredictable, but my remaining shares will be donated to the four foundations one way or the other by Dec. 31, 2034.”
Buffett said the goal is to have the donations grow annually to the three foundations that are managed by his three children — that is, the Sherwood Foundation (chaired by daughter Susan A. Buffett), Howard G. Buffett Foundation (chaired by son Howard Buffett), and NoVo Foundation (chaired by son Peter Buffett and Peter’s wife, Jennifer). He noted that the annual grant to the Susan Thompson Buffett Foundation will grow at a “somewhat greater rate.” Susan Thompson Buffett was Buffett’s first wife. She died in 2004.
Giving away the $140 billion in the next eight years would require distributing roughly $17 billion per year in grants.
Should you buy stock in Berkshire Hathaway right now?
Before you buy stock in Berkshire Hathaway, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Berkshire Hathaway wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $371,842!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,244,783!*
Now, it’s worth noting Stock Advisor’s total average return is 900% — a market-crushing outperformance compared to 207% for the S&P 500. Don’t miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
Dave Kovaleski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy.
