We’re in the playground of a school in one of the most deprived parts of south
London. The children haven’t arrived yet, but I’m sitting on a bench
discussing education policy with a hedge fund zillionaire.
Paul Marshall is co-founder of Marshall Wace Asset Management, which has
billions of pounds under management. He is also a leading exponent of the
new “venture philanthropy”: he gives away vast amounts of cash and also
throws himself wholeheartedly into the projects that he funds.
As the children and parents start to arrive at Joseph Lancaster primary
school, Marshall rattles off the indicators of disadvantage: 68% of children
here qualify for free school meals, he says, waving towards them, compared
with a national average of 14.5%; 75% of them speak English as an additional
language.
“If you look at the academic research,” Marshall continues, “about 80% to 90%
of a school’s outcomes are explained by the intake.
“So if you are in leafy Godalming you will get better results than in
Southwark. These types of schools need a completely different approach from
the leafy suburb, but our education system tends to be one size fits all.”
Marshall has the bushy hair and gentle manner of a character from a Richard
Curtis sitcom. That is not to say that his views are mild or comic. Some of
his peers might balk at his suggestion that they, too, should throw
themselves into philanthropy.
“I think there is a duty, not only on hedge funds but on everyone in the
City,” he says. “Private equity and investment banking. And likewise a lot
of people in sport, frankly.”
He is not alone. More and more rich people, it seems, are not only giving away
large sums, but also overcoming traditional British discretion to talk about
their generosity in public.
Indeed, last week the new golden age of philanthropy in Britain reached a
stunning milestone as the billionaire retail entrepreneur Sir Tom Hunter,
already a prolific splasher-out of dosh to good causes, pledged to offload
more than £1 billion through his foundation before he dies.
Hunter, who grew up in the poor mining village of New Cumnock in Ayrshire,
became Scotland’s first home-grown billionaire.
“With great wealth comes great responsibility,” he said. “We’ve got to take
care of these things if wealth creation is still going to be seen as a
positive force for the rest of the population.”
By “these things”, he means things like the failings which see 20% of Scottish
school-children effectively giving up on education at the age of 14.
Hunter, who jokes that as a Scotsman, “I’m not very good at giving money
away”, has an interesting take on it. He has made enough to meet all his
material goals, he says: “So now the philanthropy is the real motivator to
continue to make money.”
The great philanthropists of the past were motivated by the desire to make a
difference. But they were operating in a time before the development of the
modern welfare state and tax-payer-funded healthcare and education. Their
philanthropy saved people from destitution. Now the goals are different.
Hunter’s £1 billion, while a massive sum for an individual, compares with the
£586 billion that the government is spending this year. For the new
philanthropists, however, it is more than just the money.
They approach giving as they would approach a business proposition: believing
that they can bring their expertise to bear to bring about change in a way
that governments fail to do.
While money from the public purse often appears to be flowing into a
bottomless pit, the new philanthropists ensure that they get a “return”, in
terms of results, for all the charitable projects they fund.
Other big pledges recently have included £230m donated by the hedge fund
investor Chris Hohn to a children’s charity run by his wife, and a £100m
pledge from the financial trader Peter Cruddas to a variety of charities.
Dame Steve Shirley has dropped from being the 11th richest woman in the UK to
being no more than fairly ordinarily well off as a result of giving away
£50m of her fortune. And Dame Anita Roddick has announced that she is giving
away much of her Body Shop earnings, with her daughters’ explicit blessing.
One big reason why the rich are giving, of course, is that they have the money
to do it. The 1,000 richest people on The Sunday Times Rich List –
Richistanis, as the author Robert Frank calls them – account for £360
billion between them. That’s up from £99 billion 10 years ago.
The rest have by no means kept up. Indeed, the number of people living below
the poverty line has increased, according to last week’s report from the
Joseph Rowntree Foundation. More than one in four households were classed
either as “core poor” or “bread-line poor” in 2001.
