Buffett: Give Generously While You Can See Results

Published on October 18, 2009

Warren Buffett’s approach to philanthropy has been unconventional.  Rather than establishing the infrastructure required to administer a foundation bearing his own name, the majority of Mr. Buffett’s wealth has been given to The Bill and Melinda Gates Foundation.   Many super-rich individuals set up foundations that will exist in perpetuity, but Mr. Buffett’s instructions call for using his donations soon after they are made.

Many wealthy individuals have taken note of the Buffett approach to philanthropy and have set up similar arrangements in which their wealth is used to fund current projects.  The Philadelphia Inquirer published an article today regarding Barbara Dodd Anderson’s donation to the George School located in Bucks County Pennsylvania.  Ms. Dodd Anderson is the daughter of David Dodd who was co-author of Security Analysis along with Benjamin Graham.

Ms. Dodd Anderson’s 2007 donation consisted of Berkshire Hathaway shares and have declined in market value over the past two years.  At a news conference dedicating a new library funded by this donation, Mr. Buffett made the following comment:

On Sept. 18, 2007, shares were trading at $118,700. That was when Dodd Anderson gave George the largest gift to an existing independent school in the nation.

She created an irrevocable trust designed to pay out a record $128.5 million over 20 years. The value of that $70 million trust is now $68.5 million, down just as Berkshire Hathaway shares have dropped.

“It’ll change,” Buffett said. “There are only two [share] prices that matter – the price on the day you buy it and the price on the day you sell it. If you own good businesses and you don’t do anything stupid with your money, value tends to rise.”

The article also had an amusing story, which I have not seen elsewhere, regarding Mr. Buffett’s application to Columbia Business School in 1950.  Let’s just say that the application used an unconventional approach:

When he was 9 or 10, growing up in Omaha, he read every book on finance in the public library, Buffett said.

He particularly admired Security Analysis, a 1934 investing classic cowritten by David Dodd.

Later, after Buffett had been rejected from Harvard University’s graduate school of business, he was thumbing through a Columbia University catalog and noticed that Dodd was assistant dean.

Even though it was August, just weeks from the start of the fall term, he wrote to Dodd: “I thought you guys were dead, but now that I realize you are alive, I’d like to come and study with you.”

While most aspiring Columbia Business School students would do well to emulate Warren Buffett’s history, they may wish to choose a more conventional strategy when writing their essay to the admissions committee!

The author owns shares of Berkshire Hathaway.

Buffett: Give Generously While You Can See Results
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