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36Issue

THE ONLYWAY IS UPhow the 30% cluB took

on the financialestaBlishment to win moRe

places foR women on BoaRds

By saRah GoRdon

@hugo_greenhalgh

contentsFt WeALtHdecemBeR

30% club: thenext chapter

On the same day the women — and two men — ofthe 30% Club gathered for our photoshoot, LordDavies released the latest chapter in his ongoingreview into the representation of women on boards.The club had been founded in 2010 with the

express purpose of increasing the number of womenin C-suite positions; Lord Davies’ final reportwas keenly anticipated. After five years of work,and lobbying by the 30% Club, his findings werepositive: women filling FTSE 100 board positionspassed the 25 per cent “milestone” earlier this year.A new target of 33 per cent female representationhas been set for 2020.The numbers stand testament to the work

undertaken by the 30% Club — at every level. Notonly lobbying ministers and the City for change, butalso acting as role models for the emerging femaleleaders of the future.Eventually, as Sarah Gordon notes in her cover

story for this edition of FT Wealth, its membershope there will be no need for the club. “I’d like tosee the 30% Club redundant and wound up,” saysHeather McGregor, managing director of TaylorBennett, “because women on boards become socommonplace that it’s simply not needed any more.”Moving from the ambitions of the 30% Club in

the UK (although they are keen to export theirmodel globally), this edition also focuses on those ofthe wealthy around the world, with a CorrespondentSpecial reporting from South Sudan, Israel, Brazil,Iran and the US.

Hugo Greenhalgh Editorhugo.greenhalgh@ft.com

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A trial is exposing thisclosed society’s linksbetween money andpolitics

18 tHe 30% cLUBHow women havetaken on the old boys’network of UKcompany boards

24 in on tHe ActArts groups arechallenged to be evermore creative in wooingwealthy sponsors

32 moveR And sHAkeRApp king Uri Levineon his quest to helpordinary people save timeand money

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36ISSUE

THE ONLYWAY IS UPHOW THE 30% CLUB TOOK

ON THE FINANCIALESTABLISHMENT TO WIN MORE

PLACES FOR WOMEN ON BOARDS

BY SARAH GORDON

contRiBUtoRsDalya Alberge is a freelance artswriterDaniel Ben-Ami is deputy editor ofIPEMagazineNajmeh Bozorgmehr is the FT’sTehran correspondentStephen Foley is the FT’s USinvestment correspondentSarah Gordon is the FT’sbusiness editorJeremy Hazlehurst is founder ofBusiness FamilySimoney Kyriakou is news editor ofFinancial Adviser, an FT publicationJoe Leahy is the FT’s Brazilbureau chiefLouise Lucas is the FT’s Asianews editorKatrina Manson is the FT’s formerEast Africa correspondent (now onbook leave)Paul McClean is an FT graduatetraineeNeil Munshi is the FT’s Chicago andMidwest correspondentAdam Palin is a reporter on FTMoneyAliya Ram is an FT graduate traineeJohn Reed is the FT’s Jerusalembureau chiefMatthew Vincent is the FT’s deputycompanies editorStephen Wilmot is companieseditor at Investors Chronicle,an FT publication

FT Wealth editor Hugo GreenhalghDeputy editor Rohit JaggiProduction editor Ruth-Lewis CosteArt director Kostya PenkovPicture editorMichael CrabtreeSub-editor Philip ParrishSpecial reports editor Leyla BoultonGlobal sales directorDominic GoodGlobal relationship director forbanking and finance Valerie XiberrasPublishing systems managerAndrea Frias-AndradeAdvertising productionDaniel LesarJunior designerHarriet Thorne

coveR pHotogRApHdAn BURn-FoRtiAssistAnt sAm WRigHt

insigHt38 eqUities

The debate is on as to whetherthere are assets in acronyms

40 FAmiLY oFFiceFor the wealthy in the MiddleEast, it is about finding a balancebetween generations

42 investmentThe growth of gadgets such asmobile phones is powering themetals market

44 pHiLAntHRopYThe power and efficacyof altruism

46 coRRespondent: speciALHow South Sudan’s wealthy parktheir assets outside the country

48 coRRespondent: speciALThe Lucas Museum of NarrativeArt is battling a show of force

50 coRRespondent: speciALCorruption in Brazil is bringingforth a wonderful display of art

52 donoR-Advised FUndsDafs are gaining in popularitywith affluent altruists on bothsides of the Atlantic

56 investment pAssionsBuilding assets in musicmanuscripts and instrumentsis beginning to resonate

