(BRK.A; BRK.B) –
Yesterday, Warren E. Buffett, CEO of Berkshire Hathaway, contributed 15,971,345 "B" shares of Berkshire to five philanthropies.
The shares, valued at about $2.9 billion, were given to the following foundations: Bill and Melinda Gates Foundation, Susan Thompson Buffett Foundation, The Sherwood Foundation, Howard G. Buffett Foundation and NoVo Foundation.
Mr. Buffett’s current contribution of Berkshire stock is the 15th installment of an annual giving plan he initiated in June, 2006 and increased in August, 2012. A procedural part of his plan is to annually convert sufficient "A" shares that he owns into "B" shares, which are then used to make his gifts.
Including the contributions just made and a few miscellaneous philanthropic gifts that over the years have involved far smaller sums, Mr. Buffett has since 2006 contributed Berkshire "B" shares that had a value totaling more than $37 billion (as calculated by Berkshire’s market price on the date of each contribution). These gifts, over the period that his giving plan has existed, have reduced his holdings of "A" shares from 474,998 to 248,734. He has meanwhile sold no shares nor does he expect to sell any shares between now and his death.
Mr. Buffett has received only minor benefits from tax deductions arising from his gifts to the five foundations. During the 15-year span of his program, including projected figures for 2020, every $1,000 of contributions he has made pursuant to his plan has allowed him to deduct slightly less than $1 from his taxable income. Consequently, the combined federal and Nebraska income taxes he has paid, again including projections for 2020, have been reduced by about 43 cents for each $1,000 of value he has given the foundations.
Looking ahead, Mr. Buffett envisions that all of the Berkshire shares he owns at his death will be distributed to various philanthropic organizations over the following 12 years. Again, "A" shares will be converted to "Bs" immediately before the specified distributions are made. The recipients of the gifts will be obliged to both spend their gifts in a prompt manner and to prevent their use, either directly or indirectly, for any kind of endowment purpose.
Marc D. Hamburg