Not your average City suits: Private equity heads turn to philanthropy

London

"For me, it’s personal." Those were the words which headed Andy Ratcliffe’s CV when he applied to be chief executive of the Impetus Private Equity Foundation (PEF), and almost two years into the job they seem to have stood him in good stead.

Impetus PEF is something of a novelty in the City. It relies on donations from some of London’s biggest firms and individuals, and puts their money to work philanthropically but in a way they understand.

The foundation takes a private equity approach to “investing” (it never actually receives any money back) in charities which help underprivileged children get jobs. “A lot of charities are kind of starved – they get funding from people who pay for bums on seats but don’t invest in the organisation,” says Ratcliffe.

“There’s certain things that people don’t want to pay for, like getting a new finance officer or IT system, but you need in order to build a good organisation. We pay for that bit really.”

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The charities Impetus focuses on range from those which tackle exclusions or skiving, to those which help talented teenagers from deprived areas get into university.

“I went to quite a rubbish school in Telford in the Midlands, where about 15 to 20 per cent of people would pass their GCSEs,” says Ratcliffe. “I was lucky and did quite well, but loads of my mates would have had really different experiences in a different place.”

The drive to right this wrong led Ratcliffe to work as a poverty researcher in the UK and South Africa, an education adviser to Gordon Brown’s government, and a policy adviser to the Rwandan government with the Tony Blair Africa Governance Initiative. Eventually, he grabbed what he calls his “dream job” as chief executive of Impetus – the power to place money with charities which are doing the best for disadvantaged young people purely based on objective evidence, without the interference of politics or bureaucracy.

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The drive behind Impetus

It isn’t just the money – around £3m to £4m per year – which Impetus brings to education charities. The foundation’s board contains some of the world’s biggest names in private equity: chaired by KKR’s Johannes Huth, just a few of the other seats are filled by Blackstone’s Lionel Assant, CVC Capital Partners’ Marc Boughton and BC Partners’ Nikos Stathopoulos.

These leaders, along with the investment team containing a wider variety of professional services players, act as possibly the world’s most well-connected business network to help charities improve their work and scale up.

First, Ratcliffe’s on-the-ground team helps charities measure and define their success and make sure their programme works.

“Once you’ve got that right, we bring in a load of pro bono support from the City. There shouldn’t be any problem with a small charity where we don’t know someone who can help fix it,” he explains.

The huge private equity presence throughout the foundation means that there is a significant focus on due diligence. Before any money is committed to a charity, Impetus will make sure it walks the talk, it can be sustainable and there are no skeletons hidden in the closet.

Why the private equity industry has spearheaded these efforts to help children from less well-off backgrounds goes beyond a feeling of compassion, Ratcliffe believes. “Private equity firms own a lot of very big employers, so I think they also understand that there’s an economics to this as well,” he says.

The fact that we’ve got a big chunk of our society that aren’t getting the educational skills they need is not just a social or moral tragedy, it’s an economic one.

The next step for Impetus will be trying to get young adults into these companies for work experience. Meanwhile it is hoping to partner with government to make sure the charities it has supported have a sustainable funding line. Then, Impetus can step back and find new charities, to start the whole process again.

Read more: City firms back campaign to educate thousands of youngsters about managing money

Full story: Not your average City suits: Private equity heads turn to philanthropy: City A.M.

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