Big-hearted Warren Buffett's guide to giving

This holiday season, Americans may seem sadly polarized politically and philosophically on topics like abortion, immigration and wealth distribution. But even sharp differences among us can be accommodated because of agreement on more basic values, such as the spirit of giving.

Consider Warren Buffett and Charlie Munger , chairman and vice chairman of Berkshire Hathaway (BRK-A), the nation's fourth-largest public company.

Buffett is an agnostic Democrat with liberal leanings who often speaks out; Munger is a reticent Republican holding libertarian views. Despite their differences, they both believe in the importance of philanthropy and agree completely on how the way a person chooses to give relates to the most striking management principle at Berkshire: autonomy.

While Buffett urges fellow billionaires to join him and Bill Gates in giving at least half their wealth away in their famous "Giving Pledge," Munger has declined to sign on to the Giving Pledge and even muses about the fecklessness of many charitable organizations, choosing a few specific institutions for his giving (Munger said a few years ago that Costco (COST), where he serves on the board, did more for civilization than the Rockefeller Foundation.)

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These two men disagree on politics and philosophy yet remain best friends and phenomenally successful business partners. Why? Because they respect each other's right to do things their own way. At Berkshire, such autonomy is embraced at all levels. Not only are Berkshire managers free to run their businesses as they see fit, the numerous subsidiaries that comprise the conglomerate are likewise diverse-politically, philosophically and philanthropically.

Some Berkshire subsidiaries are run by deeply conservative families in Salt Lake City, Utah, and Waco, Texas, others by progressives in Boston and Seattle. The companies are managed by devout Christians, observant Jews and practicing Mormons, as well as agnostics and atheists, Americans and Israelis. While Berkshire's diversity reaches to the philanthropic approaches and interests of its leaders, they are united by a shared spirit of giving.

Among the largest donors listed in "The Chronicle of Philanthropy" in the 2000-2009 period was Lorry I. Lokey, founder of Business Wire, which Berkshire acquired in 2005 for $600 million. Lokey's total giving at the time of Berkshire's acquisition was $160 million; since then, the total surpassed $400 million, with many gifts to higher education.

Berkshire's managers have often been equally entrepreneurial when it comes to altruistic endeavors. An example is the program begun by the late Al Ueltshci, founder of FlightSafety, a pioneer in training airplane pilots using flight simulators. Eradicating cataract blindness in the developing world was his quest. He created a flying eye hospital called ORBIS International to provide sight-saving surgery and training to doctors worldwide. With his son James, he adapted the knowledge gained at FlightSafety to create simulation devices to train eye surgeons to be able to serve local communities.

Customers, employees and other constituents chip in to philanthropic efforts at some Berkshire subsidiaries. The thousands of franchisees of Dairy Queen, for example, support the Children's Miracle Network Hospitals (CMN Hospitals). Since 1984, they have generated more than $100 million in donations for CMN. Funds are drawn from sources, including customers' spare change.

The philanthropic interests of Berkshire subsidiary executives are as varied as the group is diverse. Consider this one: In addition to contributing $3.4 million to help build the $17.4 million Will Rogers Equestrian Center in Fort Worth, Texas, John Justin Jr., founder of the eponymous cowboy boot maker, created The Justin Cowboy Crisis Fund, which provides financial aid to injured rodeo performers and their families.

Bill Child, who built the Utah-based RC Willey furniture store chain with his family, has donated millions to American Indian Services and funded scholarships for Native Americans.

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Ed Bridge, fourth-generation leader of Ben Bridge Jeweler, one of several Berkshire jewelry store chains, has helped raised millions of dollars for children who are victims of catastrophic illness, abuse, or neglect. Another Berkshire manager, Stan Lipsey, long-time head of The Buffalo News, raised $14 million to restore Buffalo's 1907 Darwin Martin House complex, designed by Frank Lloyd Wright.

The Pritzker clan, whose patriarchs built Berkshire's Marmon Group subsidiary, features a dozen family members with net worth exceeding $1 billion, ranking high on the Forbes 400 list. Pritzkers have endowed numerous academies, centers, galleries, institutes, prizes and schools in their native Chicago to as far away as Cambodia.

While not signing the Giving Pledge, Munger has donated hundreds of millions of dollars to a variety of causes, often in the form of Berkshire stock. Beneficiaries include family alma maters, the University of Michigan (including a single gift of $110 million), Stanford University (one worth $43 million) and Harvard University. Most recently, Munger made a gift of $65 million to the University of California at Santa Barbara to build a housing facility where scientists can discuss theoretical physics. Endowments include a named professorship in business at Stanford University Law School; the Munger Research Center wing of the Huntington Library in San Marino, California; and the Munger Science Center at Harvard-Westlake School, a Los Angeles preparatory school, attended by numerous Munger offspring.

Going beyond the mandate of the Giving Pledge (which requires "a majority" of wealth to be earmarked for charity), Buffett is giving all his wealth to charity, including through The Bill and Melinda Gates Foundation and foundations organized by Buffett's children. That is uncommon in corporate philanthropic history, as most magnates leave a legacy graced by their name in perpetuity, whether via foundations or schools-besides other Berkshire leaders like Munger and Pritzker, think of Carnegie, Ford, Kellogg or Rockefeller.

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At Berkshire, from 1981 until 2002, the corporate giving program was also unique. At most corporations, boards decide which charities receive corporate beneficence. But that goes against Berkshire's culture of autonomy, in this case because it interferes with what should be a shareholder prerogative. So Berkshire's program lets shareholders choose the organizations, with the aggregate amount set by the board. Shareholders designated a wide range of recipients, from Catholic Social Services to Planned Parenthood, and the company distributed $200 million to causes of every stripe.

You might ask why it was discontinued in 2002, then? That's an important story. The program drew attention from social activists on topics, including abortion, who orchestrated boycotts of Berkshire subsidiaries or their products. One target was Pampered Chef, a business that sells kitchen gadgetry through a network of some 70,000 independent distributors, called "kitchen consultants." The cost of the boycotts to Pampered Chef's kitchen consultants was so great that Berkshire discontinued its shareholder charitable contribution program, with Buffett commenting that he wouldn't continue a program, even one with merit, that hurt the livelihoods of company employees. Berkshire offers autonomy to its business teammates and also has their backs.

Buffett's route is characteristically unusual, even as it speaks to an aspiration widely held. Most of us wish to leave a mark, something lasting. Buffett's legacy is not ultimately measured in money but in the values, people and companies of Berkshire Hathaway. Among those values: individual autonomy that enables individual ways of giving. People, including himself and Charlie Munger, should be free to change the world any way they want.

-By Lawrence A. Cunningham, professor of law at George Washington University, adapted from his new book, "Berkshire Beyond Buffett: The Enduring Value of Values"