Following Bill Gates’ divorce from Melinda, Warren Buffett (hereinafter referred to as Warren Buffett) has also chosen to leave him.
Buffett will no longer serve as a trustee of the Bill & Melinda Gates Foundation, according to the Wall Street Journal.
Buffett, 91, is chairman and chief executive of Berkshire Hathaway Inc. (BRKA) and a longtime friend of the Gateses.
As previously reported, Buffett has pledged to give 85 percent of his assets to five foundations starting in 2006, with the largest financial donation going to none other than the Bill & Melinda Gates Foundation. As a result, Buffett has been a trustee of the Melinda Gates Foundation since 2006.
Rumor has it that this time Warren Buffett quit the Gates Foundation or with the Gates couple’s divorce – early May, shortly after the Gates couple announced their divorce, an anonymous source said on a social media platform, “Warren Buffett therefore wavered over whether to continue to donate to the Gates Foundation. “
The friendship between the tech titan and the financial powerhouse
Buffett and Gates met in July 1991 at a party organized by Gates’ mother, Mary Maxwell Gates. Initially, both billionaires were hesitant to attend the party, but the two later had a good conversation at the party.
Although, the age difference between the two is 25 years, one is a technology giant, the other is a financial predator, but they both maintain a strong curiosity about the workings of the world, because of this, the achievement of this more than 30 years of friendship.
In the early years, Gates once proposed in a speech at Davos that the world needed not only “technological innovation” but also “systemic innovation” in order to build a system that “uses market incentives to drive more contributions to the poor A system of “market incentives to do more for the poor”.
Buffett was convinced and chose to support Gates’ vision and plans with real money – in 2006, Buffett announced that he would donate 85 percent of his assets to five foundations, the largest of which went to the Bill & Melinda Gates Foundation, which became the world’s largest private foundation.
In that donation document, released in June 2006, Warren Buffett wrote, “You two (Gates and Melinda) have given extraordinary intelligence, energy and effort to improve the quality of life for millions of people less fortunate than we are. You are fully committed to advancing this cause regardless of color, gender, religion or geographic differences, and I am honored to contribute additional resources to this cause.”
At the same time, in order to improve the utilization of this donation, Warren Buffett clearly put forward three requirements.
First, that one of Bill Gates or Melinda Gates is still alive and still actively involved in the foundation’s operations; second, that the foundation must use Buffett’s gift for charitable purposes, enabling it to be exempt from gift and other taxes; and third, that after a three-year acclimation period, since 2008, the foundation must spend the total value of the stock donated in the previous year.
Data show that since 2008, the Gates Foundation has spent about $4 billion per year on charity; and during the decade from 2006 to 2015, Warren Buffett donated a cumulative total of over $17.3 billion to it.
It can be seen that Warren Buffett has been closely associated with the Gates Foundation. So, why he wants to quit the Gates Foundation?
Sources close to the matter revealed that Buffett’s decision to quit this time is related to the Gates Foundation’s plan to strengthen governance and increase independence – in May, after Gates and Melinda announced the end of their marriage, the Gates Foundation was already actively discussing changes to the foundation’s structure to increase its independence. Because until then, the foundation had only three trustees, Bill Gates, Melinda and Warren Buffett.
Of course, Buffett did not explicitly explain in his statement why he withdrew from the Gates Foundation, except to euphemistically state, “For many years I have served as a trustee of the Gates Foundation, but I have not been an active trustee.”
Buffett also noted, “Resigning from this position now, as I have resigned from all directorships outside of Berkshire Hathaway.” In response, it has been speculated that as he gets older, Buffett’s move is an attempt to free himself from his busy day-to-day commitments to focus on investing.
In response, philanthropy expert Benjamin Soskice said Buffett’s statement was “contradictory”.
“Given the events of the past few months (the divorce), it is surprising that he did not mention the Gateses in his statement; if it is really for the future health of the Gates Foundation, personal relationships (the Gateses’ divorce has made the relationship between the three delicate) are not the most important, and the trustees’ oversight of each other is more important.”
Warren Buffett and Gates is not a “real breakup”?
In fact, before Warren Buffett announced his withdrawal from the Gates Foundation, Gates had already gotten out of Buffett’s company first.
On March 14, 2020, Bill Gates announced his withdrawal from the company’s board of directors, while withdrawing from his position on the board of directors of Warren Buffett’s investment company Berkshire Hathaway.
At the time, Gates explained this by saying, “The leadership of Berkshire and Microsoft has never been stronger, so now is the right time.”
Even, a source said, Gates and Melinda announced the decision to divorce timing are to avoid the “God of stocks” Warren Buffett create trouble, “they to avoid ‘Warren Buffett had to deal with this thing’, so wait for Burke The divorce was announced two days after the end of the annual shareholders meeting of Hill Hathaway.”
After all, Buffett and the Gateses have been close friends for years, and Buffett is also a partner in the Gates Foundation. If the news of Gates’ divorce is announced before the shareholders’ meeting, Buffett is bound to be asked relevant questions at the shareholders’ meeting. So, Berkshire Hathaway held its shareholders meeting on May 1, 2021, and the Gates couple announced the news of their divorce to the public only on May 3.
Only the news of Warren Buffett’s exit from the Gates Foundation as a financial magnate is obviously more topical.
According to the New York Times, Gates Foundation CEO Mark Suzman acknowledged in an email to employees that “Buffett’s exit raises public questions about the foundation’s governance.” He reiterated that he has been actively discussing with Buffett, Gates and Melinda ways to strengthen the foundation’s governance to maintain its long-term stability and sustainability in light of the previously announced divorce of Gates and Melinda.
In addition to withdrawing from the Gates Foundation, Buffett also made a big announcement – he will give away $4.1 billion worth of Berkshire Hathaway stock to five foundations, including the Gates Foundation.
In a statement, Buffett said, “Today is a milestone for me. In 2006, I pledged to distribute all of my Berkshire Hathaway stock – more than 99 percent of my net worth – to philanthropic causes. With today’s $4.1 billion gift, I’ve fulfilled half of that commitment.”
Data show that Buffett owned 474,998 shares of Berkshire stock in 2006; donating to five major foundations to date, he still holds 238,624 shares of Berkshire stock, worth about $100 billion.
In response, an anonymous source said Buffett may have been using donations to foundations to avoid taxes, as Buffett’s name was also frequently mentioned in a recent media debate about the taxes paid by U.S. billionaires.
Citing leaked IRS reports, news outlet ProPublica said the Berkshire CEO paid $23.7 million in taxes on pairs from 2014 to 2018, while his wealth grew by $24 billion during that time, at an effective tax rate of 0.1 percent, lower than even the average industrial worker.
In response, Buffett did not specifically mention ProPublica’s challenge in a statement Wednesday, only admitting that his income was “relatively small” and that his wealth accumulation was mainly derived from his Berkshire Hathaway holdings. He also explained that “charitable contributions save just 40 cents in taxes for every $1,000 donated.”
Warren Buffett is known to be a long-time advocate of tax increases for the wealthy.
In 2010, Buffett and Gates also launched the Giving Pledge, an initiative that calls on billionaires to give at least half of their wealth to charity during or after their deaths. Now, 168 billionaires have joined the initiative.
This time, he also reiterated his support for this policy in a statement, saying, “While tax deductions are important to some wealthy individuals, it is essential that Congress periodically review tax policies for charitable contributions, especially from donors whose industries are highly influential.”
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