Charities that rely on the benevolence and performance of hedge funds are feeling the pinch.
The mighty Robin Hood Foundation, the largest and best-known hedge-fund-related charity, raised $56.5 million at its annual fundraiser this year, $15.5 million less than it did in 2007. Robin Hood, founded by Tudor Investment Corp.’s Paul Tudor Jones II, held the event in May, just as the credit crisis was beginning to hit its stride.
The foundation also made $32.5 million through gains on hedge fund investments in 2006, the most recent figures available, but that number won’t likely be repeated anytime soon. Tax returns next spring will show exactly how badly charities have been hit; anecdotal evidence is already piling up. Some of Robin Hood’s wealth, for instance, is in Citadel Investment Group’s $9.8 billion Kensington Global Strategies Fund, which was down 22 percent this year through September.
The Children’s Investment Fund Foundation, the London-based hedge fund charity affiliated with manager Christopher Hohn, counted more than $644 million in income for its fiscal year ended August 2007, with most of that coming from performance and management fees diverted into the charity from Hohn’s hedge fund. The $15 billion Children’s Investment Fund’s Master Fund (UK) returned more than 40 percent in 2006 and 37 percent in 2007. This year TCI was down more than 26 percent through September.
Then there’s London’s Absolute Return for Kids (ARK), set up by several London hedge fund executives, including Arpad Busson, founder of $14 billion London-based fund-of-funds firm EIM Group. Some of the charity’s big backers have been hurt in these rough markets. Ronald Beller, co-founder of Peloton Partners and a major ARK supporter, was one of the early victims of the credit crisis. Beller and partner Geoffrey Grant closed Peloton in February after the highly leveraged fund suffered billions in losses on bullish bets on the U.S. mortgage market. ARK raised $50 million at its gala in June, about $3 million less than it did in 2007.
Not all the news is weepy. Some managers who are shutting down funds as they pass through the twilight of their years continue to contribute their own money through a family office or charitable foundation, as Julian Robertson Jr. did after he closed his $21 billion New York–based Tiger Asset Management in 2001. And many of the old guard may now have more time to devote to philanthropy.
