How Do You Spend $1.5 Billion A Year?

Warren Buffett's contribution of about $1.5 billion a year to the Bill & Melinda Gates Foundation will be used to seek cures for the world's worst diseases and improve American education, Bill Gates said Monday.

"There is no reason we can't cure the top 20 diseases," Gates said while appearing with Buffett during a donation ceremony at the New York Public Library.

The Buffet gift is the largest in the history of philanthropy, reports CBS News correspondent Anthony Mason.

The Buffett and Gates families, as well as onlookers, were beaming as the so-called Oracle of Omaha officially made his benevolence a reality.

"There is more than one way to get to heaven, but this is a great way," said Buffett. He presented the biggest gift to Gates, and $1 billion donations to his own foundation and the foundations run by each of his three children.

"It's easy to sign. I just signed, 'Dad,'" Buffett joked while handing one of the donation documents, a stock transfer letter, to his daughter, Suze Buffett.

Buffett said he had made some suggestions about how to use the money. But "I think their judgment above the ground is going to be a lot better than mine six feet below the ground," he said at a later appearance.

Buffett said his children have known all along that much of their family's wealth would be given back to society. "They consider themselves lucky. They don't consider themselves quite as lucky as if they had a father with a different view."

In a letter dated Monday, Buffett had informed Bill and Melinda Gates that the first donation of Berkshire Hathaway Inc. stock would go to the foundation next month.

Gerry House, the president of the Institute for Student Achievement, which has received close to $14 million from the Gates Foundation, told CBS News correspondent Byron Pitts that the Buffet contribution will have concrete results.

"It means that organizations like ours are able to help more students – underperforming students, low-performing students – graduate from high school prepared for success in post-secondary education, for careers for success in life," House said.

The Gates Foundation, which has assets of $30.6 billion, spends money on world health, poverty and increasing access to technology in developing countries. In the United States, it focuses on education and technology in public libraries.

The money from Buffett, who is 75 but considered strong and healthy, comes with a significant catch. The letter says Buffett wants all his money to be distributed in the year it is donated, not added to the foundation's assets for future giving. The foundation gave away $1.36 billion in 2005, so the Buffett commitment would effectively double its spending.

"What you should expect from us is that we'll really deepen the areas that we're already into," Melinda Gates said. "We're not going to broaden the foundation a whole lot of new areas, but really deepen our commitment already to global health and particularly to education, so I know Bill and I are delighted — not only about the gift, but in particular about getting to work with Warren and we're very, very excited about it."

Buffett had said he would give away 12,050,000 Class B shares of Berkshire Hathaway stock to the five foundations. The shares fell $28, or 0.9 percent, to close at $3,043.01 in Monday's trading on the New York Stock Exchange.

The gifts would be worth nearly $37 billion, which represents the bulk of the $44 billion that Buffet's stock holdings are worth today. Five-sixths of the shares will be earmarked for the Gates Foundation.

In his letter to the Gates Foundation, Buffett said he admired the foundation and wanted to extend its "future capabilities." Until now, all the money given away by the Gates Foundation has come from the couple.

In a statement over the weekend, Bill and Melinda Gates spoke of their relationship with Buffett over the past 15 years and his influence on their philanthropy.

"Warren has not only an amazing intellect but also a strong sense of justice. Warren's wisdom will help us do a better job and make it more fun at the same time," they said. The couple said they were "awed" by Buffett's decision.

The Buffett pledge also requires that Bill and Melinda Gates remain alive and active in the policy-setting and administration of the foundation. Buffett plans to give each foundation 5 percent of his total pledge each year in July.

Bill Gates, the world's richest man, announced earlier this month that he would be stepping back from his day-to-day responsibilities at Microsoft Corp. in July 2008 so he can spend more time on the Seattle-based foundation. The foundation followed his announcement by saying Melinda Gates would also be taking a more active role in their philanthropic work.

Buffett, the world's second-richest man, said in an interview with Fortune magazine that the timing of the two announcements — one week apart — was just "happenstance."

Buffett's gift is "really significant," not just for its size but for its potential to encourage other giving, said Diana Aviv, president and CEO of Independent Sector, a nonprofit coalition of about 550 charities, foundations and corporate giving programs that includes The Gates Foundation.

"I'm sure there are lots of young, wealthy individuals who have made their fortunes and who are watching this very carefully," she said. "These business leaders are icons."