2011: Will Berkshire reinstate its shareholder charitable giving program?

ANDREW ROSS SORKIN: This question comes from Mary and Jim Beaumont (PH) from Springfield, Illinois. They’ve been Berkshire shareholders since 1971, and I should note that we received several questions from some long-term shareholders along these lines, and this one reads: “Would Berkshire ever consider reinstating its shareholder-directed charitable giving program now that you have a big cash position and are urging people to give away their wealth to worthy causes? When you had that program, we were able to support many local schools and charities over the years.”

WARREN BUFFETT: Yeah, I love that program, which we had for maybe 20 or so years. Charlie loved it. A lot of the shareholders loved it. And it was interesting because it was a tax-efficient way to let shareholders give away some money to whatever they chose, as long as it was a 501(c)(3), and they could pick up to three charities. And some families, for example, used it as a learning device. When they would get the form from us, they’d get their kids around the table and they’d talk about philanthropy and why they were choosing what they did.

Two things — well, one thing that was very interesting about it is nobody else copied it. I mean, the rest of corporate America was not interested in having their shareholders direct contributions. They were much more interested in having the CEO direct contributions. So it did not catch on, despite a fair amount of publicity.

We always had a small backlash of sorts from people who didn’t like the charities that our shareholders were choosing. So Berkshire’s name was on the check. The shareholders would tell us we want $20 a share, let’s say — and they own ten shares, so they can direct $200 — they’d say, we want our $200 to go to more — churches and synagogues, actually, were number one — but there were schools and there were all kinds of things.

And we would always get some letters where Berkshire would be contributing to, say, Planned Parenthood of California, and people would say, “Well, we’re not going to buy See’s Candy because Berkshire is supporting Planned Parenthood in California.” And sometimes I would write the people a letter and tell them that when See’s bought almonds or milk or anything like that we didn’t get into the charitable preferences of the person supplying us, but it never really amounted to anything.

Then we bought the Pampered Chef, and that was a different situation because with the Pampered Chef we operated through 50,000-plus independent contractors. These are women, largely, who sometimes, to supplement their income — we have at least one in the office that — a woman that sells Pampered Chef products — sometimes as a main source of income. These 50,000 were independent contractors, and a campaign developed where people said that because Berkshire Hathaway gives money, probably primarily to pro-choice organizations, and that was at the direction — we had other people giving them to pro-life organizations. I mean, these reflected the views of our shareholders, not of Berkshire management — but that they were going to boycott these independent contractors.

And these were people who depended on the income, who had nothing to do with Berkshire’s policies, and they were being hurt in terms of their livelihood. In some cities, it became a radio campaign, and in some cities, people regularly started interfering with the parties arranged for our Pampered Chef consultants. And it was hurting a whole lot of innocent people who had nothing to do with Berkshire’s policies, who had nothing to do with Berkshire.

And at that time, reluctantly, we decided to end the program. I didn’t mind at all losing some See’s Candy business or whatever to some people. But when we start affecting individuals — most of these are not high-income individuals — and we’re cutting off their livelihood because of something Berkshire is doing, it became — it just became apparent to me that it was unfair to continue it, and reluctantly, we stopped it, and I think it’s too bad.

Charlie?

CHARLIE MUNGER: We don’t want the parent company involved in distracting arguments about the social issues of the times.

WARREN BUFFETT: Well, we certainly don’t want it where it affects —

CHARLIE MUNGER: Yeah.

WARREN BUFFETT: — people who are just bystanders, basically, who have counted on us over the years to work with them. And it was literally affecting the income of thousands, primarily women, concentrated in certain communities around the country. OK.

CHARLIE MUNGER: A lot of Berkshire stock is given away every year. It isn’t like we’ve lost the flow of charity totally.

WARREN BUFFETT: No, a huge amount is given away. Partly that’s because Charlie and I started our partnerships back in the 50s and 60s, and we’ve got a number of partners that are now in their 80s, and some of them have given away some exceptional amounts of money. You had a question earlier from Dick Holland, for example, and Dick Holland — I think it’s a matter of record as to exact numbers — but he’s given away huge amounts of money over the years and continues to. And we’ve got dozens like that that I would say are going to end up giving back 90 percent or more of all the money they’ve made in Berkshire.