Investing in Charity
Like her famous brother, Warren, Doris Buffett expects a return on her money

by Paula C. Squires
Virginia Business
June 2007

Billionaire investor Warren Buffett may be know n as the Oracle of Omaha for his keen ability to predict high-performing stocks. But when it comes to philanthropy, his sister, Doris, is the true prophet. A resident of Fredericksburg for much of the year, Doris Buffett heads The Sunshine Lady Foundation. The private family foundation has given away a lot of sunshine — about $40 million during the past decade.

The sibling of the world’s second-richest man was carrying the torch for philanthropy before Warren Buffett announced last summer that he would give the bulk of his fortune — estimated by Forbes magazine at $52 billion — to charity. Most of the money is earmarked for the foundation of the world’s richest man, Microsoft Corp.’s Bill Gates. Yet that didn’t stop pleas for financial assistance from pouring into Warren Buffett’s Nebraska office.

The 76-year-old chairman and CEO of Berkshire Hathaway Inc. turned to his sister for help. “I get this call from him and he says, ‘I’m getting thousands of letters. Will you take them?’” Doris Buffett agreed, against the advice of her foundation’s board. The first batch contained 1,500 letters. To assist her nonprofit with its new responsibility, Warren Buffett sent the foundation a check for $5 million. “That really screwed me up,” Doris Buffett quipped during a recent public appearance. “I’m in my 80 th year. I’m trying to get rid of all of my money.”

Her quick wit belies the business approach she takes to philanthropy. “It’s really just business with a big heart,” she told Virginia Business. But, she adds, “You can’t be sappy about this. Do it like a business. I look at it as an investment.”

Like her famous brother, Buffett expects a return. She expects good grades from scholarship students, matching funds from organizations and collaboration from communities. And don’t even think about wasting money. “It’s not in the Buffett DNA.” She and a five-member board work for free, as does a six-member staff in Rockport, Maine, which to date has screened 4,000 “ Warren letters.”

Giving back has taken on a high profile with everyone from Bill Gates to Irish rock star Bono sharing their wealth. While celebs tend to take on such global issues as medicine for Africa’s AIDS victims or a cure for malaria, many of the people who write to her brother, says Doris Buffett, are America’s “invisible people. No one knows they exist.”

So far, her foundation has disbursed $1 million of the $5 million — mostly in small increments. The Maine staff responds only to requests from U.S. residents, since she doesn’t want to deal with foreign exchanges. Some of the pleas are clearly from “crackpots,” she says, and those end up in her linen closet. Requests that appear legitimate may prompt a call from the Sunshine Lady herself. “When I say, ‘It’s Doris Buffett,’ they literally go to pieces. They’ll drop the phone or they’ll start to shake and cry. They’re not expecting ever to hear anybody pay any attention to them.”

It’s just bad luck
Many pleas for help come from decent people, she adds, struggling because of a devastating illness, medical bills or the loss of a job. Bad luck, she believes, plays a role in hardship. “Everything is predetermined before you’re born … if you’re a boy or a girl, what type of brain you have. Warren says if he was born 100 years before, he wouldn’t have made any mo ney. Bill Gates wouldn’t have made any money, either. It depends on when you’re born, what’s available, what’s going on.”

Her philosophy? Bad luck is okay, but not bad choices. The foundation requires documentation of bills and circumstances before it will help. Money has gone for an array of needs. “We’ve paid off mortgages and medical bills … Bought glasses and a glass eye, and a car for a lady dwarf, a car that was equipped especially for her. It runs the gamut,” she says.

The main focus of her philanthropy remains the Sunshine Lady Foundation. She founded the nonprofit in 1996, after inheriting Berkshire Hathaway stock upon the death of her mother. At his publicly traded, Omaha-based holding company, her brother manages a stock portfolio of more than $100 billion and keeps an eye on Berkshire’s subsidiaries, which include Dairy Queen Inc. and auto insurer Geico.

When it comes to her foundation, Doris Buffett doesn’t like to talk numbers. According to its most recent tax filing in 2005, the foundation received $8.8 million in contributions, gifts and grants and dispersed $6.4 million, leaving about $2.4 million in assets. She does volunteer that stock originally worth $27,000 a share has increased to as much as $110,000 per share under her brother’s stewardship. Bottom line: “I have a lot more to give.”

That wasn’t always the case. Before she inherited money, Buffett says she didn’t have large sums to devote to philanthropy, although she always gave on a smaller scale. She believes philanthropy is taking deeper root in America because “there are such vast amounts of money, and the inequalities are so obvious.”

