The rise of boutique philanthropic advisors
These not-for-profit services are finding creative new ways of helping time-poor donors with their charitable giving. Charlotte Eagar reports
It’s warm and dark in the Roundhouse, cut off from the fried-chicken vendors of Chalk Farm outside. On stage in the performing-arts venue, the youth theatre company Weapon of Choice is rehearsing an improv. Our hero, the product of a London sink estate, has defied social and financial pressures to go to university rather than join a gang like all his old mates. Despite his degree he still can’t get a job, and his girlfriend is pregnant. How will he support the child? Should he continue to struggle down the path of righteous poverty or turn to crime?
I’ve been brought here by Sita Schutt, founding director of Prospero World, a not-for-profit company at the vanguard of London’s small but growing number of boutique philanthropic advisory services. An Oxford graduate and former academic at Turkey’s prestigious Bilkent University before she turned to development work, Schutt identifies suitable charities for potential benefactors. She also has to make sure the money will be properly spent, and keep donors up to date on what the charities are doing. This rehearsal is part of Prospero World’s London field trip – an exercise in both research and accountability, as it has supported Weapon of Choice before, through the company Pan Intercultural Arts.
“All Weapon of Choice’s members have been affected by youth violence and gangs,” explains Schutt. “They do workshops with other vulnerable young people like themselves, who are at risk of turning to crime. Whenever the hero is faced with a choice, the play stops and the audience votes on what he should do next. It’s to show the little choices, step by step, that can take someone the wrong way. Normally our field trips take us to places such as the Philippines or Cambodia. We visit some amazing charities there. But there is terrible deprivation in London, too.”
Anna Louisa Psarras, Prospero’s COO, is recording the action on stage, as part of a film to show the donors. The rehearsal is also being documented at Schutt’s instigation by the artist Dan Llywelyn Hall, who painted the Queen last year. I’d met Psarras and Llywelyn Hall the previous week, when Schutt had shown me a very different side of London: a meeting of the Cornucopia Club, Prospero World’s regular salon group. With its £600-a-year annual standard membership fee and £12,000 Gold membership (which includes benefits such as the use of Prospero World’s advisory services for a day a month, access to all the company’s research and invitations to participate in its field trips), the Cornucopia Club has a splendid clientele drawn from London’s new financial and philanthropic circles.
In an opulent house in Kensington – double-fronted and girded with topiary – clusters of elegantly dressed people toyed with glasses of champagne and listened intently as a young physicist made a presentation. The audience then paired off with a list of related philosophical questions to discuss. It was surprisingly fun.
“This isn’t just for networking,” said Schutt slightly defensively as, philosophical debates over, everyone began to revert to form, chatting, checking BlackBerries and mingling over the delicious buffet. “This is about encouraging philanthropic giving. We think philanthropy is more likely to happen in a stimulating environment. People get inspired by ideas and causes. We’ve had eight salons so far, with the focus ranging from North Korea and Myanmar to neuroscience and art.” Last October’s salon, hosted by the life peer Lord Verjee at his Mayfair shop Thomas Goode, was on how to stop the spread of dengue fever to Europe by sterilising male mosquitoes. The speaker was Hadyn Parry, CEO of Oxitec, the biotech company that has created said type of genetically modified mosquito. Another, in December, was by the composer Sir Nigel Osborne, on music and trauma.
Schutt’s next planned projects are a conference on how the arts can be used for social change and a charity fashion show of Polish designers, both scheduled for the end of this year. The latter was inspired by the success of Prospero World’s 2011 Philippine Fashion Show in London. On a field trip to investigate projects supporting trafficked women, microfinance funding and education in Manila, Schutt and Psarras were impressed by the work of the country’s fashion designers. They decided to put on the show in aid of the Ayala Foundation’s educational programme, with the participation of Philippine designers such as Michael Cinco and hatmaker Mich Dulce.