Admittedly, the poverty line has been refined so that it is a relative rather
than an absolute measure. But the gap between the rich and the poor in
recent years has grown rapidly. Sir Ronald Cohen of Apax, the private equity
group, has warned that there may be riots in the streets if the rich-poor
divide keeps on growing.
Over the top? Possibly, but a contributor to The Guardian’s website last week
felt inclined to post this comment: “The money-grabbing gits better enjoy it
while they can, as they will certainly be the first up against the wall when
the revolution comes, and if they carry on at this rate sooner or later it
will.”
So is the new interest in public philanthropy merely an attempt by the rich to
escape the tumbrils or could it combine a genuine wish to do good with a
hitherto un-British outbreak of wallet-waving? Has conspicuous consumption
given way to conspicuous altruism?
To put that another way: what do you do once you’ve got all the toys – the
homes, yachts, jets and cars? Through philanthropy, some are reported to
boast, you can meet celebrities and get invited to places you’d never see
otherwise.
To be fair, this does not in the least appear to be the motive for Marshall.
He will not discuss how much money he is worth (reportedly £275m, according
to The Sunday Times Rich List, which ranks him 263rd equal) or the amount
that he has given away to charitable causes.
Aged 47, educated at private school, Oxford and Insead, the French business
school, Marshall was once a researcher for Charles Kennedy and stood as a
parliamentary candidate for the Social Democrats.
He funds CentreForum, the political think tank.
One thing he does say without embarrassment is that he has a strong Christian
faith: “I do believe that I have been very fortunate. I believe that every
child has God-given gifts that they need to develop and use. That’s their
right. And also I believe that I have a duty to give something back.”
In 2000, Marshall was part of a group planning an awards ceremony for the
hedge fund industry. “We were sitting around the table and someone said,
‘This is all a bit self-congratulatory. Can’t we do something more
interesting?’ In effect, we transformed ourselves. We became a charity.”
That charity is Absolute Return for Kids, or Ark. Its declared mission is to
transform the lives of children who are victims of abuse, disability,
illness or poverty.
It is headed by Arpad “Arki” Busson, the Frenchman best known as the former
partner of the model Elle Macpherson, and largely funded by rather showy
annual dinners at which Busson, Marshall and others encourage their
colleagues and industry rivals to part with millions.
“This sounds self-serving but it’s an extremely elegant event with wonderful
entertainment,” says Marshall. This is something of an understatement. In
the past couple of years Elton John, Prince, Desmond Tutu and Bill Clinton
have starred and guests have bid small fortunes for Damien Hirst artwork,
yoga sessions with Sting and a guitar lesson from Coldplay’s Chris Martin.
Of himself and his fellows, Marshall says: “We had all been lucky enough to
make a reasonable amount of money relatively early in our lives and wanted
to put something back. And we believe there are benefits from pooling our
efforts.”
Marshall’s own great interest was education in Britain, but that posed
difficulties: “We found it very difficult at first to give money away in the
UK, because it can go so much further and affect more lives in Africa than
here. But someone suggested we should look at academy schools.”
The group investigated academies and looked to America, where the charter
school experiment begun by Clinton seemed to be having remarkable success.
Marshall did much of that research himself and has written a 90-page paper,
Tackling Educational Inequality. He analyses how schools have been failing
and makes proposals for change.
In the meantime, Ark has already opened one academy school in London and
intends to open a further six. That’s why I have come to talk to Marshall at
Joseph Lancaster. Nearby is Geoffrey Chaucer secondary school, which has
been put into special measures. Ark’s intention is to take over both
schools, and the adjacent nursery, and unify them under a new name, Globe
Academy. Assuming that Ark gets the go-ahead, Marshall will become chairman
of the governors.
(He seems confident of this: he recently commissioned a mosaic to be made for
him by the children, bearing the legend Globe Academy, and has come to the
school today to collect it.)
