Hedgeweek Comment: Spirit of charity dries up as financial sector wilts
The bloodbath in the stock markets and the continuing pain of the financial sector is now even taking its toll on giving to the needy. Donations are starting to dwindle from financial institutions and other players such as hedge fund managers that in the past have been big donors to charities and other worth causes.
According to the Wall Street Journal, some of the wealthiest US individuals and corporations are retreating from commitments or scaling back pledges. Some once generous givers, such as investment banks Bear Stearns, Lehman Brothers and Merrill Lynch, have folded or been bought.
The newspaper says that the suffering of the hedge fund industry is affecting a fund-raising mainstay, the New York charitable gala. A Leg to Stand On, a New York charity supported by big banks and hedge funds that helps children with missing limbs in the developing world, gathered only USD170,000 at its recent 'Hedge Fund Rocktoberfest', compared with USD320,000 a year ago.
Project Sunshine, an international non-profit organisation that provides helps children with serious illnesses, cancelled an annual fundraising dinner that usually attracts about 500 hedge fund managers because a low turnout was feared, according to Joseph Weilgus, a hedge fund manager and the group's founder.
However, there are still some givers left in the alternative industry. Hedge fund manager John Paulson donated USD15m to the Center for Responsible Lending to fund legal assistance for families facing foreclosure. As well he might, having earned an estimated USD3.7bn last year largely by betting that US sub-prime borrowers would default on their mortgages.
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