The show featured a mixture of professional models and volunteers from the banking world, some of them recruited by Schutt trawling London parties. “A former Goldman Sachs banker wore Michael Cinco’s silver codpiece and stripped on stage,” she says. “I basically went round London picking people up. I saw this incredibly good-looking banker at the JP Morgan party at the Serpentine Gallery and asked him if he’d like to be in a fashion show. It didn’t take him long to agree.” The tickets sold out within 10 days (two in the case of the £1,000 VIP ones), with companies such as Credit Suisse and the Bank of Singapore taking part. “It was very, very glamorous. We raised £155,000 for the Ayala Foundation’s Centex project; the costs were sponsored.”
What Schutt is doing is not totally new – she just comes at it from a more creative direction. “Banks such as C Hoare & Co have their own philanthropy advisors. But they don’t necessarily help their clients identify the projects.”
In the UK, boutique philanthropy advisory services really started with New Philanthropy Capital, founded in 2002 by former Goldman Sachs employees Peter Wheeler and Gavin Davies. They turned their sharp financial eyes to inspecting suitable charities to benefit from their and their one-time colleagues’ munificence. NPC may operate as a think-tank as well as a consultancy these days, yet demand for its original services is still high.
Patrick Fauchier is a London-based former manager of a fund of hedge funds, now chairman of the technology company Bluwan. He turned to Prospero World before becoming chairman of the appeal at Coram, which focuses on children and is one of the oldest charities in the UK. “I wanted Prospero to assess the charity,” he says.
“Sometimes we get Prospero to monitor charities. Sometimes they come to us with an interesting one,” says a retired hedge-fund manager who used to give about 10 per cent of his profits to charity. “Using Prospero is very good if you don’t want to build the infrastructure of your foundation.”
As FT readers will realise, there’s been an enormous change in philanthropy in Britain over the past decade or so, alongside the longer-term seismic shift of UK wealth from inherited money to the self-made. Until recently, the very essence of being rich in Britain was that you didn’t need to work. But that’s not to say the wealthy all sat like Downton Abbey’s Lord Grantham at their library desks waiting for someone to walk in and ask them a question. Often, when not trying to become prime minister or explore the Andes, they donated their time to charity, doing good works. Sometimes they gave money as well. But all too frequently, in the case of inherited money, the British rich were not only fixated on the belief that the funds were just theirs in trust for the next generation, but also terrified that they might run out.
Then London became the global capital of the cash-rich, time-poor. With their newly embraced US culture of huge pay packets and endless working hours, the new rich also embraced the US culture of philanthropy. It helped that the UK took American-style tax-efficient giving to its bosom, too. Thanks to Gift Aid, not only can a charity claim from the Revenue an extra 25 per cent from every £100 given by a higher-rate taxpayer, but the donor can claim back 20-25 per cent as well.
“There’s no guilt to earned money. And today people make money earlier and then want to keep going,” says Doug Balfour, British-born head of Geneva Global, a 15-year-old philanthropic advisory service that opened a joint venture in the UK last May. In the US, Geneva Global has managed grants of more than $192m since its foundation by billionaire investment bankers Christopher and Richard Chandler. “They’d made a lot of money in emerging countries and decided to give something back. They started looking for a philanthropic investment bank, but when they learned that one did not exist, they created one.”
“We find out what our donors are annoyed about in the world – that’s the best way,” says UK director Peter Cafferkey, who started Geneva Global’s British operation with colleague Kenny Washington. “We give the same level of advice as you would expect if you were making an investment.”
The two men met at the Charities Aid Foundation, which helps other philanthropic organisations and their donors. Before that, Cafferkey, a former Stella Artois salesman, had been looking for something more worthwhile to do with his life. Washington’s pre-philanthropic calling was the music business. He worked for Virgin and Sony/BMG for 12 years and discovered, among other acts, Seal. “It was an interesting way to see wealth creation at a young age,” he says. “The things they do with their money are usually hedonistic.”
