W A R R E N E.
B U F F E T T
1440 KIEWIT PLAZA
OMAHA, NEBRASKA 68131
TELEPHONE (402) 346-1400
June 26, 2006
Mr. Peter A. Buffett
NoVo Foundation
Dear Peter:
I am enormously proud of the way in which you have managed the resources of
the foundation that Mom and I established for you. Your thinking has been good, and
your actions have been effective in helping those less fortunate than our family has been.
Therefore, I want to make annual contributions of Berkshire shares to the NoVo
Foundation (NoVo) that will allow you to substantially expand your activities.
I am by this letter making a lifetime pledge to NoVo conditioned on two factors.
The first is that you remain alive and active in the foundations activities. The second is
that NoVo must continue to satisfy legal requirements qualifying my gifts as charitable
and not subject to gift or other taxes.
Here are the mechanics of my pledge: 350,000 B shares will be earmarked by me
for NoVo contributions. (I currently own only A shares but will soon convert a number
of these to B.) In July of every year, beginning next month, 5% of the balance of the
earmarked shares will be contributed to NoVo. To illustrate, in 2006, 17,500 shares
(currently worth more than $50 million) will be contributed. In 2007, 16,625 shares (5%
of the 332,500 remaining after the 2006 contribution) will be contributed and thereafter
5% fewer shares will be contributed each year.
The value of Berkshire shares will, of course, vary from year to year. And, as
noted, the number of shares NoVo receives will diminish by 5% per year. Nevertheless, I
believe that you can reasonably expect the value of the Berkshire shares you will receive
to increase, in an irregular manner, by an amount that more than compensates for the
decline in the number of shares you will be receiving. Over time, the increase may be
substantial.
Mike Sorrell tells me that I am in excellent health, and I certainly feel that I am.
If I should become incapacitated, however, and be unable to administer my affairs, I
direct whoever is handling my affairs to honor the commitment I am making in this letter.
Additionally, I will soon write a new will that will provide for a continuance of this
commitment by distribution of the remaining earmarked shares or in some other
manner after my death.
Mr. Peter A. Buffett
June 26, 2006
Page 2
I regard Berkshire as an ideal asset to underpin the long-term well-being of a
foundation. The company has a multitude of diversified and powerful streams of
earnings, Gibraltar-like financial strength, and a deeply-imbedded culture of acting in the
best interests of shareholders. Outstanding managers are available to succeed me. I
expect Berkshire to become ever-stronger and more profitable as it makes new
acquisitions and expands present businesses.
A couple of thoughts (but not directives): Focus the new funds and your energy
on a relatively few activities in which NoVo can make an important difference.
Concentrate your resources on needs that would not be met without your efforts.
Conversely, avoid making small contributions to the multitude of worthwhile activities
that have many possible funders and that would likely proceed without your help.
Consider working with your siblings on important projects. Pay attention to your home
community but favor a broader view. Judge programs by how they fit with your goals
and their chances for success, not by who makes the request. Expect to make some
mistakes; nothing important will be accomplished if you make only safe decisions.
NoVo does not necessarily need to spend each annual inflow in the year in which
it is received. You can build up resources while you gain experience and develop longrange goals. But, since you will be receiving gifts annually, there is no need for you to
build large reserves.
I consider myself lucky to have three children who want to spend much of their
time and energy in working on projects that will benefit others. I am proud of what you
are doing, and your mother would be proud as well.
Love,
