Buyout magnates turn to philanthropy to motivate and attract staff
The popular perception of the private equity industry as a profit-seeking elite ignores the attempt by many within it to do good.
Financial News research last month found about half of the industry’s 20 largest European firms have set up charitable foundations or organisations, including most recently Bridgepoint Capital, Apax Partners, Cinven, Permira and IK Investment Partners.
At least three other firms in Europe are known to be setting up their own charitable organisations.
Others with longer-established charities include 3i Group, Charterhouse Capital Partners, Doughty Hanson and Terra Firma.
Of the seven firms that disclosed their donations to Financial News, Apax was top, donating £1.2m (€1.3m) to charities last year.
Aside from the tax benefits of charitable giving, firms are also using donations as a way to motivate and attract staff, as well as doing good.
Filippo Cardini, chief operating officer of TowerBrook, which provides the chair of the UK’s Private Equity Foundation and also runs its own foundation, said it was important to set up an official institution, rather than giving privately.
He said: “Anybody can give money individually. We decided we wanted to use it as an opportunity to build the culture of the firm around teamwork and partnership, which we care a lot about here.”
Damon Buffini, former chairman of UK buyout firm Permira, said: “I believe we must do everything possible to make sure young people can make the most of their lives.
That’s what led me to become president of Fairbridge, a national charity that helps young people to develop the confidence, motivation and skills they need to turn their lives around.”
Buffini also works closely with educational organisation Eastside Young Leaders Academy in East London.
Nigel Doughty, chairman and co-founder of Doughty Hanson, said he had long been an advocate for incorporating corporate responsibility into the world of business.
He gave a £3m donation in 2006 to establish the Doughty Centre for Corporate Responsibility at the Cranfield School of Management.
Patrick Dunne, 3i communications head, said: “Despite the press we sometimes get, there are quite a lot of people in private equity who have a big heart too.”
However, private equity donations of time and money often have a specific focus on leveraging the assets to improve and change society, much in the way their business model tries to do.
Sir Ronald Cohen, retired co-founder of Apax, said: “I think the private equity industry has the skills and the resources to turn social entrepreneurship into a mainstream activity and social investment into an asset.”
Shaks Ghosh, chief executive of the Private Equity Foundation, which, along with others such as Impetus Trust, applies private equity techniques to improve charities directly, said: “This is an industry of people who think beyond the cheque.
They love the idea that those tools and techniques which made them successful can be offered to the charity world.”
Anne Rannaleet, chairman of Nordic firm IK’s industrial advisory board, said the firm had set up its own charity IKare in 2006, as well as a scholarship programme created nine years ago, because it felt its previous giving was not as targeted as it could be.
Firms’ foundations are likely to make up a small part of employees’ overall charitable contributions, according to Carol Kennedy, a partner at Pantheon Ventures.
She said: “I have a suspicion the major giving is from individuals rather than firms themselves, although both are good, because it draws attention to charitable giving as a whole.”
The industry is being urged to increase donations in response to the credit crisis to compensate for the overall funding freeze charities face.
Dunne said: “Most charities are finding it very difficult to raise money this year, so there’s an even greater need for them to have support. Our in-box is full with requests.”
del.icio.us
Digg
Newsvine
reddit
StumbleUpon