Buffett says Gates-Epstein ties were distasteful, but not decisive

Warren Buffett is changing where his Berkshire Hathaway stock donations go, and the Gates Foundation is out of this year’s gift. For Berkshire watchers, the move matters because Buffett’s annual giving has long been one of the biggest recurring transfers of Berkshire shares outside the company.

Buffett told CNBC’s Becky Quick that Bill Gates’ association with the late sex offender Jeffrey Epstein was “distasteful,” but he said it was not the reason he excluded the Gates Foundation from his latest annual donations.

“I read a great deal since January 1 in terms of what happened, with Bill and Epstein,” Buffett said in the CNBC interview. “While it’s distasteful, while he made mistakes, I made mistakes, hiring all kinds of people, or choosing friends, and then finding out later that, one way or other, they weren’t what I thought they were. I found nothing in there that was beyond what I could picture myself doing.”

Buffett, 95, has been friends with Gates for more than three decades, according to CNBC. He said he reviewed information about Gates’ relationship with Epstein before revising his charitable giving plan.

Why the donation shift matters

Buffett has donated more than $47 billion of Berkshire stock to the Gates Foundation since 2006, CNBC reported. For years, the foundation, started by Microsoft co-founder Bill Gates and his former wife, Melinda Gates, received the largest portion of Buffett’s annual Berkshire donations.

This year, Buffett is directing all of his annual stock gifts to four foundations connected to his family. CNBC reported that the Susan Thompson Buffett Foundation, named for Buffett’s late first wife, will receive 9 million Berkshire Class B shares valued at about $4.5 billion.

Three foundations run by Buffett’s children will each receive 1 million Berkshire Class B shares worth just under $500 million, according to CNBC. Those organizations are Susie Buffett’s Sherwood Foundation, the Howard G. Buffett Foundation and Peter Buffett’s NoVo Foundation.

Stock donations work by transferring shares rather than cash. In Buffett’s case, the gifts move Berkshire stock from his personal holdings to charitable organizations, which can then use the value of those shares to fund their work.

Buffett points to his children’s role

Buffett told CNBC the change reflects a broader review of his estate plan and a desire to give his children more responsibility over his philanthropy.

“I reevaluated my whole situation,” Buffett said. “What happened was that I gave the Gates Foundation a great deal of money. I thought that was a good decision. I think it was a decent decision, but I did not think my kids were in any way ready to give away vast sums of money.”

He added: “I tell the three children that it is theirs, and it’s their responsibility to get it done well.”

Buffett said in a statement earlier this week, cited by CNBC, that he aims to dispose of all of his Berkshire shares within about eight years because his children are “unfortunately growing older.”

Buffett also said he and Gates remain in contact. Gates visited him in Omaha recently, Buffett told CNBC, and the two spent about three hours together. Buffett said Gates has proposed another meeting.

CNBC also reported that Buffett recently had surgery after breaking his leg several weeks ago and said he is recovering well.

This story draws on original reporting from CNBC.