More charities get private equity backing

The industry's once-controversial charitable foundation has backed another four children's charities...

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Last Updated: 31 Aug 2010

The Private Equity Foundation, which was established last year amid a storm of negative press, has had a busy year. Since recruiting ex-Crisis boss Shaks Ghosh as CEO in April, it’s been honing its strategy to focus on NEETs – young people not in education, employment or training. All four of its new charities – Fairbridge, School Homes Support, SkillForce and Tomorrow’s People – operate in this area (and take its total portfolio to eleven).

The PEF model involves bringing corporate management discipline to the third sector – the so-called ‘social venture philanthropy’ approach that Bill Gates’ foundation is also adopting. This means carefully screening opportunities, working closely with portfolio charities and measuring performance. ‘Our aim is to help charities scale,’ says Ghosh. ‘So we’re looking for charities that are prepared to take that step change.’

It’s an interesting approach, and one that we imagine could go either way. It might revolutionise the sector, and convince a sceptical world of the wonders of private equity. Or it might result in a few disgruntled charities – after all, it may come as a bit of a culture shock to some of the volunteers working in the sector when the PE boys come in and start cracking the whip.

Still, it looks as though PEF is recovering from its inauspicious debut last year, when its launch dinner attracted hostility from press and unions alike. A £5m fund was a paltry effort from a super-rich industry, critics said – a transparent publicity stunt at a time when private equity was under the cosh. If nothing else, the trustees seemed to misjudge how the episode would play out in the media.

Now it’s keen to tell its story better. In London yesterday, Ghosh showed MT a video extolling the work of the PEF’s charities (presented by her old chum Jon Snow) and talked frankly about the lessons it has learned during the last year. And the money pot is growing: the latest round of fundraising, which is almost complete, has already surpassed last year’s total (PEF has no target figure, but it could end up being about twice the original amount). ‘And the level of personal donations has also increased, which is great,’ adds chairman Ramez Sousou. ‘It shows people believe in the model’.
 
Applying private equity skills, time and money to educating British children? If the PEF isn’t careful, it might start giving the industry a good name...

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