Buffett wants to level the playing field. Her foundation primarily supports survivors of domestic violence, at-risk youth and what she calls the “big stuff” — funds for medical research and larger projects. It favors organizations that deliver services directly to the poor and families in crisis. Frequently, projects are flagged by 75 volunteer “sunbeams” that live around the country and serve as the foundation’s eyes and ears.

“I don’t do SOBs,” she says, referring to symphonies, operas or ballets. In Virginia, her foundation has provided funds for St. Andrew’s School in Richmond, a private, tuition-free elementary school. Closer to home in Fredericksburg, her largesse is becoming legendary. She spent some of her growing up years here while her stockbroker father, Howard, served in Congress during the 1940s. For two years running, she has paid upfront for all the city’s residents to use the city-owned pool free of charge, because she didn’t want low-income children to stay home because of an entrance fee. The tab this year was $20,000. “She helped us get the pool going the first year and provided the money for some additional lifeguard instruction,” says City Manager Phil Rodenberg. “She’s very active. She always has a project going on.”

This past September, she funded a mentoring program for at-risk students at Fredericksburg’s James Monroe High School. STARS — an acronym for Students Taking Action and Responsibility — enrolled 50 students out of 800, targeting those who are struggling to graduate
because of academic, attendance or disciplinary problems. To keep students on track, it provides resources such as mentors, truant officers and motivational speakers.

Another carrot for the students? Cash for college. To enroll in STARS, students must sign a contract. They agree to maintain a 2.5 grade point average, attend school, stay out of disciplinary trouble and “don’t get pregnant or get anybody pregnant,” says Principal Daryl Chesley. For every year a student successfully abides by the contract, the foundation will deposit $1,000 into an escrow account that can be used for education after high school.

Chesley already is seeing positive results. “More than 70 percent of the GPAs went up. Attendance is improving and discipline referrals have dropped tremendously,” he says. Startup costs for James Monroe came in at about $100,000, he says, with the school footing the bill for some resources. Buffett likes to get personally involved, so James Monroe threw a dinner where she met the students. “With kids, you have to give them hope and you have to have faith in them,” she says.

Mentoring the young
Winning converts from the younger generation is high on Buffett’s agenda as she feels the weight of advancing years. She takes her message about building community through philanthropy to campuses throughout the Southeast. When student Shin Fujiyama attended one of her classes at the University of Mary Washington in Fredericksburg, he says, “It basically changed my entire life around.”

Already involved in mission work with an orphanage in the poor village of Siete de Abril near El Progresso, Honduras, the international affairs major wanted to do more. After hearing Buffett explain her business approach to running a nonprofit, “I felt empowered,” he recalls. “You feel prepared to go out there and do anything.”

It wasn’t long before the 23-year-old started a nonprofit campus group, Students Helping Honduras, with several college chapters. It sponsored a walkathon last year that raised about $55,000 and another one this spring that brought in nearly $120,000. The Sunshine Lady Foundation donated a matching grant of $66,000 the first time and plans to put up as much as $100,000 since the second walkathon was so successful.

Fujiyama has used the funds to build a small school for the village and to retire debt at the orphanage. Buffett praises the way his group energized the community, with students and local Rotary groups flying to El Progresso to help. The local Free-Lance Star newspaper did a four-part series on the student-led projects.

“He’s energetic, passionate, a leader,” says Buffett. She supports Fujiyama’s next plan to replace the village’s tin-roofed shacks with cinder-block homes. Fujiyama graduated in May and postponed plans for medical school so he can return to Siete de Abril to manage the home construction. “I’ve got thousands of students who want to help me,” he says. “It’s a great way to use my time.”

Planting philanthropic seeds and watching them bloom is an investment for the future, says Buffett. A mother and grandmother, she has involved some of her family members with the foundation as well. “I wish I had more time … My aim is to get all my money out there working before I die.” To that end, her foundation plans to step up its giving this year to $1 million a month.

She doesn’t remember how she came up with the name The Sunshine Lady. People seem to like the idea of spreading light, she says. There is a downside, though. “I have to go around smiling all the time.” Sunshine ladies aren’t supposed to be cranky, but Buffett shares this kernel about why she took on the persona in the first place. “Listen, life is really hard. I didn’t always have a lot of money. I don’t want to go into my past, but it was difficult.” A cancer survivor, she has worked as a first-grade teacher and done some interior decorating. “I wasn’t ever battered. I‘d like to make that clear,” she adds. “But I knew about it, and it touched me.”

Now that she’s rich in her own right, she finds joy in sharing. “It isn’t a question of why you do it. It’s a question of why don’t you do it? You got any better use for it? Need another coffee table? Another European cruise or something? I just don’t get it, when you have the opportunity to help someone … For me philanthropy is a wonderful opportunity to make my life fun.”