What Buffett and Gates Can Teach Us

By Hertz, Noreena | New Statesman (1996), July 10, 2006 | Go to article overview

What Buffett and Gates Can Teach Us


Hertz, Noreena, New Statesman (1996)


In the same week that the world's richest man, Bill Gates, announced he was giving up his job at Microsoft in favour of working at his charitable foundation, the world's second-richest man--Warren Buffett--announced he was donating three-quarters of his fortune to the foundation Gates has set up. Philanthropy on this scale dwarfs the investments made by the big philanthropists of old, and rivals the funds that governments and international organisations spend on addressing global ills. The US Agency for International Development (Usaid) spent $1.5bn last year on health programmes, approximately the amount spent that year by the Bill and Melinda Gates Foundation.

But, although these men's donations are unprecedented in size, the Gates-Buffett model, in which donors have a great degree of control over where their monies are being utilised, is indicative of a new trend. Philanthropists today want input into how their monies are being deployed. The big question is, can governments use this insight to sell the rich the idea of paying more tax rather than spend more on charitable giving?

It's not that I am against the rich giving money to charities. I'm all for it, and we should think of ways of encouraging more of it. But I also believe that states, rather than individuals, are ultimately a better bet for delivering a fair and just world and reconciling differing interests.

For every Warren Buffet who gives away a significant proportion of his wealth to charity, there is a billionaire who gives away dimes--only one person in the Sunday Times Rich List top 30, Lord Sainsbury, is also a Sunday Times top 30 "giver". And, for every Bill Gates who is using his billions to make the world a better place, there is a Tom Monaghan who uses his money for such ills as campaigning to overturn Roe v Wade (the US Supreme Court decision that legalised abortion). Most philanthropists would still rather donate to elite schools, concert halls or religious groups than help the poor or sick.

And when the rich give, they are unaccountable: the Gates Foundation answers only to its own board. While we may not like our governments' uses of our money--it is hardly a prudent use of public funds for the British government to spend [pounds sterling]4.5bn ($8.2bn) on the Iraq war, or for its US equivalent to spend $318bn on the same--at least we have the option of voting the politicians who make these kinds of choices out of office after a few years. …

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