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April 22, 2016

Opinion: How Buffett’s Giving Could Alter Berkshire’s Future

Warren Buffett’s annual donation of Berkshire Hathaway shares worth billions of dollars to charitable foundations could significantly change the management structure of his iconic investment firm and risks undermining its success, two business advisers write in the Harvard Business Review.

Josh Baron and Rob Lachenauer of BanyanGlobal Family Business Advisors say Mr. Buffett’s altruism has been “a huge boon to societies around the globe” but will inevitably dilute the centralized control that is widely credited for Berkshire’s investment performance. Foundations’ spending obligations and charitable goals mean they typically sell donated shares on the open market, dispersing ownership of the company in question, with potential ripple effects on its strategy and decisions.

“Great philanthropy becomes a legacy question for founders. Where do you want to leave your real mark — in your philanthropy or in your business?” Mr. Baron and Mr. Lachenauer write. “There is no one right answer. There is simply a choice to be made, and both decisions have consequences.”