SEATTLE – The Bill &Melinda Gates Foundation will alter its internal financial structure to cleanly separate its program work from investment of its assets, the foundation announced this week.
The reorganization plan, which takes effect in January, will also help the foundation accommodate an infusion of stock from Warren Buffett, the organization announced Wednesday. Buffett said in June he would be giving most of his money to the foundation in annual installments worth about $1.5 billion. His first gift was made in August.
Buffett has given the foundation a few years to ramp up before requiring that it distribute his entire donation each year, which will effectively double the dollar amount of grants the foundation makes.
In the same announcement, the foundation for the first time set a limit on its charitable work, saying it would spend all its money within 50 years of the death of Gates or his wife, whoever lives longest. The time limit gives the organization incentive to work harder to achieve more of its goals within the lifetimes of the Gateses and their children, officials said.
Buffett’s involvement with the foundation and the Gateses likely led to both of these changes, said Gene Tempel, executive director of The Center on Philanthropy at Indiana University.
The world’s largest charitable foundation will be divided in January into two separate charitable trusts: an asset trust and a program foundation. The asset trust, which will start out at nearly $32 billion, will supply cash to the program foundation.
The decision to establish an asset trust will help Buffett avoid a conflict of interest as he joins the Gateses as a trustee of the foundation, in case it invests in Buffett’s Omaha, Neb.-based company, Berkshire Hathaway Inc., Tempel explained.
It also protects Microsoft co-founder Bill Gates from any implication of a conflict if the foundation owns stock in Microsoft. And it saves the foundation from questions of impropriety when it makes grants that may benefit a company in which it has invested, such as a drug maker.
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