(May 1, 2013) — Did you think managing a hedge fund was all about chasing market inefficiencies and weekending in the Hamptons/Monaco? Well, maybe it is for the most part – but some of these investors are giving something back to society, and it might be more than you would think.
The Alternative Investment Management Association (AIMA), which represents hedge funds and other alternative investment houses, has published a report entitled “Contributing to Communities” that shines a light on the charitable donations made by the sector.
In 2010, some $170 million was donated to charitable causes by just four foundations: the philanthropic arms of two gargantuan hedge funds – Tudor Investment Corporation and Tiger Management – and societies Hedge Funds Care and 100 Women in Hedge Funds, the report said.
“In the US, there is an expectation that people who come from money, or people who make a lot of money, will give back,” Rob Mirsky, a partner at KPMG and founder of Hedge Funds Care’s UK branch said in the AIMA report. “Almost every wealthy person I know in the US feels this compulsion, it’s a very endemic thing – I think it comes partly from the fact that you cannot rely on the state to provide funding for many important causes, except in the most extreme of circumstances.”
Further down the scale, European giving is dominated by a small group of large players. Ark – launched by EIM’s Arpad Busson and supported by the founders of Marshall Wace, amongst others – has raised £180 million over the past decade, mainly through its star-studded, lavish balls and dinners.
The personal foundation launched by Michael Hintze, founder of British/Swiss CQS, has distributed £25 million since 2005 to various artistic causes, including the restoration of frescos in the Vatican, the AIMA report said.
In Asia, the burgeoning hedge fund scene has come together to host joint events, the proceeds of which are split between nominated charities.
The types of charitable causes supported by these philanthropic activities are almost as wide-ranging as the gamut of hedge fund strategies available to investors. Africa receives around £100 million a year, AIMA said, while children and women’s projects around the world receive large amounts of support.
However, for these large asset houses, money is a relatively cheap commodity – AIMA claims the sector is also giving its time.
“The industry provides ample opportunities for staff wishing to get involved in philanthropy both inside and outside the office, and generates an enthusiasm for charitable involvement that is reflected in the proliferation of start-up philanthropic foundations being established by younger managers and service providers,” the report said.
So next time you’re paying 2/20 and wondering where all that money goes – it might not be heading where you think.
Watch this space for aiCIO‘s first foray into charitable support – more details soon…