I’m hopeful that Mr. Buffett’s generous gift to the Gates Foundation will inspire other wealthy families to be more philanthropic. There’s an important aspect of his gift that could use greater emphasis:
Mr. Buffett’s strategy of outsourcing his philanthropy recalls his approach to investment, which involves identifying good companies run by talented people and backing them. Would-be imitators have turned books such as “The Warren Buffett Way” and “Buffettology” into best sellers; perhaps Mr. Buffett will persuade other wealthy individuals to give away their fortunes through existing foundations instead of establishing their own. Ultimately, we could see a market in philanthropic capital in which donor groups compete for resources the way their recipients do now. This would be healthy, as the best foundations presumably would attract the most assets.*
The idea is simple: Instead of incurring the considerable expense of establishing your own foundation, why not simply give a part of your fortune to an established philanthropy, one whose values resonate with your own? Many foundations will have professionals on staff with expertise in areas like youth development, health, education, and the arts, among others. They often know the best charities in a given region and have accumulated considerable knowledge about what works and what doesn’t.
Your philanthropic advisor can help you decide if this is the best option for you, and even help you broker the relationship with an existing foundation.
Wasn’t it Thoreau who said that “A man is rich in proportion to the number of things he can afford to let alone”?
* Open the FloodGates by John J. Miller, in the WSJ OpinionJournal.