John-Paul Flintoff




From richer, for poorer

On philanthropy in Britain

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, and a leading exponent of the new “venture philanthropy” – he gives away vast amounts of cash and also throws himself wholeheartedly into the projects he funds.

As the children and parents start to arrive at Joseph Lancaster Primary School, Marshall rattles off the indicators of disadvantage: 68 per cent of children here qualify for free school meals, he says, waving towards them, compared with a national average of 14.5 per cent. And 75 per cent of them speak English as an additional language.

“If you look at the academic research,” Marshall continues, “about 80 to 90 per cent 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.”

In person, Marshall is not remotely how I’d expected. Having read perhaps too many stories about the unrestrained capitalism exercised by hedge funds, I had steeled myself to meet a sleek monster – not somebody with the bushy hair and quiet, gentle manner of a character from a Richard Curtis sitcom.

That’s not to say that Marshall’s 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. Private equity and investment banking. And likewise a lot of people in sport, frankly.”

He’s 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, this week the new golden age of philanthropy in Britain reached a stunning milestone as the billionaire retail entrepreneur Tom Hunter, already a prolific splasher out of dosh to good causes, pledged to offload more than £1bn before he dies.

In a telling echo of Marshall’s comment, Hunter explained his decision thus: “With great wealth comes great responsibility.”

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.

Meanwhile Dame Steve Shirley has dropped from being 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 over the last seven years. And a couple of years ago Anita Roddick announced that she was giving away all her money, with her daughters’ explicit blessing.

But despite the high-profile donations, research consistently shows that poorer people give away almost twice as much as the rich, as a proportion of their income. Charities Aid Foundation figures show that the top 1,000 wealthiest people in the UK give away around 0.2% of their wealth – compared with a national average of 0.9 per cent.

Worse still, Sir Tom’s pledge came at the same time as warnings that the gap between rich and poor in Britain has risen sharply and is now the widest in more than 40 years.

The thousand richest people account for £360bn between them – up from £99bn ten years ago. Meanwhile the number of people living below the poverty line has increased, according to this week’s report from the Joseph Rowntree Foundation. More than one in four households were classed as “breadline poor” in 2001. Meanwhile average households – neither rich nor poor – are gradually disappearing in London and the south east. (By a nice irony, the Joseph Rowntree Foundation was established by a philanthropist.)

Sir Ronald Cohen of Apax has warned there may be riots in the streets if the rich-poor divide keeps growing. Over the top? Possibly, but a reader of the Guardian’s website felt inclined this week 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 philanthropy merely an attempt by the rich to stave off criticism? Or does it combine a genuine wish to do good with a hitherto unseen specimen of wallet-waving – conspicuous giving instead of (or as well as) conspicuous consumption?

To put that another way: what do you do once you’ve got all the toys – the homes, yachts, jets and cars? Through philanthropy, exponents argue, you can meet celebrities and get yourself invited to places you’d never see otherwise.

To be fair, this does not in the least appear to be the motive for Paul Marshall. Despite having personal wealth reported to be more than £250m, he has said that he tries to avoid lavish spending on his family, a French wife and two teenage children. (With me, he prefers not to discuss that at all. Nor will he discuss how much money he is worth, nor the amount he’s given away to charitable causes.)

Aged 47, educated at private school, Oxford, and Insead, the business school, Marshall was once a researcher for Charles Kennedy and stood in 1987 as a Liberal Democrat/SDP parliamentary candidate. He funds Centre Forum, the only liberal 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’s headed by Arpad “Arki” Busson, best known as the former partner of model Elle Macpherson, and largely funded by rather showy annual dinners at which Busson, Marshall and others encourage 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 last couple of years Elton John, Prince, Desmond Tutu and Bill Clinton have addressed the event. At an auction conducted by Lord Dalmeny of Sotheby’s, guests 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.”

For instance, Ark has recruited experts across its areas of activity. Marshall reels off the individual names, and I dutifully write them in my notebook. “These guys have done it all, and got the T-shirt,” says the philanthropist who worries that talking to me might focus undue attention on himself. “They bring the credibility, I don’t.”

Marshall’s own great interest was education in the UK, 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 the US, where the charter school experiment begun by Bill Clinton seemed to be having remarkable success. Marshall did much of that research himself, and has now written a fascinating 90-page research paper “Tackling Educational Inequality”, explaining how schools have been failing and outlining some important 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 is given the go-ahead, Marshall will become chairman of the governors.

(He seems confident: 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.)

One thing that struck Marshall, as he researched education in the US, was the long hours children spent at successful charter schools, including sessions on Saturdays and summer camps. “On average, they spent 60 per cent more time at the school than other children in average schools.” If that sounds unappealing to middle-class readers, bear in mind that the alternative for many children in these rough, urban environments is to wander the streets.

To judge by Marshall’s education paper, these long hours, together with an intense focus on literacy and numeracy, and personal conduct, will be central to Ark’s Academy programme.

