From West by Northwest.org Voices of the Northwest Sadler's Sense: Croesus and Responsibility By Russell Sadler Jul 3, 2006 Warren Buffett never made a secret of his decision to Die Broke. Read any profile of the Oracle of Omaha and you will learn about his intention to give away his fortune, estimated at about $44 billion. It’s the way that Buffett decided to give it away that is making news and may well revolutionize philanthropy. Many wealthy people create foundations in their name in the hope their money will live after them and solve problems for their community, state, nation or the world. On a smaller scale, many wealthy people simply leave a bequest in the hope the money will be used for charitable purposes. Some 30 years ago, Oregon banks were managing so many small bequests, their trust officers found they lacked the time and the expertise to manage the money efficiently and comply with the wishes of the benefactors. The Oregon Community Foundation was created to consolidate these small bequests under unified investment management and a small staff that acquired the expertise to see the money was spent as the benefactor requested. Wealthy Oregonians also created their own foundations to do charitable work. The late supermarket magnate, Fred Meyer, left a large part of his fortune to the Fred Meyer Charitable Trust. The Fred Meyer Charitable Trust, like most of the foundations of that era, modeled itself after the Ford Foundation, the Rockefeller Foundation and the Carnegie Endowment, with a program staff that developed the expertise to evaluate grant requests and determine where the money would be most effectively spent. The Bill and Melinda Gates Foundation broke that mold because it had so much money -- $30 billion -- it literally couldn’t give it away fast enough. The Gates’ were forced to pioneer a more efficient mechanism to give money away. Modern American philanthropy is driven by two major forces -- the desire of wealthy people to give their money away to avoid inheritance taxes and a federal law that requires charitable foundations to give away five percent of their entire endowment annually. In the go-go 1990s, the stock market was producing double-digit returns on foundation portfolios. Foundations actually had trouble giving away five percent of their holdings productively. Many new tax exempt foundation sprang up in an effort to absorb this enormous flow of cash. The Pacific Northwest Foundation actually began programs to train foundation boards of directors to be better overseers and managers. PNW also helped other foundations write better quality grant proposals so program officers could decide which foundations might spent money most effectively. But the Bill and Melinda Gates Foundation changed that approach. Instead of hiring a bevy of program executives to evaluate grants and essentially rediscover the wheel, the Gates Foundation simply sent out staff to interview experts in a field and establish a consensus about which person or organization was most likely to solve a particular problem the quickest. If the Gate Foundation board accepted the consensus, that’s the person or organization that got Gates’ grants. Buffett chose to give a substantial portion of his fortune to the Gates Foundation for a similar reason. "If you're accumulating wealth, it's very natural to go to somebody you know can handle it better than you can," Buffett explained at a news conference. "I've found some people who are better at giving away money, and I'm turning it over to them." Gates and Buffett oppose repeal of the inheritance tax. They argue repeal will reduce the incentive of the wealthy to give money to charity. They are also old-fashioned because they believe in the old axiom that “to whom much has been given, of him much is required.” This is a slap at the Conservative/Libertarian libel that estate taxes are “theft’ of the fruits of capitalist endeavor instead of a means of emphasizing merit over inherited wealth as an driving force in American society. I also suspect Buffett, a healthy 75, is beginning to feel his mortality. Asked if he thought it was possible to solve 20 of the world’s major public health problems in his lifetime, Gates said, “I’ll be optimistic and say, absolutely.” Gates is just 50. Gates has 35 years of his life left. Buffett has perhaps 15 years left. Buffett is wise enough to know that no matter how his fortune is spent, he will not live to see the results. Why not leave his money with someone who is young enough and who can use the money wisely enough to see results in his lifetime? There are a lot of politicians and ideologues who presume to speak for the rich these days when advocating tax cuts that are bankrupting the nation. Perhaps they should sit down and let the rich speak for themselves. The two wealthiest men in America are putting their money where their mouths are. Copyright © 2006 by Russell Sadler Russell Sadler is a journalist and a lecturer at Southern Oregon University. You may write him c/o publisher at westbynorthwest.org. Visit Sadler's Sense columns at West By Northwest.org: Sadler's Sense: Can We Kick the "Kicker" Habit? Or... the Big Lie Sadler's Sense: Enter Starret Stage Right -- Now a Four Way Race for Governor and Freeway Nation or Free Nation? Sadler's Sense: How Portland Lost a University for 100 Years Sadler's Sense: Beyond Industrial Forestry Sadler's Sense: Who Can Bridge the Great Divide? Sadler's Sense: Peer Review and Politics Sadler's Sense: Of Forests and The River Sadler's Sense: Development and Belief --Who Pays? 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