The private equity industry gathered last night for the launch of a new foundation that will channel millions of pounds to charities in the UK and Europe.
The Private Equity Foundation, which launched last night with a low-key fundraising dinner in London, has attracted the support of some of the industry’s leading lights. It has already raised more than £5 million ($9.8 million; €7.6 million), which will be divided between five children’s charities in the UK.
Ramez Sousou, managing director of Towerbrook Partners and chairman of the board of directors of PEF, said: “As an industry we have had great success and with that comes a responsibility and desire to give back. We found that desire was widespread in the industry.”
More than 70 private equity firms and advisory groups have already signed up to the foundation. Its trustees are David Blitzer from The Blackstone Group and Stephen Peel from Texas Pacific Group, Todd Fisher from Kohlberg Kravis Roberts, Dwight Poler from Bain Capital, Scott Collins from Summit Partners and Charlie Green of Candover.
The foundation’s stated aim is to apply private equity techniques to charitable giving. There will be stringent criteria for the selection of suitable charities, operational and financial management assistance for the chosen groups to help them meet their objectives, and ongoing evaluation of their effectiveness.
Sousou said: “We have raised £5.1 million. It is easier to raise money and much harder to give it away. So we have applied private equity techniques to charity. We set a strategy. We did the due diligence and screened the market. We drew up a long list of 30 then a short list of eight charities. We took advice from New Philanthropy Capital, who advise donors and then we committed to the four charities.”
The money raised to date already puts the foundation in the top 30 of UK charities and Sousou has ambitions to raise as much as £15 million a year. “When we prove the concept we will come back for even more money,” he said. In practice this will mean the chosen charities have to deliver against objectives agreed with the foundation.
But the recipients of foundation cash will get more than capital. Sousou said: “We will try to add value to the charities. Each trustee has a direct relationship with one of the chosen charities and it is an opportunity for our people to volunteer time as well.”
The proposed approach is very similar to that pioneered by Impetus Trust, a venture philanthropy firm run by industry veteran Stephen Dawson. Impetus, which currently focuses on charities addressing social issues, is one of the five beneficiaries of the initial fundraising and will co-invest alongside PEF.
The other beneficiaries are: Community Links, an East London children’s charity; the National Society for the Prevention of Cruelty to Children’s Treatment and Therapeutic Service; ThePlace2Be, which supports unhappy schoolchildren, and Volunteer Reading Help, a charity that promotes literacy among disadvantaged children.
Not all last night’s attendees were enthusiastic about the foundation. The GMB, a UK trade union that recently clashed with buyout firm Permira over job cuts at the AA, organised a protest at the event, accusing the foundation of hypocrisy.