Warren Buffett is unquestionably one of the country’s most generous and influential philanthropists. The 92-year-old legendary investor is worth more than $100 billion—and has promised to give 99% of it away. In 2010, he cofounded the Giving Pledge, exhorting other billionaires to follow his example; this year alone, he’s pledged almost $5 billion to charity.
Yet the narrowly averted U.S. railroad strike earlier this month put Buffett in much less flattering headlines—thanks to some of the for-profit activities that have padded his fortune. His Berkshire Hathaway owns BNSF, one of the country’s largest railroads—and one of the railroad employers that effectively doesn’t give its workers paid sick leave. Unlike 79% of U.S. civilian workers, the railroad industry’s 115,000 laborers can’t take unscheduled paid time off when they fall ill.
This fall, as bitterly fought contract negotiations almost led to a national economic crisis, workers’ lack of paid sick leave became a flash point. Labor representatives and left-leaning lawmakers alike singled out BNSF, and its owner, while excoriating the entire industry. That scrutiny is likely to continue: Last week, more than 70 U.S. Senators and Representatives sent a letter to President Biden, asking him to sign an executive order that would guarantee railroad workers seven paid sick days. Meanwhile, investors at two of the other largest railroad companies have introduced resolutions asking shareholders to vote this spring on giving workers paid sick leave. And on Tuesday, another large freight operator, CSX, told Reuters that it would stop penalizing workers for taking unplanned time off for illness.
Through it all, Buffett has remained silent on this question of worker welfare. (He and BNSF did not respond to Fortune’s requests for comment.) He has continued doing good in other areas: Late last month, as Congress geared up to vote on legislation that ultimately averted the railroad workers’ strike but did not address their paid-leave demands, Buffett donated Berkshire Hathaway shares worth more than $750 million to four charitable foundations run by his family members, which fund causes including abortion access and ending world hunger. Earlier this year, he pledged $4 billion worth of shares to charities including the Bill and Melinda Gates Foundation—which, incidentally, focuses on global health.
Thus the railroad controversy highlighted an uncomfortable tension inherent in business titans’ philanthropy: Often, the profits that finance their generosity are derived at a cost to other people or the planet. BNSF earned a record $6 billion in 2021—and those profits, its critics say, would have been lower if BNSF, like other railroads, hadn’t implemented “lean staffing” policies that have reduced headcounts and limited workers’ flexibility.
“There are inherent contradictions in philanthropy—and they’re contradictions that some folks are more willing than others to really wrestle with,” says Aaron Dorfman, executive director of the National Committee for Responsive Philanthropy, a left-leaning research nonprofit.
This disconnect highlights a wider challenge for this generation of “stakeholder capitalist” chief executives, tech founders, and other billionaire philanthropists. As more founders and investors gain tremendous wealth relatively early in their lives, many of them are establishing significant nonprofit operations and reputations. (Or, in the case of disgraced FTX founder Sam Bankman-Fried, promoting entire “effective altruism” movements.) And because these business leaders are still involved in both for-profit and nonprofit operations, they are facing mounting scrutiny on how one affects the other.
“This is a major issue with respect to how we all think about philanthropy in the coming years,” says Benjamin Soskis, a philanthropy researcher at the Urban Institute.
“There’s even greater pressure on trying to figure out the relationship between the way money is made and the significance of how it’s given away,” he adds. “And a lot of donors don’t particularly want that connection made.”
A railroad strike draws attention to big donors
Buffett isn’t the only billionaire philanthropist to draw some sick-leave scrutiny. Recent articles in the New York Times, the New Yorker, New York magazine, and the American Prospect have named Bill Ackman, the activist hedge fund manager, as a supporting character in the industry’s decade-long journey toward lean staffing, and the resulting worker complaints about their inability to take unscheduled time off. Ackman is also an increasingly vocal philanthropist, who last year pledged more than $1 billion to charity and ranked No. 4 on the Chronicle of Philanthropy’s list of the most generous U.S. donors.
Some railroad industry experts argue that Ackman bears little direct responsibility for current U.S. worker complaints. Ackman was a major investor and board member in Canadian Pacific a decade ago; he sold his stake in 2016, and reinvested in the company last year. “Bill Ackman is pretty innocent in this,” argues Tony Hatch, a veteran industry analyst. Ackman declined to comment.
Hatch also argues that Buffett can’t be held responsible for BNSF’s decisions, including what Hatch calls a “particularly harsh” system that railroad introduced earlier this year to penalize workers for taking unscheduled time off. The Berkshire Hathaway CEO is an investor, rather than a day-to-day operator, and famously allows his companies’ top executives plenty of independence to maximize shareholder returns. (That said, Buffett also doesn’t mind touting his companies’ broader social or environmental impact. “If the many essential products BNSF carries were instead hauled by truck, America’s carbon emissions would soar,” he wrote to Berkshire Hathaway shareholders in February.)
Buffett’s silence on paid leave also stands in contrast to one of his longtime philanthropic partners. He cofounded the Giving Pledge in 2010 with then-spouses Bill Gates and Melinda French Gates, and he has donated about $36 billion to their health-focused Gates Foundation. Meanwhile French Gates, who divorced Bill Gates last year, has individually long advocated for paid family leave in the United States. The country remains one of the only wealthy nations without it, despite a pandemic that valorized “essential” workers and created a cataclysmic economic crisis for women.
Funding to address workplace conditions, and to support labor rights, has in general been a “definite blind spot” for most billionaire philanthropists over the past several decades, according to Soskis. “Philanthropy tended to shy away from those issues, in part because it gets at the core of how the money was made,” he says.
These dilemmas extend far beyond the railroad industry. Amazon has been regularly criticized for its workplace practices, while founder Jeff Bezos last month told CNN he intends to give away the majority of his wealth during his lifetime. His former wife, writer MacKenzie Scott, has far eclipsed Bezos in execution; in three years, she’s given away around $14 billion of her share of the Amazon fortune. Starbucks founder and CEO Howard Schultz, whose family foundation in June pledged $100 million to a fund financing “diverse businesses,” is fiercely battling his workers’ efforts to unionize.
In some respects, this is a very old conundrum—especially for railroad magnates. Andrew Carnegie, John D. Rockefeller, and the other Gilded Age industrialists who shaped the modern industry faced plenty of scorn in their day for the sometimes-brutal business practices that filled their philanthropic coffers. In more recent years, both for-profit companies and nonprofit institutions have been running into accusations of “greenwashing” and making other hollow ESG pledges, as they try to reconcile the operations that created their wealth with the larger environmental and social impact they say they want to make on the world. For example, to go back to Buffett: Berkshire Hathaway also owns stakes in oil giants Chevron and Occidental Petroleum, and has faced investor pressure to do more to combat climate change.
Reconciling profit-making and philanthropy
This tension between for-profit and nonprofit goals “is a phenomenon that’s existed for 150 years,” says Elizabeth Dale, an associate professor of nonprofit leadership at Seattle University. But, she adds, it’s heightened because “we’re in an era where businesspeople want to portray themselves as not doing harm.”
For philanthropists who want to reconcile their for-profit and nonprofit activities, NCRP’s Dorfman recommends investing more in grass-roots organizations focused on advocacy and empowerment of marginalized groups; removing any restrictions from the grants they give to charities, as MacKenzie Scott has become famous for doing; and speaking out publicly on the issues they care about. But to start, he argues, would-be donors should think more deeply about how they make their money in the first place.
“The capitalist system that produces the wealth that gets invested philanthropically also creates harmful externalities—for human beings or for the environment,” Dorfman says. “So step one, for any billionaire, is to minimize the harm that your profit-producing activities is creating.”
