Gates Foundation Faces a Big Drop in Donations After Warren Buffett’s Death

Bill Gates may have to step up giving to his foundation if he wants to offset an end to donations from Warren Buffett when the Berkshire Hathaway CEO dies.

The Bill and Melinda Gates Foundation is a giant among philanthropies with an endowment of $75 billion and charitable support of $7.7 billion in 2023.

Buffett’s annual gifts to the foundation, which began in 2006, account for about half of the Gates’ foundations annual charitable disbursements, Barron’s estimates. Buffett, 93, told The Wall Street Journal on Friday that his donations to the foundation, the largest beneficiary of his annual giving, will cease after his death.

Buffett gave about $3.5 billion of Berkshire stock to the foundation in his annual June donation last year and $4 billion in a gift announced on Friday.

Buffett’s plans to end giving to the foundation after his death marks a change from what he originally laid out in a pledge for lifetime gifts to the Gates foundation and four Buffett family charities in 2006. He then wrote that his pledge of Berkshire Hathaway stock to the Gates foundation would continue after his death.

Buffett has given about $43 billion to the Gates foundation since 2006. The Gates foundation in the past year has sold about a quarter of the stock each quarter that Buffett donated in June 2023, a gift of more than 10 million Berkshire Class B shares.

In a statement, Gates foundation president Mark Suzman said: “Warren Buffett has been exceedingly generous to the Gates Foundation through more than 18 years of contributions and advice. He has played an invaluable role in championing and shaping the foundation’s work to create a world where every person can live a healthy, productive life. We are deeply grateful for his most recent gift and contributions totaling approximately $43 billion to our work.”

Buffett has said he’s in good health but his actuarial life expectancy is only about three years.

Buffett has stipulated that his gifts be “additive” or supplement the charitable disbursements that the Gates foundation would normally make every year.

Foundations often spend about 5% of their assets annually and that appears to be the case with the Gates foundation.

Five percent of $75 billion plus the annual Buffett donation equals about $7.7 billion, the foundation’s spending last year.

The Gates foundation plans to scale up its annual spending to $9 billion by 2026. If Buffett is no longer alive in 2026, the foundation would have to make up a hole that could total $4 billion or more.

The foundation has the wherewithal to do so with an endowment of $75 billion and given Bill Gates’ estimated wealth of $152 billion, according to Bloomberg. Gates has pledged to give away all of his wealth.

Write to Andrew Bary at [email protected]