Warren Buffett's $140B 'gift' sparks new debate after Gates Foundation drama

​Warren Buffett’s $140 billion “gift" to his children's charitable foundations is facing criticism. This comes after the recent "drama" surrounding the legendary investor's decision to stop the long-running tradition of directing his annual Berkshire Hathaway share donations to the Gates Foundation and instead channel his fortune to foundations run by his children. According to CNBC, some readers questioned whether the move was intended to avoid taxes or to slow the flow of money to nonprofits.​Whereas gifts of appreciated stock by rich individuals were already enjoying tax advantages, experts told Fortune that the recent decision made by Buffett has revived concerns regarding how one should evaluate the efforts of billionaires in philanthropy based on tax deductions or based on the promptness of getting money to charity organisations. These experts say it is all about how Buffett has structured his philanthropic efforts, specifically whether he chose a vehicle that provides accountability and the prompt distribution of funds to charities.​Tax benefits exist, but experts say they are not the central issue​According to Allison Tait, a law professor at the University of Richmond who studies wealth transfer, donating appreciated stock instead of selling it removes the shares from a donor's taxable estate and avoids capital gains taxes that would otherwise apply after a sale.​"Passing massive wealth directly to heirs or letting it sit in a personal estate at death triggers severe exposure to the estate tax," Tait told Fortune. "Moving the shares into a foundation completely removes them from the calculation."​She estimated that Buffett could avoid between $33 billion and $56 billion in taxes by transferring his Berkshire Hathaway shares to family foundations rather than selling them first.​The discussion has also highlighted an apparent contrast with Buffett's longstanding public support for stronger estate taxes. During testimony before the US Senate Finance Committee in 2007, Buffett warned that "dynastic wealth, the enemy of a meritocracy, is on the rise," adding that "equality of opportunity has been on the decline."​Tait said Buffett would likely argue that he is using the current tax rules while continuing to advocate for legislative changes. However, she added that avoiding taxes on this scale raises questions alongside his calls for reform.​Jane Ditelberg, chief tax strategist at Northern Trust Wealth Management, told Fortune that charitable gifts of appreciated securities have long received favourable tax treatment because charities themselves are tax-exempt.​"Appreciated securities often make efficient charitable gifts," Ditelberg said. "The charity can receive more value than it would if the donor sold the stock first and donated the after-tax proceeds."​Experts also noted that recent US tax law changes do not support claims that Buffett accelerated the transfers to avoid future changes to estate taxes. The One Big Beautiful Bill Act, signed in July 2025, permanently raised the federal estate tax exemption to $15 million per individual, reducing any urgency to make immediate transfers, according to Janetta Cravens, founder of CoSpire Consulting.​Debate shifts to how charitable funds are distributed​Experts told Fortune that the more significant distinction lies in the type of charitable vehicle used to distribute wealth. Private foundations, such as those run by Buffett's family, must publicly disclose their grants through annual tax filings and distribute at least 5% of their assets each year. Critics argue that this minimum payout allows foundations to retain large endowments for extended periods while meeting only the legal requirement.​However, Jack Lewars, founder of Ultra Philanthropy, said Buffett's family foundations distribute substantially more than the minimum. According to Inside Philanthropy, the Susan Thompson Buffett Foundation has averaged payouts of about 41% over five years, while the Howard G. Buffett Foundation and Sherwood Foundation have averaged approximately 59% and 87%, respectively.​"They spend more like operating charities than endowments," Lewars told Fortune, adding that Buffett's previous donations to the Gates Foundation also came with the condition that the funds be spent within the year they were received.​"It isn't fair to accuse [Buffett] of warehousing his funds," Lewars said.​Experts contrasted private foundations with donor-advised funds (DAFs), which offer donors immediate tax deductions but have no mandatory annual payout requirements and are not required to publicly disclose grant distributions.​"The alternative to a disclosed, floor-bound vehicle usually isn't more democratic giving," Cravens said. "It's less accountable giving."​The discussion regarding Buffett's recent philanthropic act has therefore shifted from whether he receives any tax benefit, which,, according to experts, is very common under current US law, to whether there is adequate transparency in other forms of charitable organisation.Get the latest technology news and updates. Download the TOI App.