Hedge Fund Philanthropy: Where's the Buffett?

The hedge fund industry has two faces. There is the bad face. On Friday, a former hedge-fund manager Imperium Advisors LLC agreed to pay almost $120,000 to settle charges that it violated securities rules. This is only the most recent scandal that has tarred the hedge fund industry.

As long as there are bad actors like these in the hedge fund industry, hedge fund philanthropy will fail to repair the industry's image. It doesn't help that although hedge fund money has built many mega-mansions, it has failed to build a foundation on the order of the Bill and Melinda Gates Foundation. There is no Andrew Carnegie, John D. Rockefeller, or Warren Buffett in the hedge fund industry.

Then there is the good face. Some do-gooders are attempting to change the perception of hedge fund managers as a band of robber barons--as well as fill a social need. Rob Davis, a founder of Hedge Funds Care, a nine-year-old charity, tell the New York Times: "we may have failed to change the perception of hedge funds, but I think we've succeeded in helping children." The Robin Hood Foundation, a well known hedge fund charity, raised $48 million at its annual benefit dinner last year. These charities are respected and have a solid results-oriented approach to philanthropy. However, there seem to be fewer Rob Davises than Kirk Wrights in the hedge fund world. Kirk Wright is a hedge fund CEO who went on the lam last year after $100 million in investment funds disappeared. Until more hedge fund managers put their talents in the service of good rather than evil, "hedge fund" will remain synonomous with scandal, not altruism.