Hedge funds often draw press for big risks and even bigger profits, as well as their ability to avoid the regulations traditional investment banks are subject to. They're as clandestine as they are lucrative, which has drawn them equal numbers of admirers and enemies in the financial world.
But many of the hedge fund world's biggest leaders are using their wealth to benefit others, as well as to polish their image. Hedge Funds Care, an international charity based in New York City, aims to use its wealth to fund organizations dedicated to fighting child abuse.
Hedge Funds Care claims to be the only grant-making public charity that focuses exclusively on funding anti-child abuse initiatives. Founder Rob Davis was working for Montgomery Securities in the late 1990s, and wanted to combat the bad press that hedge funds were receiving as a result of the collapse of Long Term Capital Management.
As a former elementary school teacher, Davis was particularly concerned about the effects of child abuse on student's education and well-being, and so chose child abuse as the focus of his new philanthropic endeavor. Davis claimed in a 2007 interview that hedge funds are "the most philanthropic industry on the planet...but you almost never hear about it.”
Since 1998, Hedge Funds Care has awarded over 900 grants totaling more than $32 million internationally. In the New York City area, Hedge Funds Care East Coast has distributed over $14.5 million through 407 grants (see Fundraising: New York City). The largest portion of the grants (57%), goes towards primary prevention and educational activities, though Hedge Funds Care also funds advocacy, training, and intervention programs. New York City grantees include the Child Abuse Prevention Program, Big Brothers Big Sisters, Girls Education and Mentoring Services, and Court Appointed Special Advocates (CASA), among many others.
While the grantees benefit from a foundation that was able to keep up its giving levels even during the worst years of the financial crisis (according to their website, over $2.7 million in 2009), there is still secrecy around how the foundation raises its money exactly, aside from the benefits and galas, and updates on giving.
What the foundation and others like it have been open about, is the premium placed on the return on their philanthropic investment. Organizations that hope to funded must show the outcomes they hope to produce, and the metrics used to measure success. In business as in charity, the hedge funds want to ensure their investments are successful.