Oct 1, 2008|
Lessons from Warren Buffett - LVI
In the previous article, we touched upon the qualities that Buffett seeks in his successor. Let us go further down the same letter of 2006 and see what other investment wisdom he has to offer.
Buffett and his benevolence
If succession planning wasn't proof enough, Warren Buffett gave one more indication in his 2006 letter to shareholders that the time has indeed come to start planning for the post-Buffett era. The indication though had nothing to do with Berkshire's operations per se. It concerned the use of his enormous wealth post his death. While the subject seemed to be bugging him for quite some time, he made an official announcement in the 2006 letter whereby he arranged the bulk of his holdings to go to five charitable foundations. He however inserted a special clause that all his donations were to be used within 10 years rather than let it run like a perpetual foundation and hence, use it over a much longer period of time. He has indeed spelt out the reasons for the same. Let us read Buffett's words as to why he chose to take such a decision.
The golden words
"I've set this schedule because I want the money to be spent relatively promptly by people I know to be capable, vigorous and motivated. These managerial attributes sometimes wane as institutions - particularly those that are exempt from market forces - age. Today, there are terrific people in charge at the five foundations. So at my death, why should they not move with dispatch to judiciously spend the money that remains?"
He further adds, "Those people favoring perpetual foundations argue that in the future there will most certainly be large and important societal problems that philanthropy will need to address. I agree. But there will then also be many super-rich individuals and families whose wealth will exceed that of today's Americans and to whom philanthropic organizations can make their case for funding. These funders can then judge firsthand which operations have both the vitality and the focus to best address the major societal problems that then exist."
Indeed, even in matters as arcane as philanthropy, Buffett's understanding of the subject and his crystal clear thoughts leave an indelible impression.
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