Warren Buffet’s Kids Living in Midwest Likely to Follow Dad’s Lead

The foundations run by Warren Buffett’s three children, including one who lives in Illinois, will likely be the first to start handing out the nearly $37 billion the world’s second-richest man promised to start giving away next month.

The business and insurance tycoon of Omaha plans to give the bulk of his nearly $44 billion fortune to the Bill & Melinda Gates Foundation, which is run by Microsoft Corp., co-founder Bill Gates, who is also Buffett’s friend.

Buffett’s company, Berkshire Hathaway Inc., owns a diverse mix of more than 60 companies, including insurance, furniture, carpet, jewelry, restaurants and utility firms. And it has major investments in such companies as H&R Block Inc., Anheuser-Busch Cos. and Coca-Cola Co.

Buffett’s children said they want to help improve education in the United States and in developing countries and support research into drought-resistant crops. The communities of Omaha, Neb., Milwaukee, Wis. and Decatur, Ill., where Buffett’s children live, will likely also benefit.

But the Gates foundation will likely need some time to determine how to handle Buffett’s commitment to give roughly $30 billion worth of Berkshire Hathaway stock to the foundation over time. So the foundations run by Susie, Howard and Peter Buffett, which will each receive about $1 billion worth of stock in Warren Buffett’s investment company over time, might start reinvesting their father’s fortune sooner then the Gates foundation.

The foundation Buffett founded with his late wife, the Susan Thompson Buffett Foundation, will also receive about $3 billion of company stock over time. That foundation has given millions of dollars to hospitals, universities and teachers, as well as to Planned Parenthood and abortion rights groups.

Buffett made his commitment to give away 12,050,000 Class B shares of Berkshire Hathaway stock to the foundations official yesterday in New York by handing letters to representatives of all five foundations.

Buffett plans to give each foundation 5 percent of his total pledge each year in July. He will have to convert some of his 474,998 Class A shares of Berkshire to complete the gifts. One Class A share, which closed at $91,500 Monday, can be converted into 30 Class B shares, which sold for $3,043.01 Monday.

Howard Buffett said his foundation now has enough money to tackle some larger projects such as providing clean water in Africa. Previously, his foundation has concentrated on humanitarian causes in Asia, Africa and Latin America, as well as smaller projects in Illinois.

Howard Buffett, 51, farms 840 acres near Decatur, and he said he may support research to create crops resistant to disease and drought.

“It’s something that absolutely can feed more people,” Howard Buffett said. “And that takes more money.”

The three younger Buffetts also collaborate on some projects, Howard Buffett said, and that will likely continue.

Buffett’s children seem ready to take on his challenge. In Warren Buffett’s letters explaining his gifts, he suggested that his children should focus their charitable resources on needs that would not be met otherwise.

“It’s just very exciting,” Susie Buffett said. “I don’t want to be sitting on a lot of money. There’s no reason not to try to see what we can do to change people’s lives.”

The value of Buffett’s gifts will vary with the value of Berkshire stock.

Buffett said he plans to earmark 10 million B shares for the Gates Foundation, 1 million B shares for the Susan Thompson Buffett Foundation and 350,000 shares for each of the three foundations run by his children.