Gates and Buffett Seek 'Fathers of All Nations' Title

Bill Gates and Warren Buffett, the richest people on Earth, have publicly declared their intention to transfer half of their billion-dollar fortunes to charity. Moreover, they called for their "colleagues" to follow their example as soon as possible. Analysts polled by believe that this may be a good PR move or a desire to "atone sins."

On June 16, investor Warren Buffett and Microsoft founder Bill Gates announced a campaign “The Giving Pledge,” which is an effort to invite the wealthiest individuals and families in America to commit to giving the majority of their wealth to charity. Billionaires can make a donation both during life and after death, introducing the relevant paragraph to their wills. The organizers estimated that their initiative will help to attract approximately $600 billion in charitable contributions.

According to the founder of Microsoft and owner of investment company Berkshire Hathaway, they want to remain in history as the most generous, not the wealthiest people.

Buffet said in his statement that he was still extremely happy that he has made the decision in 2006 to transfer 99% (almost $50 billion) of his fortune to the Bill and Melinda Gates Foundation.

He added that now he and the Bill and Melinda Gates Foundation were addressing those with multiple billions of dollars with a similar request.

According to Buffett, all profits from his own securities of U.S. investment holding Berkshire Hathaway, where he is the main shareholder, will be given to charity.

Within the last year, Buffett and Gates met with a few dozen of wealthiest people in the United States in informal settings and urged them to make donations. They believe that in times of recession, wealthy people should help those most in need.

At least four billionaires responded to the appeal made by Gates and Buffett: Eli Broad, John Duerr, Gerry Lenfest and John Morgridge.

For example, Eli Broad and his wife, Edith, who are among the most prominent American philanthropists and art collectors, have announced their intention to give to charity 75% of their wealth estimated by Forbes magazine at $5.7 billion. Media tycoon Gerry Lenfest and his wife Margaret have sent to charity more than $800 million, nearly 65% of their wealth. The amounts of donations made by a venture capitalist John Duerr, and former head of Cisco Systems John Morgridge, were not disclosed.

"Of course, I cannot speak for them, but I can definitely see a PR move here,” Alexander Razuvaev, head of analytical department of IC Gallion Capital, told “In addition, it is important to mention that these people live in the established economic and political system where such behavior is customary. When people are very wealthy or just well-off, and they do not donate, they are looked upon with a disdain, and in some cases, there are possible issues with the government. Superstition may be a part of it. I know such people personally. They are wealthy enough and think that what they have was received through luck or coincidence. And they believe that to make life to continue to be kind to them, they must give a part of their income to the poor.”

Michael Young, senior trader of Maxwell Capital, believes that there is some religious basis and the desire to perpetuate their name in millionaires’ charitable behavior.

"Most of these people are not young, but the amount of money that they’ve earned even considering their charitable donations will be enough for their children and grandchildren and great-grandchildren and future generations. Rather, we are talking about immortalizing people’s names in history. For example, one can open medical centers or school named in her honor," explained the expert.

Analysts with FG Kalita-Finance also say that the decision of billionaires is hardly surprising. "Charity in the United States is fairly common among the wealthy citizens. That includes regular events (auctions, concerts, etc.) that motivate the wealthier citizens to provide financial assistance to those who need it the most," they explained.

Buffett and Gates have been actively involved in charity work for a long time. For example, the head of Berkshire Hathaway has made three contributions to the Bill and Melinda Gates Foundation. The last time Buffett donated a large portfolio of his company shares, estimated at over $1 billion.

However, as experts note, no matter how much money billionaires donate, it is unlikely to affect the lives of ordinary citizens. "Those charitable funds invest only a portion of the money into charitable projects like construction of orphanages, care for animals on the brink of extinction, etc. But the other part remains in the accounts or is invested in securities, etc. "the expert explains.

In addition, Alexander Razuvaev says, billionaires overreacted speaking about their readiness to give away half of their riches. "The fortunes named by Forbes are mainly the value of shares owned by the person. This is not cash. It is rather difficult to sell these shares. If you sell them in the market it will cause a meltdown. In order to sell them to an individualyou must obtain the permission of the government," the analyst said.

Incidentally, last year the amount of charitable contributions in the United States fell to $30.75 billion from $ 315 billion in 2008.

According to Forbes magazine for 2010, 403 billion people reside in the US, which is more than in any other country in the world. Buffett’s fortune is now estimated at $47 billion, and Gates’s is at $ 53 billion. They are placed third and second respectively in Forbes magazine's ranking of the 2010 wealthiest people.

Yekaterina Yevstigneeva.

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Author`s name Dmitry Sudakov