It’s perfectly 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 the Cuban-American philanthropist Alberto Vilar 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 forever, 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 per cent of its value. He started defaulting on his pledges. But he’d become addicted to philanthropy, and didn’t stop making promises till he was arrested and charged with borrowing clients’ funds – to make good on promised 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 the US, where last year it amounted to an astonishing $295bn.

But 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 incredibly rich people who literally have so much money they can’t think what to do with it.

At the same time, a major 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’d inherited it. They took little pride in the money because it didn’t reflect any personal achievement, and 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.

What’s more, many positively 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 Sir Tom Hunter.

The result is a massive increase in the amount of “giving while living”, to use the philanthropists’ jargon. The great Scottish-American philanthropist Andrew Carnegie would approve: “He who dies rich thus dies disgraced,” Carnegie once said.

An indication of the increased numbers is provided by the management writer Charles Handy. He has turned his attention to the phenomenon and will shortly publish a book about the new generation of “practical philanthropists”, who don’t simply give money away but actively help charities, and try to ensure that the initiatives they fund are sustainable in the longer term.

The idea that philanthropy can be transacted in businesslike manner, even to the point of expecting a “return” on investments, is supported by Bill Gates, who once calculated the impact of eradicating malaria on Africa’s gross domestic product.

Many others likewise argue that business people can genuinely contribute to the causes they support. Indeed, the benefits can be two-way.

Adele Blakebrough runs the Community Action Network, which brokers relationships between donors and recipients. She says that many business people are thunderstruck by what they see among social enterprises and charities. “They are amazed by the high levels of motivation, and that it has nothing to do with money. They’re also amazed by how well people manage with so little resource.” Blakebrough believes that donors often try to take back what they have learned and use it in their businesses.

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 major fund on behalf of a dotcom tycoon. Business people talk “bollocks”, she says, about bringing their expertise to charities. 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’s confirmed, delicately, by Marina Cantacuzino, a journalist who set up a charity almost by accident. Just before the Iraq war began, Cantacuzino started work on The Forgiveness Project, intending to show that there were alternatives to revenge. With a photographer colleague she went out to gather stories of forgiveness from victims and perpetrators of terrible crimes. These testaments were put on show and suddenly The Forgiveness Project became an ongoing concern. “It took over my life,” she says.

One of her biggest supporters is a property developer who avoids micro-managing and 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.”

This donor, who prefers me not to use his name, first came across the project on display at a law firm, and liked what he saw. He phoned Cantacuzino and said he wanted a meeting to see how he might be able to help. “The newer charities are delighted to get calls like that, out of the blue. Especially the unfashionable causes.”

What does he mean by unfashionable? “Well, The Forgiveness Project is helping people who have blown other people up, or done them other kinds of terrible harm.”

(Other unfashionable causes he supports – because they deal with things that have affected him and close family – include alcoholism, cancer and penal reform.)

Clearly, something like The Forgiveness Project is only going to be set up by an individual with a vision. But what about schools? Aren’t they the sort of thing governments should run? What next – private armies?

High-earners argue that governments won’t spend their money as well as they can spend it themselves: philanthropists can direct the cash exactly where they want. Critics argue that we’d all, no doubt, like to do that with our taxes – but the better way is to elect a government to spend it as rationally and accountably as it can, according to the columnist Polly Toynbee.

Not everybody on the left sees it this way. Beth Breeze, of Philanthropy UK, stood as a Labour candidate at the last election. She constantly finds herself arguing that private donations are not an alternative to government funding through taxes. They’re a supplement: “The NHS can’t send children to Disneyworld.”

Among politicians, the answer to this issue is hotly contended. But all the main parties see a major role for citizens and social entrepreneurs. David Cameron has repeatedly called for them to take on the burden of failed state agencies. Meanwhile Gordon Brown, who did so much to liberate the philanthropists’ cash, has promoted the former minister for the Third Sector, Ed Miliband, to cabinet while allowing him to retain overall responsibility for the voluntary sector.

Like Breeze, LaSpada does not believe that private funding will replace government, but 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 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,” says the mild-mannered philanthropist. “We have 25 per cent 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.”



Helping 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 may 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 co-ordinates foundations across the UK, Bowcock passionately believes that donors should engage with their local communities – something that might well help to address concerns about the rich-poor divide.

Another non-profit organization 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 Rockerfeller Foundation. While he was there, he created a three-week workshop for would-be philanthropists, 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 off his own business.

Davidson always lived modestly. He’s 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 up 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 per cent of the money they intended to give, because they were overwhelmed with plausible and moving requests and didn’t have the time to carry out sufficient research. “You go into this and you think, ‘God, there is an infinite number of ways to lose money!’”

The workshop enabled him to overcome that. 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 wouldn’t 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 there’s a family trust.

Keywords: philanthropy