In June 2006, about 100 years after Andrew Carnegie and John D. Rockefeller Sr., established foundations and other endowed institutions to be named for themselves, Warren Buffett, in a stroke that caught the attention of much of the world, announced that he would give away $31 billion, over a period of years, to a foundation named not for himself but for two other major donors — Bill and Melinda Gates.
In one fell swoop, Buffett, revered as “the great investor,” won first place for himself as “the greatest divestor” in history for giving away for the public good the bulk of his lifetime accumulation of wealth–more than three times, in 2006 dollars, what John D. Rockefeller Sr., and Andrew Carnegie, America’s most generous philanthropy pioneers before Bill Gates and Warren Buffett, gave away combined!
It was not only, or even primarily, the magnitude of Buffett’s gift that compelled the attention of the entire world. Even more breathtaking was Buffett’s decision not to memorialize himself and his life by placing his wealth in a foundation named for himself, as all but a tiny handful of previous philanthropists had done before him. Self- or dynasty-promotion has always been understood, accepted and lauded as perhaps the primary driver of perpetual foundation-creation, as well as of other kinds of institution-naming in perpetuity.
So in this age in which aggressive self-promotion is as rampant as it is deplored, it is stunning to witness an act of historic altruism transformed by heroic self-denial into perhaps an even more historic act, an act of sacrifice in resisting, indeed renouncing, the attention of posterity. Had Buffett followed the example of virtually all of his predecessors in giving, the foundation he could have created would have been the wealthiest one in the entire world, thereby assuring himself of perpetual admiration and the gratitude of history for all time.
Instead of that guarantee of fame forever, the summum bonum for most human beings throughout history, he chose to veil his magnanimity in the cloak of another foundation, thereby assuring himself of anonymity in the future even if his gift has won him worldwide celebrity in the memory of those alive today. If Maimonides was right in placing double-blind giving immediately below the peak of praiseworthiness in charitable giving, ponder the virtue Buffett will earn for saving or improving the lives of millions of human beings who will never know his name.
Andrew Carnegie, the first founder of the great American foundations, obviously did not exemplify such anonymous giving. His name appears on some 2,500 libraries in the United States and elsewhere, as well as on more than two dozen major American think tanks, foundations and other institutions, all of which confer great benefits on society. While Buffett obviously shares the conviction Carnegie expressed 125 years ago in The Gospel of Wealth that “he who dies rich dies thus disgraced,” and obeyed his injunction to the wealthyto give away their riches while they’re still alive, he did not play out of Carnegie’s playbook in yet another way. Carnegie’s primary argument for urging “giving while living” was to enable, indeed encourage, those who have earned great wealth to bear in its donation the same entrepreneurial skills and zeal for efficiency that they employed in its accumulation.
Those who wonder just why Buffett chose not to follow Carnegie’s advice and manage his own philanthropic giving can easily discover the answer. He said: “I came to realize that there was a terrific foundation already scaled-up – that I wouldn’t have to go through the real grind of getting to a megasize like the Buffett Foundation would – and that I could productively use my money now….[Bill and Melinda Gates] do a much better job than I could in running their operations. What can be more logical, in whatever you want done, than finding someone better equipped than you are to do it?” [Forbes, “A Conversation with Warren Buffett,” June 25, 2006.]
In other words, in his usual self-effacing way, “the Sage of Omaha” confessed that he felt he would not be as good in giving away wealth as he had clearly been in making it. Perhaps it is Buffett’s humility also that explains why the admiration of history holds little temptation for him. From now on, perhaps he should be known as “the Saint of Omaha.”
Buffett’s twin achievements have drawn more sustained and intense press and public attention to the world of foundations and charitable giving than any other such gift-giving in the past 100 years. In view of the important role philanthropy plays in continuously renewing America’s and the world’s civic sector and enabling it to function more equitably and effectively, that attention is long past overdue.
The Gates Foundation’s biggest challenge may be responding appropriately to the increased scrutiny it can expect as the steward of such a massive sum. The public attention drawn to a foundation governed by only three trustees who oversee the annual spending of $3.5 billion has already sparked public concern over its scale and the lack of broader accountability, as well as curiosity about how and how well the Gates Foundation will manage to spend such large amounts effectively.
That added size imposes great responsibility on the Gates Foundation to take the lead in becoming a model of transparency for American foundations. As things stand now, the public knows very little about foundations, and every time foundations come under attack by politicians, public officials or the press for one or another misdeed or mishap, there is therefore no existing reservoir of public support to fend off harm.
The only way for foundations to protect the freedom, creativity and flexibility they now enjoy and which they must have if they are to serve society to their fullest, is to open their doors and windows to the world so that all can see what they are doing and how they are doing it. At this dramatic juncture in the history of the Gates Foundation, as well as of the entire world of philanthropy that has now come under public view, it is essential that Gates bite the bullet and lead the foundation sector by becoming a model of what a transparently run foundation can be.
Joel Fleishman. Professor of PPS and Law
Director, Foundation Impact Research Program.
Joel L. Fleishman