Robin Hood Foundation

  • 19 Jul 2007 at 10:15 AM
  • charity

Robin Hood Fund Pulls Investments From Hedge Fund Managers

The Robin Hood Foundation, a giant charity for the poor in New York City, is withdrawing investments in hedge funds managed by members of its board of directors and leadership council, according to a letter to Robin Hood supporters obtained by DealBreaker.
The charity had come under criticism from Washington, DC lawmakers for investing with—and paying fees to—hedge fund managers who also serve on its board of directors. Senator Charles Grassley of Iowa, the leading Republican on the Senate committee which oversees charities, recently expressed his disapproval of the fees paid to board members.
“I don’t remember Robin Hood keeping two and 20 as his cut,”’ says Senator Charles Grassley of Iowa, the top Republican on the tax-writing finance committee, which also oversees charities.
The charity had invested money from an emergency fund built from donations from its board members with as many as 19 hedge funds. Seven of those funds are managed by board members or members of the charity’s leadership council. Those managers were paid fees of 2 percent of assets and 20 percent of profit for managing the assets.
In a letter to supporters emailed last night, David Saltzman, the charity’s executive director, announced that the charity would no longer invest money with members of its board.
“Although we are totally comfortable with these procedures, as part of our board’s ongoing governance review over the past year, and to avoid even the appearance of any conflict, we have decided that none of Robin Hood’s leadership will manage these funds going forward,” Saltzman said.
Earlier this week Saltzman had defended the practice as benefitting the charity since the hedge fund managers on its board were leaders in the money management business. Since 1990, the returns after fees had averaged over 17 percent annually, according to Saltzman. Apparently the scrutiny from lawmakers like Grassley has convinced Robin Hood to give up the practice.
Even if the returns for the contingency fund’s investments decline, the poor who benefit from the charity’s work will no doubt be comforted by the fact all apparent conflicts of interest are being avoided.
After the jump you can read the full text of Saltzman’s letter.

Read more »