Wow ! Warren Buffett just became the biggest donor to charity ever ! 31 billion dollars worth of his stock to the Melinda and Bill Gates Foundation. He chose a large organisation that already had experience effectively giving out large amounts of money. The Foundation currently has about 30 billion dollars of endowment, mostly given by Bill Gates, and gives out about 1.5 billion dollars annually. This will double the size, both in terms of endowment and in terms out amounts to give out per year (3 billion !!! annually!!!).
One has to admire Warren Buffett for not going for the ego trip by sticking his name on things or creating his own foundation, but for choosing an efficient organisation committed to long term results. He said he hoped this would inspire other wealthy friends to also make large donations. This is the true value of example, and a real commitment to giving back to society.
There are two questions that this raises in my mind:
1) I can see that for research and funding purposes it is much better to have this type of organisation supporting projects, as it will not depend on the political cycle (now you have the money, now you don't because an election year is coming up). But it is definitely run along business lines, and public trust in business (as in politics) is not very high at this moment. The only organisations that seem to retain public credibility are NGOs (non government organisations). The question I am wondering about is how this foundation is going to build trust and credibility with the public around the world. It depends a lot on culture. In France good things come from the State (also entertaining scandals), and anything associated with business, is suspicious, rotten and evil. And the foundation might be tainted through association, and so will have to manage its reputation, or communicate it's model, and results. Sort of like educating the public.
2) The second issue I am wondering about is the copycat effect. Projecting into the future, I can see that this is going to be a good thing, but how it will be managed is a different problem. As people read about this great gesture, they will want to imitate on their level. Buffett spoke about his wealthy friends. Let's take it down a peg or two. Why would ordinary people with some means not want to give back and make a difference ? And if they do, but can't afford such large amounts, and don't want to get lost in the huge pool of the larger foundations, then they are going to look for individual projects to invest in, where their contribution is going to count. So somebody is going to have to structure "deals" or "offers" for these types of people - sort of like venture capital, or maybe mutual funds. But instead of investing in start-up companies, they will be investing in social projects - maybe we could call it "social capital". There is a French expression that says small trickles become large rivers, but for this to happen, we are going to need a special type of structure, sort of like a portfolio of projects. Which raises interesting questions about brokers, management, accountability and regulation - not to mention transparency. Working for the common good with performance measurements and communication... hopefully coming soon, to a cinema near you.
In case you missed the details, article by Brooke A. Masters and Yuki Noguchi entitled "Buffett, Gates to test the limits of giving".