Earlier today, Warren Buffett was interviewed live on Power Lunch by CNBC's Becky Quick. The occaision: a gift of $128 million dollars made by the daughter of one Buffett's greatest mentors, money that came from a very early investment in Buffett's Berkshire Hathaway.

In the interview, Becky asked Buffett for his prediction of what the Federal Reserve would decide on interest rates a few hours later. His response is classic Buffett. Essentially, when it comes to investing in good companies at reasonable prices, it doesn't matter what the Fed does.

I posted a short summary and a video clip of the interview in Warren Buffett to CNBC: Fed Rate Decision Won't Affect My Investment Decisions. A full transcript of his Fed/market/inflation/dollar/oil comments appears in Warren Buffett to CNBC: "I Don't Care" If the Fed Cuts Rates.

Now, it's time for the transcript of the portion of Becky's interview that covered Buffett's thoughts on that big donation to the George School in Newtown, Pennsylvania from Barbara Dodd Anderson, the daughter of David Dodd, a key figure on Buffett's life.

To find out why he's so important to the Buffett story, read on ....

Power Lunch, Tuesday, September 18, 2007

Bill Griffeth: Well, we all know about Warren Buffett's philanthropy, including his huge gift to the Bill and Melinda Gates Foundation last year. Now the family of a Buffett mentor, a legendary mentor, an early investor (in Berkshire Hathaway) has made a big contribution of their own .. a $128 million donation to a Quaker school near Philadelphia. You've probably heard about this. CNBC's Becky Quick joined now on the phone with Mr. Buffett. Becky?

Becky Quick: Hi, Bill, Hi, Sue. Hi, everybody. Obviosuly this is some big news today, a 128 million dollars being given to the George School. On the phone with us right now is Warren Buffett. Mr. Buffett, thank you for joining us today.

Warren Buffett: Hi, Becky.

BQ: You know this donation is a huge donation. What's your connection to the George School and to the David Dodd family?

WB: Well, the David Dodd family has had an enormous impact on my life. Dave Dodd was the co-author, with Ben Graham, of the famous book Security Analysis in 1934. Back in 1950, I'd gotten out of the University of Nebraska and applied to the Harvard Business School. They turned me down in about 10 minutes. (Laughs.) And I was out at the library of the University of Omaha leafing through catalogs that summer of 1950 and in August I was leafing through the Columbia catalog and there I saw the names of Ben Graham and Dave Dodd, they were teaching at Columbia, I had no idea that they were teaching. I thought these guys were long gone or something (laughs.) So I wrote a letter to Dave Dodd who was also an associate professor there and I said 'Dear Professor Dodd,' I said, 'I thought you guys were dead.' (Laughs) 'But now that I know you're alive and teaching at Columbia I'd very much like to come to the Columbia Business School and just a few weeks before school started he wrote me a letter back and he said 'You're in.' And I went back there and I benefited enormously from Dave Dodd's teaching as well as Ben Graham's. He, Dave, treated me like a son. He would take me to dinner, he became a good friend and subsequently he invested in my partnership for his daughter Barbara and now the George School is going to be 128 million dollars better off because he did (laughs.) So it was a very happy story with a happy ending.

BQ: You know we talk an awful lot about how philanthropy seems to be flourishing these days. Everyone points back to your gift last year of over 35 billion dollars. Then we take a look at some other huge amounts of money that have been given back from people like Sandy Weill, people like Boone Pickens. Do you think this is something that's happening much more, especially with some of your earlier investors?

WB: Our early investors were kind of a, there were not a representative lot. They probably had some of my characteristics which was to be much more of a saver than a spender. So, you had these people join my partnership and they really were savers, they were not big spenders, and as the years have gone by some of them have gotten very, very rich. And instead of buying boats or something of the sort, they're going to give it to whatever their charities are. And so we're seeing other gifts, some of them haven't been publicized, but we're seeing many other gifts that are in the tens or hundreds of millions that are coming from these people, and I think you'll see a lot more even in the years to come. It's a group that I woudl say, I bet they on average give back 90% of what they've made through the society, through their Berkshire shares.

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WB: I would like to thank Barbara Dodd Anderson for doing what she did... she's done, I think, a tremendous act... She's a terrific person and her father would be very proud of her.

Questions? Comments? Email me at buffettwatch@cnbc.com