How to donate $150 billion

A version of this article first appeared in CNBC’s Inside Wealth newsletter by Robert Frank, a weekly guide for high-net-worth investors and consumers. Sign up to receive future editions directly to your inbox.

When Peter Buffett learned that he and his brother would be responsible for donating their father Warren Buffett’s fortune, his reaction was clear.

“I didn’t want that,” Peter Buffett told CNBC. “I called him and said, ‘I want to opt out.’ He said, ‘I don’t blame you.’ That obviously puts a lot of pressure on us. ”

In 2024, Warren Buffett announced that after his death he would donate his fortune to a new philanthropic foundation overseen by his three children, Susan A. (Susie) Buffett, Howard G. (Howie) Buffett, and Peter Buffett. The 95-year-old’s net worth is currently estimated at more than $150 billion, according to Bloomberg.

Additionally, the legendary investor requested that the entire amount be donated within 10 years of his death. Another issue is that all three parties must unanimously agree on how the funds will be disbursed.

The size of Buffett’s wealth means his children will need to give away at least $15 billion a year through 2024, according to data from Giving USA, which is about 4% of annual charitable giving in the United States. That amount is likely to increase even more over time as Buffett’s fortune continues to grow.

Howie Buffett said, “This is something no one has ever done before, certainly not as a family.”

Susie Buffett added: “That’s really a lot of money.”

This bequest suddenly thrust the Buffett family’s children, who had been under the radar, into the spotlight. After Warren Buffett’s death, Susie, Howie and Peter became three of the world’s most important philanthropists, subject to intense media scrutiny, widely pursued by other wealthy donors, and inundated with requests for funds.

In a rare interview with CNBC’s Becky Quick, the three Buffett heirs said their worldview, priorities and approach to philanthropy began with the Buffett family. While their father’s wealth began to increase, his children lived middle-class or upper-middle-class lives. They rode the bus to public school every day. They did housework and had jobs to earn pocket money.

Warren Buffett drove a blue Volkswagen Bug when he was a kid, they said. Their mother, Susan T. Buffett, volunteered with various groups and hosted exchange students from all over the world. When Susie Buffett was in elementary school and had to fill out a census form to list her father’s occupation, she remembers that her mother asked her to write “security analyst.”

“I thought he was checking the burglar alarm,” Susie Buffett said.

Buffett’s children grew up to be philanthropists as they formed their own families and found their own causes. For a long time since 2006 Berkshire Hathaway The CEO has annually awarded a stake in the company to each of the three children’s foundations, 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 chairs the Howard G. Buffett Foundation, is dedicating more time and resources overseas to food security and conflict resolution. Peter Buffett, who lives in upstate New York and heads the Novo Foundation, works on health and economic programs for women and children.

Warren Buffett says he doesn’t give his brothers clear financial instructions. Peter Buffett said his only guiding principle is to use it to benefit “those less fortunate.” Warren Buffett explained in his 2024 Thanksgiving letter that he was confident in giving them such large sums of money and wide discretion.

“I know all three of them well and have complete trust in them,” he wrote. “The period from 2006 to 2024 has given me the opportunity to observe the activities of each of my children, and they have learned a lot about large-scale philanthropy and human behavior. Although the children enjoy being financially comfortable, they are not obsessed with wealth. Any mother whose children have learned these values ​​would be very proud of their children, and so am I.”

Susie, Howie, and Peter will likely fund joint efforts, each focusing on different objectives. The requirement that all spending be unanimous is both a challenge and a blessing, they say. This is because each brother can blame the other if they don’t want to fund the cause.

“It makes it really easy to say no,” says Susie Buffett. “It’s like, ‘Sorry, I’d like to do this, but my brothers won’t like it. So give me a call.'”

As the Buffetts prepare for their historic giving campaign, here are five principles and strategies they say they’ve learned about effectively using capital and philanthropy.

Philanthropists must adapt quickly because the world is constantly changing to meet its needs. The causes they support can change, and so can 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 it’s going to be true 20 years after I die or 10 years from now,'” Susie Buffett recalled.

Howie Buffett said funding programs in Africa, for example, often require collaboration with governments, which also change.

“We work in a lot of places, like eastern Congo, where things can happen quickly. So we need flexibility,” he said.

Howie Buffett called philanthropy “the risk capital of the world” and said foundations need to make bigger bets, even if they fail.

Susie Buffett added, “Sometimes things don’t work out the way you want them to.” “Sometimes that’s a good thing. You learn from it.”

She added that being out of the spotlight in Omaha allows her to experiment more.

“My staff has said to me over and over again, ‘It’s refreshing to be in a place where you can fail and make mistakes,'” Susie Buffett said, noting that her team rarely goes to conferences, and that 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 worthy of praise. “If you really screw up and do something you shouldn’t have done, then it’s okay,” Howie Buffett says. “But if you failed for reasons you knew might be difficult, that’s OK.”

Philanthropists can read all the reports and studies on a topic, but there is no substitute for seeing the problem or population firsthand.

“I’ve been to Africa 97 times, and the 98th time I go there I’ll learn something new,” Howie Buffett said. “Every time I put myself in a dynamic environment, I see something.”

My brother Peter has a saying: “You won’t know until you’ve been there.”

When Peter Buffett started his foundation, he said he felt he could “change the world.” He then visited Sierra Leone, Liberia and Bangladesh, where he said the scale of the need was “overwhelming”. “Slowly we withdrew.”

Some of his current projects include helping communities near his home in Kingston, New York, where he can get up close to the fabric of everyday life and learn what causes are most effective.

“I basically had to be in a place where I could be there every day,” he says.

Giving away more than $150 billion would require writing huge checks for hundreds of millions or even billions of dollars. Typically, only governments and large institutions can handle such large gifts. But, as Howie Buffett says, “I don’t really trust them to make good decisions. If they don’t, they have a lot of overhead.”

Fostering trust and accountability is paramount. Howie Buffett said grant letters always include a clause that allows him to terminate funding at any time for any reason. He also included a “free extension” clause that would require any money left over from budgeted projects to be returned rather than spent on other projects.

Over time, he said, he found nonprofits and organizations he trusted.

“We have five or six partners who regularly contribute tens of millions of dollars a year,” he said. “And we’ve built that trust. You know how they operate. They know your expectations.”

Trust also includes sharing negative outcomes. “If there’s bad news, I want any bad news,” Susie Buffett said. “You have to make it clear to people, ‘I want to hear everything.'”

Just as Warren Buffett maintains the famously low-cost structure in life and at Berkshire, the Buffett family has learned to make the most of every dollar spent on philanthropy.

Howie Buffett said the foundation’s “distribution percentage,” or operating costs relative to distributions, is just 1.3%.

“It’s ingrained in us,” he says. “We know that’s what our father expects of us.”

Our lean staff and small teams allow us to make quick decisions, similar to Berkshire’s culture.

Howie Buffett said, “I once made a $50 million decision on the spot after a two-hour meeting.” “It’s like, ‘I want to do this, so I’m going to spend money.'”

Acting quickly with bold bets goes against many foundations and can face battles with decision-makers and layers of bureaucracy.

Susie Buffett said, “You have to have a board meeting and the board has to look at it and vote on it. That just drags everything out.” “People are always surprised that we do it.”