INDIANAPOLIS -- Billionaire Warren Buffett made his fortune backing winners.
Now that the second-richest man in the USA is working to give away the bulk of his vast wealth, he's aiming to take the same approach.
Buffett was in Indianapolis this week to lend his support to a new holistic approach to urban redevelopment. It's an idea he's betting will help break the cycle of poverty that for decades has gripped struggling inner-city neighborhoods across the USA.
Buffett isn't the only tycoon getting behind the concept from Purpose Built Communities, an Atlanta-based non-profit. Joining him this week in Indianapolis were two others: Tom Cousins, a prominent real estate developer who pioneered the concept in Atlanta in the late 1990s, and retired hedge fund manager Julian Robertson.
"What better can you do with money," said Buffett, "than to help thousands of people change their lives in a very, very positive way?"
The three looked more like good-natured grandpas than power brokers as they sat together on the patio of an apartment at a new mixed-income development in a section of Indianapolis that many had written off years ago. They were there to cut a ribbon celebrating completion of the first phase of a project based on the Purpose Built Communities model — one of about 13 under construction or being planned in cities from Charlotte to Omaha.
What sets these apart from other urban redevelopment schemes — and what prompted Buffett and Robertson to join forces with Cousins — is the scope of work involved. New apartments replacing crime-riddled public housing projects are just the beginning. It's the charter schools, parks, community service centers, health care facilities, recreation programs and places to work and shop that the big-money guys are betting on to usher in meaningful, long-term change.
"When people are finding a way to realize their potential, when they're earning their own way, when kids are getting a decent education, when they don't have to worry about the area in which they live, I think that does wonders," Buffett said. "The net benefit just has to be huge over time."
Buffett said he learned about the concept while serving on the board of Coca-Cola. When he visited the company headquarters in Atlanta, he kept hearing stories about a unique project that was changing lives in a deteriorating part of the city called East Lake. Crime was down. Employment rates and incomes were up. Kids were staying in school and going to college.
It was an easy decision for Buffett, who recently made waves for saying the wealthy should pay a lot more in taxes, as he distributes his fortune to promote what he calls "equality of opportunity" for all Americans.
"I like to back success. I like things that change people's lives," Buffett said of his support for Purpose Built Communities. "It's got the right mission. It's got a record of success. It's got the right leader and it's hard to find terrific leadership. And now it's been proven to be replicable."
Gerry Barousse, chairman of the non-profit Bayou District Foundation, which has partnered with a Purpose Built Communities project in New Orleans, sees positive signs every day in what was one of the worst housing projects in the city.
"We're not quite half-way, about five years into it," he said, "and we are starting to see the results. It's really rewarding and refreshing to see people there appreciating and enjoying their lives."
In addition to Indianapolis, Atlanta and New Orleans, Purpose Built Community projects are taking shape in Rome and Clarkston, Ga.; Birmingham, Ala.; Galveston, Texas; Omaha; and Charlotte. Though the projects require heavy investment, Cousins said, "They're the biggest payoff in investment that I have ever seen."
It's just the type of winning concept, Buffett said, that merits his support.
"The world does not treat everybody equal at birth," he said. "We don't have the same starting line for people in this country. We aspire to it and we've gone further than most countries in that respect — and we'll be better 10 years from now, and 20 years from now, and 50 years from now."
Evans also reports for the Indianapolis Star