2006: How can people pick effective charities?

AUDIENCE MEMBER: My name is Martin Wiegand from Chevy Chase, Maryland. Mr. Buffett and Mr. Munger, on behalf of the assembled shareholders, we thank you and all the Berkshire staff who put so much work and thought into making this weekend such a wonderful community-building event. (Applause)

WARREN BUFFETT: Martin, is Janie (PH) with you?

AUDIENCE MEMBER: Yes, sir.

WARREN BUFFETT: OK. Well, she sent me some great sweetbreads the other day. I love them. Keep them coming. Thank you. (Laughter)

AUDIENCE MEMBER: Through the years, you have generously helped us thinking through capital allocation decisions for funding our businesses and feeding our families.

Would you please help us think through the capital allocation decisions we face when it comes to charitable giving, particularly as it concerns how we pick effective charities? Thank you.

WARREN BUFFETT: You know, it’s tough to give other people advice on that. But, you know, you have to pick the things that are important to you. And, you know, many people — majority in the United States — it’s their church. You know, there’s more money given to churches than anything else.

Many people — very many people — it’s their school, or schools generally. You know, I think, to a great extent, you should pick whatever gives you the most satisfaction, and that will probably be something that you know, something you’ve, maybe, benefited from yourself.

I look at it a little differently. The amount of funds are different, too, but I like to think of things that are important but that don’t have natural funding constituencies.

But that isn’t something, you know, for millions of people to be following as an example or something. Nothing wrong with doing something that gives you plenty of personal satisfaction and does some good for other people in the process.

So I would not be reluctant — I would not feel I had to be as objective about that, necessarily, as I was about buying securities or something of the sort. I would, kind of, go where my gut led me and make it something you participate in.

And, like I say, I think if you’re doing it with large sums, you may have some reason, maybe even some obligation, to try and think about where really large sums can have an important impact on a societal problem that might not get attention otherwise. And, you know, that’s, sort of, where my own thinking leads me.

But I would — I would go with something where I felt I knew where the money was going to go and I knew some good was going to come out of it. And maybe, by observing what took place, I could make the next gift more efficient than the last gift and more beneficial.

Charlie?

CHARLIE MUNGER: I’ve got nothing to add. But I have a question: would you pour me a cup of coffee? (Laughter)

WARREN BUFFETT: We don’t sell coffee, Charlie. We sell Coke. (Laughter)

We get the profit on one out of every 12 Cokes. So I don’t care whether you drink them, just open the can. (Laughter)