Marshall as he researched education in the United States was the long hours
children spent at successful charter schools, including sessions on
Saturdays and summer camps: “On average, they spent 60% more time at the
school than other children in average schools.”
To judge by Marshall’s education paper, these long hours, together with an
intense focus on literacy, numeracy and personal conduct, will be central to
Ark’s academy programme.
It is obvious that Marshall is doing this because he believes in it. And it
feels churlish to ask if it’s all some elaborate defence against media
criticism of hedge funds. But I ask anyway. “We started doing this a long
time before the heat was on,” he smiles.
If I’m mildly sceptical about philanthropists, I have good reason. Some years
ago I interviewed Alberto Vilar, the Cuban-American philanthropist, at one
of his nine homes – a 30-room apartment in Manhattan. Among the gold
couches, gold columns and gold wallpaper, the music aficionado proudly
showed me a plaque that was due to be unveiled at the Royal Opera House, in
Covent Garden, later that year.
He read the words out loud: “Vilar Floral Hall / Dedicated to / Her Majesty
Queen Elizabeth / the Queen Mother / generously supported by Alberto Vilar”.
It would bear his name for ever, he said firmly. “If the place burns down
and they rebuild it, I still get that.”
In whispers, many people accused Vilar of vanity, but he insisted he was doing
it to encourage other would-be philanthropists, particularly in Britain,
where philanthropy had most recently flourished under Queen Victoria.
“The rich won’t give unless they see dividends,” he said: “I can only hope to
set a standard so that other people will follow suit.”
That was in 2000, the year the dotcom bubble burst. Vilar’s investment company
lost 90% of its value. But he had become addicted to philanthropy and didn’t
stop making promises until he was arrested and charged with borrowing
clients’ funds – to make good on donations.
More happily, 2000 was also the year that Gordon Brown removed the £600
ceiling on gift aid. (For charities, gift aid means a substantial increase
in the value of every donation by British taxpayers: to every £1 given to
British charities, the Treasury adds another 28p.) Some suggest that this
marked the start of the new age of philanthropy.
As Marshall and others acknowledge, this and other measures introduced by
Brown at the Treasury have made charitable giving considerably more
attractive, if not quite so much as in America, where last year it amounted
to an astonishing $295 billion.
Wider trends in wealth also help to explain the growth in philanthropy. In
recent years, dotcoms, private equity and hedge funds have created
substantial numbers of people who have so much money they can’t think what
to do with it.
At the same time, a demographic shift is witnessing an unprecedented transfer
of assets from one generation to the next, and the inheritors are looking
for new ways to spend the money.
Until fairly recently, three-quarters of great wealth was held by people who
had inherited it. They saw themselves as stewards who must pass it on to
their offspring. Today, by contrast, three-quarters of the seriously wealthy
are self-made. They regard the money as theirs to dispose of as they like.
Many dislike the idea of passing it to their offspring. “Do you really want to
give your children all the well-documented pain and suffering attached to
enormous wealth?” asks Hunter.
The result is a massive increase in the amount of “giving while living”, to
use the philanthropists’ jargon. Andrew Carnegie, the great
Scottish-American philanthropist, would approve. “He who dies rich, dies
disgraced,” he once said.
Many argue that business people can genuinely contribute to the causes they
support. But the idea that philanthropy is more than just a financial
transaction can be taken too far, cautions a woman – formerly in business –
who runs a fund on behalf of a dotcom tycoon.
Business people talk “bollocks” about bringing their expertise to charities,
she says. They should just give their money to the people who understand the
problems and let them spend it on whatever is needed most: “If you’re giving
the money away you should enjoy it, not micro-manage it.”
That is confirmed by Marina Cantacuzino, a journalist whose reporting on
forgiveness between the victims and the perpetrators of terrible crimes led
to the creation of a charity called the Forgiveness Project.
