MB Civic

By Scot Lehigh | June 27, 2006 | The Boston Globe

WARREN BUFFETT, the oracle of Omaha, is as revered in the investment world as the Oracle at Delphi was in the ancient world.

And now, unlike that ancient oracle, Buffett, 75, has delivered a decidedly unambiguous message: It’s important to do something worthwhile with your wealth — and to do it while you’re still alive.

Not only is Buffett giving the bulk of his fortune away, in a shrewd and modest move he will transfer most of it to the Bill & Melinda Gates Foundation. That announcement nips at the heels of news that in 2008 Bill Gates will relinquish his full-time role at Microsoft Corp. to devote most of his time to philanthropy.

Thus in the space of a few days in June, the world’s two richest men have said that making the planet a better place will become the focus of their wealth or energy — or both.

Their commitment could just redefine the obligations and opportunities of wealth.

For perspective, we are not talking about the kind of money that replaces government spending. With Buffett’s gift of $31 billion, the assets of the Gates f oundation will effectively reach more than $60 billion. But though it will be the largest charitable foundation in the country five times over, that amount pales before a yearly US federal budget of $2.6 trillion — and even before the $500 billion in annual domestic discretionary spending.

Still, a foundation that will soon spend $2.5 to $3 billion a year can have a huge impact, particularly in poor nations, where needs are acute and providing vaccines or supplying fresh water or treating cataracts can be accomplished for relatively short money.

Further, the news should set an important example in the world of giving. It’s a stunning reaffirmation of the notion of noblesse oblige, American style. That is, that those who have made great fortunes have an obligation to give back to society. In recent years, that ideal been under sustained assault as we’ve watched a rogue’s gallery of corporate robber barons whose only motivation seemed to be greed distilled.

“This will encourage a trend whereby people of substantial wealth will be devoting greater proportions of their wealth to philanthropy,” predicts Paul Schervish, director of the Boston College Center on Wealth and Philanthropy, which studies charitable giving. “We are seeing a model for making the extraordinary ordinary.”

Let’s hope so. Certainly there’s huge potential out there. Schervish notes that the least wealthy of the Forbes 400 list of the richest people in the US has a net worth of some $900 million. According to a September 2005 report on Forbes.com, however, only 10 had made charitable gifts of $25 million or more in the last year.

“Many are still in the acquisitive mode,” says Dwight Burlingame, associate executive director at the Center on Philanthropy at Indiana University, displaying a deft diplomatic touch.

In 1997, when Ted Turner pledged $1 billion to the United Nations, his gift made jaws drop. Almost as noteworthy was his brash challenge to other elites to start donating more. Turner’s gift now looks small in comparison with the amount that Buffett and Gates will dispense.

Hard-nosed businessman that he is, Gates will bring his own formidable intelligence to the task of how to spend his charitable billions. Buffett, a value investor who digs through the details in search of the best investment opportunities, has cast a vote of confidence in his friend’s model of entrepreneurial philanthropy.

“It is taking Buffett’s philosophy of investing and applying it to philanthropy,” notes Burlingame.

Finally, their joint action underscores importance of giving during one’s lifetime, says Schervish.

Buffett had long intended to give much of his fortune to charity, but had talked of doing it upon his death. By accelerating his timetable, he is now divesting himself of his fortune even as he is still generating wealth.

In 1998, when Ralph Nader challenged Gates to convene a conference about wealth inequity, Gates responded that his primary responsibility was to continue to guide Microsoft, but said that later in his career, he intended to give the bulk of his wealth away.

Now 50, he is clearly going to make good on his pledge.

Together, he and Buffett have established a new gold standard for responsible wealth and effective philanthropy.

Here’s to them.