Media Alert: I'm quoted in this CNN Money story comparing private equity philanthropy overseas and in the US: "Private equity: Scrooge no longer."

My quote: "Private equity firms are very concerned about making any statements. They are being very circumspect," said Stephen Adler, chief executive of Charity Brands Marketing, a New York firm that advises private equity firms and hedge funds on giving. "They're all about being under the radar."

CNN journalist Grace Wong makes an excellent point about US private equity philanthropists needing to take a page from their counterparts across the pond.

Hedge Funds Write the Rulebook in Philanthropy

Think that Bill Gates and the dot-commers are going to be the major drivers of philanthropy in the coming decades?

Consider this, then: In 2003, the biggest family foundations created by hedge fund managers was $360 million. In 2005, it jumped to $1.6 billion. About $1.3 trillion is currently invested in hedge funds. Hedge funds trade more each day than most companies make in a year, and the boom shows no signs of busting.

With this kind of wealth, hedge funds are writing the new rulebook in the philanthropy game, and, for better or for worse, charities that don't study the new rules will get left in the cold in the 21st century. What are the new rules?

1. Performance must be measurable. Whether the philanthropy is nonprofit or for-profit, hedge fund philanthropists like quantifiable results. Charities like the Global Fund, which uses a performance-based model and sets tangible targets, do well. Charities with a vague mission and no metrics lose.
2. Take risks and take on debt. On the financial side, the new kids on the board like to run a charity the way they run their hedge funds. Greater risks yield greater returns.
3. Spare no expense in fundraising. From Bill Clinton to Prince, no star is too big to make an appearance at a hedge fund charity fundraiser. This kind of lavish fundraising rankles some of the old guard in the nonprofit world, but the hedge fund executives are calling the shots.

Some of the prominent hedge fund philanthropic organizations that are shaking up the field: Robin Hood Foundation, Hedge Funds Care, A Leg to Stand On (ALTSO), High Water Women, 100 Women in Hedge Funds, and, in Europe, Absolute Return for Kids (ARK).

Venture Philanthropy and the War on Terror

Venture philanthropy has its champions and detractors. Detractors say capitalism and charity shouldn't mix. Proponents say it applies principles of accountability much needed in the nonprofit sector. Oh, and it may also be a potent weapon in the war on terror.

Stop the presses. Venture philanthropy fights terrorism? So implies moderate religious leader, venture philanthropist, and businessman the Aga Khan in a piece in Sunday's New York Times. The Aga Khan is chairman of Akfed (the Aga Khan Fund for Economic Development), a strategic for-profit philanthropy. Akfed, which funds projects such as hydroelectric dam systems in poor, underdeveloped countries like Uganda, is "developing protection against extremism," in his words, by creating a way out of poverty. Poverty, according to Khan, "is the driver of tragic despair, and there is the possibility that any way out will be taken."

Kudos to the Aga Khan and others who follow in his footsteps. It is well-known that extremists have made inroads in the Muslim world through their philanthropy, building schools and community centers, so it is heartening to find out that moderate Muslims are seeing to it that religious extremists no longer have the market cornered.

As Oxford economist Paul Collier says, "He gets a multiplier effect from his investments that's really lacking in foreign aid."

If one of the effects is reducing terrorism, that's a mighty big return on his investment--one in which we are all shareholders.

Good Giving

A new analysis of trends in philanthropy by GivingUSA demonstrates a trend away from individual giving and towards private foundations. "A decade ago they represented 8.5% of philanthropic dollars (two decades ago, 7%). Today they represent 12.4%." This is a good thing because structured giving demands accountability and responsible stewardship. And that's a plus for the giver and the recipient.

"International affairs giving is about $11 billion, of which about 74% is for international development." About $5 billion of this goes to pay for vaccines in impoverished nations. This is heartwarming news, as worthy organizations such as The Global Fund need all the funding they can get to spread hope.