Warren Buffett Explained Why He's Cutting Off the Gates Foundation

For decades, the friendship between Warren Buffett and Bill Gates--two of the wealthiest people on earth--has been one of the more interesting stories in business. The two met more than 30 years ago at a meeting that apparently neither wanted to attend.

Since then, however, they've become friends, mutual mentors, and colleagues. Gates joined Berkshire Hathaway's board in 2004 and served until 2020 when he stepped down as a member of Microsoft's board as well. Buffett served as a member of the Bill and Melinda Gates Foundation board until 2021 when he resigned shortly after the couple announced their divorce.

In 2006, Buffett pledged to give away 85 percent of his Berkshire stock, then worth about $37 billion, to charity. The bulk of that was to go to the foundation Gates started with his former wife, Melinda Gates. To date, those donations have totaled more than $43 billion.

In 2010, Buffett co-founded The Giving Pledge, which encourages billionaires to give away the majority of their wealth during their lifetime or when they die. But, in an interview with *The Wall Street Journal*, Buffett revealed that after his death, the donations to the foundation would stop. "The Gates Foundation has no money coming after my death," Buffett said.

Buffett didn't explain the reason for what--on the surface--appears to be a change from his previous plan. When Buffett resigned from the foundation's board, he explained that "my goals are 100 percent in sync with those of the foundation, and my physical participation is in no way needed to achieve these goals."

Now, that future will look very different as it has a significant funding void to fill. Buffett says he will instead put his children, "whom I trust completely," in charge of deciding what happens to his money when he dies. "I feel very, very good about the values of my three children, and I have 100 percent trust in how they will carry things out," Buffett told the *Journal*.

There's a valuable lesson in those four words that Buffett uses to describe the trust he has in his children. In November, Buffett previewed his estate plan, naming his three children as executors. He highlighted that his confidence comes as they have matured and prepared for the role over the past 18 years. "They were not fully prepared for this awesome responsibility in 2006, but they are now," he said.

At some point, Buffett will no longer be around to decide what to do, with one caveat. In a statement, Buffett says that his will stipulates that "more than 99 percent of my estate is destined for philanthropic usage."

The point, however, is that Buffett believes that the best people to make the decision about what to do with his wealth when he is gone are the people still living. He could have written strict commands about what to do, but he recognizes that circumstances, laws, and needs change.

"Laws in respect to philanthropy will change from time to time, and wise trustees above ground are preferable to any strictures written by someone long gone," Buffett wrote in a letter last year.

That's a valuable lesson for every leader, even if you aren't trying to figure out how to give away one of the most iconic fortunes in the history of humanity. Your job should be to build up leaders who can succeed you, and then trust them to make the right decisions without burdening them with restrictions. Ultimately, your most important job is to give your successors the best opportunity for, well, success.