One of her biggest supporters is an anonymous property developer who happily
allows Cantacuzino to spend his donations on overheads rather than
ring-fenced projects to flatter his ego. “It usually goes towards paying
staff,” she says, “which is what we really need.”
Clearly, something like the Forgiveness Project is going to be set up only by
an individual with a vision. But what about schools? Aren’t they the sort of
thing that governments should run?
High earners argue that government cannot spend tax money as efficiently as
rich taxpayers could spend it philanthropically. Critics such as Polly
Toynbee, the columnist, counter that the better way is to elect a government
to spend as rationally and accountably as it can.
All the main parties see a role for citizens and social entrepreneurs – the
so-called “third sector”. David Cameron has repeatedly called for them to
take on the burden of failed state agencies; Brown has promoted Ed Miliband,
former minister for the third sector, to cabinet while allowing him to
retain overall responsibility for the voluntary sector.
Salvatore LaSpada, who teaches the mechanics of giving at the Institute of
Philanthropy, does not believe that private funding will replace government
but says that philanthropists can pioneer work that can subsequently be
disseminated by the state. “We do adventurous things,” he says. “Away from
the brakes of bureaucracy, resources can be shared out with a speed that
escapes governments.”
That’s certainly what Marshall hopes to achieve at the Ark schools in
Southwark. “What we can do, as philanthropists, and that government can’t,
is bring in fresh ideas. Because at the moment, it ain’t working,” he says.
“We have 25% of children leaving school without basic literacy and numeracy.
They’re not the least able, they’re the least advantaged. It’s a complete
outrage.”
A HELPING HAND FOR THE WOULD-BE PHILANTHROPISTS
Many organisations and intermediaries have sprung up to encourage would-be
philanthropists. These range from the School for Social Entrepreneurs in
east London, which puts donors in touch with good causes, to a network of
regional intermediaries known as community foundations, which put local
donors in touch with almost any kind of project they might wish to support
and run checks on them.
A big supporter of community foundations is Matthew Bowcock, a serial
entrepreneur who runs a family charitable foundation and recently set up a
specific fund within the Surrey Community Foundation. As a member of the
board of the Community Foundation Network, which coordinates foundations
across the UK, Bowcock passionately believes that donors should engage with
their communities – something that might well help to address concerns about
the rich-poor divide.
Another nonprofit organisation helping to raise the profile of philanthropy is
the Institute for Philanthropy. The head of the institute is Salvatore
LaSpada, an American who previously worked for the Rockefeller Foundation.
While he was there he created a three-week workshop for would-be
philanthropists, which is now run from the institute in London. For £8,000 –
not including flights, accommodation or meals – big-hearted tycoons can
learn to define their philanthropic mission, to conduct due diligence and to
meet charities and social entrepreneurs without talking down to them – a
genuine hazard in the case of many self-made men and women, made worse by
the imbalance of power between donor and recipient.
One who went on the course is Hugh Davidson, who had retired after years in
charge of the European division of an American multinational and
subsequently setting up and selling his own business. Davidson always lived
modestly. He has never hankered for material wealth and plainly finds excess
distasteful. As a result he found himself in possession, on retirement, of
substantial funds after selling the business he had founded, and decided
with his wife to set up a family foundation. Their sons supported the idea
of giving away the money that would otherwise have gone to them. “At least,
they say they support it,” he laughs.
For some time Davidson and his wife were unable to give away more than 20% of
the money they intended to donate because they were overwhelmed with
plausible and moving requests and did not have the time to carry out
sufficient research: “You go into this and you think, God, there are an
infinite number of ways to lose money.”
The workshop enabled him to overcome that problem. It also provided a network
of people with whom he was comfortable discussing philanthropy: “You can
talk quite openly because we have a common interest.” By contrast, he would
not feel comfortable talking about it at a dinner party: “You don’t want
people saying, ‘Oh, aren’t you generous’. It would be embarrassing.”
Even some of his relatives don’t know that there is a family trust.
