Lessons Learned When Warren Buffett Hands You $1 Billion

One of Fast Company’s most-read articles for 2009 is this one: Daddy Givebucks: Lessons Learned When Warren Buffett Hands You $1 Billion. The article is about what Buffett’s three children did with the $1 Billion each the famed investor gave them for philanthropic purposes. This will be helpful for nonprofit and ministry fundraisers who always seek to understand the thought processes of the folks on the other side of The Ask.

Here are some interesting tidbits:

“The data’s kind of fuzzy.”

Buffett tells Fast Company that one of the reasons he is giving these gifts is because he doubts he’d be skilled at philanthropy himself. “I don’t think being able to allocate capital means you’re good at anything else,” he says. He offers a metaphor to illustrate how he thinks about financial investing versus philanthropic investing. When evaluating whether to buy a stock, he says, he’ll wait months or even years until he feels comfortable “swinging at easy pitches.” But in philanthropy, “you’re really trying to swing at balls other people have been missing,” he says. Plus, “the data’s kind of fuzzy.”

About nonprofits:

Buffett’s gifts propelled his kids’ small foundations into the elite of philanthropy, immediately endowing them with new prestige and influence, but also introducing added risk. “You get a lot of people who have big hearts but don’t have business skills,” says Trevor Neilson, president of the Global Philanthropy Group. “That leads to a lot of ineffective nonprofits.”

Learn the Word “No” … and Then Learn It Again:

Not long after Warren Buffett announced the gifts to his children’s foundations, a friend of Peter Buffett’s said, “Peter, let me put it to you in simple terms: You’re the hot girl who walks into the party with big boobs.”

In the months after the announcement, Peter and his wife, Jennifer, who works full-time as president of their NoVo Foundation, learned how true that was. Suddenly, there were tons of people knocking on their door — especially those from Milwaukee, where the couple had lived until 2006, and those interested in Native American causes, which had previously been one of the focal points of their NoVo Foundation’s giving. “After the increase, we had people calling us and saying, ‘Can we get on a plane and come see you?’ ” Jennifer recalls. “No.”

and then there’s this: Look for Needs, Not Wishes:

Most of the educational projects that Sherwood is now funding are systemic. For instance, it is spending $8 million to modernize all 83 school libraries in Omaha; go into one of the renovated facilities and “you’d think you were walking into a Barnes & Noble,” says Omaha schools superintendent John Mackiel.

Many of the projects view education holistically — it’s not just about when the kids are in school or what they learn from books — and address often-overlooked needs. For instance, the school district is receiving about $300,000 a year for an emergency fund to help the poorest students and their families address critical needs, whether it’s paying a long-overdue electric bill or buying new winter coats. Sherwood has also committed to pay college tuition and subsidize child care for classroom assistants and other lower-level school-system employees who want to become teachers; this effort is focused on training minorities, who are underrepresented among Omaha’s educators.