Queries over charity's donations policy

Queries over charity's donations policy

The article below, concerning the Children's Investment Fund Foundation (CIFF), said, in error, that the charity had been approached by the Charity Commission about how it intends to narrow the £300m mismatch between its income and the grants it makes. In fact it was CIFF that requested a meeting with the Charity Commission in advance of filing its annual returns. CIFF's granting was one of several subjects discussed at the meeting at which CIFF outlined future outgoings and plans for charitable expenditure, but no specific concerns were raised by the Charity Commission or CIFF about the difference between income and charitable giving beyond discussing these plans.

The charity founded by the hedge-fund activist, Christopher Hohn, has been approached by the Charity Commission about how it intends to narrow the £300m mismatch between its income and the donations it makes.

The accounts of the Children's Investment Fund Foundation (CIFF) for the year to August 2007 show the British charity had income of £324.5m, but approved charitable grants of only £10.2m. An analysis of cash flow shows it paid out £4.5m to good causes, but spent almost £320m on investments which helped swell the charity's net assets to more than £800m.

The Charity Commission, which regulates charitable.....continued below

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"We have met the trustees of CIFF recently and we are aware that the 2007 accounts again reflected substantial income," he said.

"We understand that the charity has plans for substantial future increases

in charitable expenditure. We are in dialogue with the charity on a number of issues of good practice, as you would expect with a charity of this size and which has experienced such rapid growth."

CIFF raises most of its revenue through a subsidiary which is a partner in The Children's Investment Fund Management (UK), the hedge fund run by Hohn. That subsidiary received £275m from the hedge fund under a profit-sharing agreement and passed this on to the foundation under the Gift Aid scheme. A further £45m came directly from the hedge fund under an investment agreement.

However, the bulk of the income received by the charity is reinvested in Hohn's hedge fund. CIFF boasts investments valued at £800m of which £767m are holdings in the hedge fund - which has earned a reputation as an aggressive activist and is credited with prompting the bid battle for Dutch bank ABN Amro.

The Charity Commission's guidance on investment by charitable funds says trustees must consider the need to keep investments diversified in order to reduce the risk of losses.

A CIFF spokesman said the foundation's investment approach had recently been independently reviewed and endorsed. He said the approach CIFF takes is designed to ensure there is cash flow to support short-term needs and long-term grant-making programmes.