Foundation spending likely to increase along with stock

The four Warren Buffett family foundations have spent $1.6 billion since they ramped up their charitable work in 2006. This year, with a healthy stock market and funded programs moving ahead, spending could reach an all-time high.

The Buffett children say the nonprofit organizations, which hold $2.85 billion in total assets, are functioning well.

Peter Buffett's wife, Jennifer, handles most of the work for their NoVo Foundation, which adopted as its name the Latin word for “change, alter, invent” to symbolize their desire to improve the lives of girls and women.

The Howard G. Buffett Foundation is modifying its approach to long-term improvements in agriculture around the world, especially in Africa.

Susan A. Buffett's Sherwood Foundation focuses on early childhood education and family issues in Omaha and other U.S. cities.

And the Susan Thompson Buffett Foundation, the largest of the four, continues its work in a wide range of social issues in the United States and abroad. Named for Warren's late wife, it's the 16th-largest U.S. foundation in asset size and seventh largest in terms of annual giving, according to the Foundation Center of New York City.

“I think it's an incredible opportunity that few people get,” Howard Buffett said this week.

The recovery in the value of the foundations' stock in Berkshire Hathaway Inc. over the past year may boost spending compared with 2009, he said.

At the foundation that carries his name, Howard Buffett said, “My goal is to give away all the new money that we get each year, and sometimes more,” while keeping a reserve of about $200 million in case large needs arise.

He will talk after a noon luncheon Sunday at the Milo Bail Student Center on the University of Nebraska at Omaha campus. The fundraiser is for Omaha's Hike to Help Refugees, one of the disadvantaged groups he writes about in his new book “Fragile: The Human Condition.”

When the foundations were small, Buffett said, they were limited in what they could do and required less time.

“When your ability grows and you can give away more money, it's a bigger challenge to stay focused” on appropriate needs, he said.

He said his sister, Susan, “has stayed incredibly focused” on children, education and family issues with her Sherwood Foundation. “She's done a huge amount in Omaha for young kids' education,” he said.

For example, the Sherwood Foundation has helped fund nine early childhood education centers in Omaha, Chicago, Milwaukee and Denver and has another planned for Washington, D.C.

“You do it, and then five years from now you have some results, and you start to figure out how you can make it work better or what are the implications economically or educationally,” Howard Buffett said. “I think she's done a great job.”

Peter Buffett, who held a fundraising concert Friday evening and is signing copies of his book, “Life Is What You Make It,” at 1 p.m. Sunday at the Bookworm, 8702 Pacific St., said that besides his NoVo Foundation's giving capacity, the Buffett name attracts attention to its causes.

“It's been thrilling to see it grow and develop over these couple of years,” he said. “I love the fact that we're keeping our part by getting as much money out the door as possible.”

The foundation generally spends as much money as it receives each year, while maintaining a reserve for unanticipated needs.

“How we behave with the money is potentially an example to others,” Buffett said. “If we can turn attention to things we care about, then we're doing our job. We have found that our support of girls and women is happening at the right time. ... I think we have helped. We're a new player in the philanthropy world with a lot of assets.”

He said recent poison gas attacks by insurgents on school girls in Afghanistan demonstrate the seriousness of the issues involved and the value of education for women.

Buffett said his children likely won't carry on the work of the foundation.

“That's really because we are big believers in pushing it all out the door,” he said. The idea is to “make things happen now.”

Peter and Susan Buffett are on the board of the Susan Thompson Buffett Foundation, but its president, Allen Greenberg, does the day-to-day work.

“I feel like I'm there as an observer,” Peter Buffett said. “As I learn more about philanthropy, I love putting in my two cents worth. But Allen does impeccable work.”

The foundations' money comes from the financial success of Berkshire Hathaway. They are growing, thanks to the willingness of their father to donate Berkshire shares so the foundations can begin tackling the human issues that his late wife embraced during her life.

The Susan Thompson Buffett Foundation received $2.5 billion, the bulk of her estate, after she died in 2004. The three children's foundations each received $150 million.

Warren Buffett also donates to each of the foundations annually. Last year, he gave Berkshire stock worth $125 million to the Susan Thompson Buffett Foundation and stock worth $43 million to each of the other three.

Buffett has pledged the largest portion of his estate to the Bill & Melinda Gates Foundation, last year donating $1.25 billion in Berkshire stock there.

As the assets of the foundations have grown, so have their donations.

From $162 million in 2006, spending has more than tripled to last year's $567 million. Of their 2008 spending, 1.8 percent went for administrative expenses, according to their income tax filings.

Howard Buffett's wife, Devon, and step-daughters Erin Morgan and Chelsea Zillmer, are trustees of his foundation. Buffett said his son, Howard Jr., a policy adviser at the White House's Office of Social Innovation and Civic Participation, likely will join the board at some point.

But Howard Buffett doubts that his children will take on the foundation's work full time, as he does.

“I'm committed to this going forward,” he said. “I don't think it's likely that we would have anybody else that is going to spend that amount of time and be that personally committed to it.”

A “sunset clause” will shut down the foundation by 2045, the year he would turn 92. Besides, he said, the problems are serious today. “There's not a big reason to bank a lot of money and look at problems later.”

Buffett said his administrative expenses are somewhat higher, 5.3 percent last year, than the other foundations because of the travel and other work required by its international projects.

The Susan Thompson Buffett Foundation's administrative costs are low in relation to its size in part because it deals with larger grants and in part because Greenberg operates so efficiently, Buffett said.

The four family foundations' spending record is “pretty incredible,” said Atlanta-based fundraising consultant Del Martin, past chairman of the Giving USA Foundation of Chicago.

Martin said the fact that Warren Buffett makes public his philanthropy serves as an example to others who have wealth.

“It's hard to even measure the good that does,” she said.

World-Herald staff writer Michael Kelly contributed to this report.

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444-1080, steve.jordon@owh.com