(Bloomberg) -- The world of finance is focused on how to get high returns, and people in the industry seek the same in their philanthropy. Of course, what that looks like is shaped by a donor’s values and passions. Here are several people in finance who’ve defined their giving early in their careers. One has poured hundreds of millions of dollars into brick-and-mortar projects. Another is helping bring better seeds and fertilizer to farmers in Africa. One couple seeks a breakthrough in understanding the gene mutations that increase the risk of cancer; another is funding research to improve U.S. education. Their stories may help you define your path.
The Advice Seeker
Henry Kravis found success early, co-founding KKR & Co. at age 32. When he turned 40—the year KKR pulled off its first $1 billion buyout—he decided it was time to start giving back in a meaningful way. “So I called up the best philanthropist I knew, David Rockefeller, and asked him what to do,” he says. “David said, ‘Get involved.’ ” Kravis followed not only that advice but also Rockefeller’s example of focusing some of his philanthropy on New York City.
Within a few years, Kravis had stepped up with $10 million gifts each to the Metropolitan Museum of Art and Mount Sinai Hospital. More recently he gave $125 million toward a new campus for Columbia Business School. He also aligned with institutions associated with his mentor: the Partnership for New York City, Rockefeller University (founded by David’s grandfather), and the Museum of Modern Art. The 74-year-old also supports nonprofits backed by the younger generation at his company.
On two big issues, Jon Gray, president and chief operating officer of Blackstone Group LP, has identified unmet needs and set out to fill them, not by funding existing organizations but by starting programs with carefully chosen leaders and partners.
After Gray’s wife, Mindy, lost her sister to ovarian cancer, the couple established the Basser Center for BRCA at Penn Medicine, a division of their alma mater, the University of Pennsylvania. The center conducts research into the gene mutations that can lead to ovarian cancer and also provides community outreach. Moreover, the Grays provided the seed money for NYC Kids RISE, which offers college savings accounts (called 529s) for low-income students in New York City. The pilot program started in September.
“They’re remarkably similar from my standpoint,” Jon, 48, says about the two causes. “We’re creating something from scratch.”
The Risk Taker
Hedge fund manager Bill Ackman helped Teach For America get off the ground when it was founded in 1989, a year after he graduated from Harvard. The organization’s success is one reason Ackman supports startup nonprofits and social enterprises. The 51-year-old chief executive officer of Pershing Square Capital Management LP says his best philanthropic investment is One Acre Fund, which assists East African farmers.
The Pershing Square Foundation gave One Acre its first big grant in 2008, when the nonprofit was working with 2,000 farmers in Kenya and less than two years old. Five years later, the Bill & Melinda Gates Foundation signed on. In 2017, One Acre worked with 615,000 farmers in six countries. Of course, some ideas don’t work out. Ackman recalls funding a new nonprofit that gave stipends to high-achieving, low-income students to take Advanced Placement exams. “It turns out the money didn’t have an effect. Kids who were motivated were motivated anyway,” he says. And he’s all right with that. “We’ve had failures, but we learn from them.”
Stanley Druckenmiller, who seven years ago converted his hedge fund into the Duquesne Family Office, helped build the Harlem Children’s Zone in a single New York neighborhood. Lately he’s taken on a bigger bet: to lift children out of poverty all over the country. The idea is to pool big gifts (more than $10 million and as much as $200 million) to make investments with long horizons so proven programs can expand to other states.
Blue Meridian Partners, run out of the Edna McConnell Clark Foundation, has raised more than $850 million to work with nonprofits including Wendy’s Wonderful Kids, which supports efforts to place hard-to-adopt children. “Blue Meridian’s potential to unlock capital and channel it through a coordinated, collaborative approach will show philanthropists don’t have to go it alone,” Druckenmiller, 64, says.
John Overdeck, the co-founder of hedge fund Two Sigma Investments, and his wife, Laura, founder of Bedtime Math, which produces content to get kids excited about math, set up the Overdeck Family Foundation to support improvements in U.S. education. A lot of funds go toward research into different learning and teaching methods and for sharing those findings.
“A lot of people are nervous about investing in this sort of thing because they feel it’s not leading to immediate direct benefit to the kids,” John, 48, says. “But we’re talking about a trillion-dollar part of our economy. We have a tremendous opportunity for impact.”
The Robin Hood Foundation’s evaluations of poverty-fighting programs impressed John. He served on its metrics committee before joining the board.
This story appears in the Q2 2018 Family Offices special report from Bloomberg Markets.
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