Washington and Cafferkey are building up Geneva Global UK’s client base; the US operation already has many clients, including billionaires whose names – even if they don’t want to be mentioned – are utterly familiar. Like Prospero World, Geneva Global prides itself on its research, even taking clients on field trips. It identifies local charities with low administration costs, where as much of the donated money as possible goes to the beneficiaries, and will set up charities if the client wishes. Geneva Global US’s work ranges from helping NGOs that fight child and sex trafficking in India to setting up Speed Schools in Ethiopia, where $100 per child will provide 10-month literacy coaching in each child’s first language, English and Amharic, the country’s official language. “We’ve got 1,370 Speed Schools, with 25 kids per class – we hope to increase that this year. And all our staff are local,” says Balfour.
There are those philanthropists, however – like one London-based hedge-fund manager – for whom a large part of the fulfilment is identifying their own charities. That still takes time, however, and may not come at the right moment. “Often when you are making money, you don’t have time to do the research,” he says. “You come to March and you’ve got a tax year ending, and it’s not necessarily the point when you can have the best ideas.”
This particular individual has, among other causes, targeted parasitic worms in Africa; over the past three years he has helped to treat more than 6m people in Burundi and Madagascar. “It costs about 30¢ per person,” he explains. “It’s great. It’s measurable. It’s got leverage. And I’ve kick-started something.” Indeed, the World Bank has now stepped in to fund the Madagascan programme.
He gives through Prism the Gift Fund. “It’s a registered charity. I donate the money and get the tax break. But they hold on to it. Then I wait for the right charity to come to me, or for me to find something I’m interested in. The alternative is setting up my own foundation, which would be cumbersome and expensive.” He put £3m into Prism in 2013. “I’d probably like to spread the donations over 10 years. I think I have given away about £250,000 so far. I might give a top-up. I’m a hedge-fund manager; you never know how much you will make each year.” Philanthropy, he explains almost embarrassedly, runs in his family. “My parents are both doctors. They’ve never spent much on themselves. They give much more as a percentage of their net worth to charity than I do.”
Prism, like Geneva Global, has investment-company connections, in this case to Regent Capital. Anna Josse, Prism’s founder, is still a director at the firm and describes Prism’s role as “professionalising the way people give”. She spotted a gap in the UK charitable market. “Although the Charities Aid Foundation exists in the UK, there was nothing servicing the mid-upper end of the market,” she explains, in the office Prism shares with Regent Capital and film company Matador Pictures. It does administer grant-making foundations (such as The Dorset Foundation, which frequently supports projects at the National Theatre), but Josse explains that “if you are gifting up to £1m a year, you really don’t need to set up your own foundation”. Instead, Prism offers an account with a charity chequebook. “The minimum we accept is £10,000. The average is £300,000-£400,000.” Prism now has more than 50 clients, and about £25m has been gifted to it.
After money has been paid to Prism, the clients can claim Gift Aid, but they can’t change their minds. “Once it’s in Prism, it’s public money; we are a registered charity. Donors can only onward-gift to another charity. Since we started, we’ve been gifting out about £5m a year. It’s an administrative role, as opposed to strategic or venture philanthropic. We don’t identify charities, but we may refer people to Prospero and Geneva.”
Prism charges either a one-off fee of 2-5 per cent of the money coming in or a fixed quarterly amount starting at £750, both of which vary depending on the amount of work required. “It’s for admin,” says Josse. Prospero World, with its small workforce, also tries to keep costs to a minimum: “Anna Louisa is our COO and she also edits the films. She calculated that of every pound we spend on ourselves,” says Schutt, “we help give £10 away.”
Of course, this feel-good merry-go-round does depend on one important factor – people continuing to make money and to feel secure enough to give it away. Since 2008, the world has been struggling through the worst recession since 1929. Has it made any difference?
The short answer is no. “We’ve taken on a lot of business in the past year,” says Josse. Cafferkey, too, states, “Overall giving may be going down, but research shows that high-net-worth individuals are giving more. The Sunday Times’ Giving List, produced with the support of the Charities Aid Foundation, records 138 gifts over £1m in the UK in 2012/13.”
“In a way, the credit crunch has had the opposite effect,” says Schutt. “These guys haven’t lost their money. Instead of wanting to buy more and more helicopters, people are getting more socially concerned.” After all, how many helicopters do you actually need?
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