58 AmBitioUs WeALtHComplexities of modernphilanthropy and the fraughtissue of naming rights

openings6 investment FocUs

Money is flowing into Africain the global hunt for yield

8 tHe RicH coLUmnHow a tree can be for life, notjust for Christmas

10 tHe ideAs coLUmnAsia’s approach to learninghas spawned a global industry

48

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Oil production(barrel/day)

20mM-Pesa users in Kenya

(from a 46m population, 2015)

$87bnForeign direct investment

in Africa in 2014

14%of global total

Largest according to FDIFrench energy company

Total plans to invest

$16bnto develop the Kaombo

offshore oilfield in Angola

Sub-SaharanAfrica GDP growth

5.0%2014

3.75%2015 (forecast)

4.25%2016 (forecast)

Nigeria Angola

1.7m2.4m

In Africa, there is . . .

7.6%Global oil reserves

5.8%Global energy production

3.2%Global energy consumption

182mNigeria

Often described as thefinal frontier of globalinvesting, Africapromises investorsthe possibility of rapideconomic growtttw h

fuelled by its yyoung population andvast natural reesources.Critics, howwever, point to poor

corporate goveernance and widespreadcorruption thaat deter investmentsin the continennt’s volatile markets.Among sub-Saaharan countries, onlySouth Africa, hhome to the continent’slargest stock mmarket, is considered anemerging market by MSCI EM index.Investment and liquidity risks

notwithstanding, money is flowinginto Africa in the global hunt foryield. In 2014, the region was theworld’s fastest-growing destination forforeign direct investment, according toresearch by FDI Intelligence.For individual investors, there are

a growing number of Africa-themedfunds, offered by the likes of Investecand Templeton, that tend to focus onlarger economies such as Kenya andNigeria.Global companies listed on more

established exchanges that centre onthe continent, such as London-listedbrewer SABMiller, can also offerlower risk plays on the rise of Africanconsumption.The fate of the continent’s growth

in the near future, however, remainspegged to global commodity prices.Its dependence on primary goods isillustrated by downgraded IMF growthforecasts for 2015. There is little doubtthat Africa investors must committhemselves for the long term.

AFRICA FOCUSADAM PALIN

THE HUNT FOR YIELD

@adampalin

6 | FT.COM/WEALTH

1.68bn2030

2.48bn2050

Forecast Africapopulation

60 yearsLife expectancy inAfrica (2010-15)

43%Electricity coverage inAfrica, by population

84,000kmDistance of African railways

37%Mobile phone penetration

by population (2010)

80%(2015)

760mMobile phone

subscriptions in Africa

FTSE/Johannesburg Stock ExchangeAll-Share Index performance:

(South African stock x)Total return, to Oct 30, 2015:

23number of stock

exchanges in Africa

58.6%11.6%12 months 3 years

Sources: United Nations, African Development Bank, IMF, BP Statistical Review 2015, FDI Intelligence

Sub-Saharan Africafiscal balance forecasts

-4.3%2015

-3.6%2016

Sub-SaharanAfrica inflation forecasts

6.9%2015

7.3%2016

1.19bnAfrican population

(2015)of which largest:

99mEthiopia

GRAPHIC BYRUSSELL BIRKETT

FT.COM/WEALTH | 7

The annual Christmastree at the RockefellerCenter in New York

‘forestry has advantagesover farmland. you don’thave to harvest annually’

every Christmas, we invitethem into our homes and whathappens? We spend the wholetime pouring them drinks,finding them headache pills

and catering for their fussy tastes infood. It takes days to clean up afterthem. And it still feels like they’reunder our feet weeks later. No, not thein-laws. I refer, of course, to Christmastrees.According to experts (or at least

the people who were contacted by aDaily Mail reporter for a Decemberspace-filler two years ago), theaverage Christmas tree will drink athird of a pint of water a day, but alsorequire regular top-ups of vodka andlemonade, to kill off bacteria andprovide glucose for its cell structure,as well as salicylic acid from aspirintablets to prevent fungal infection;and the ongoing absence of bananasor other fruit that emit ethylene gas, asthis can cause premature needle drop.But even if you went to all these

lengths, the chances are your centralheating will reduce even the juiciestspruce to twigs by the Feast of Stephen— leaving you to pick needles out of theshagpile well past Twelfth Night.At £200 or $200 for a six-foot fir,

it is a lot of expense for somethingthat, when discarded alongside yourneighbours’ in that first week ofJanuary, will form one of the mostdepressing of all suburban tableaux. Ifonly families realised a tree could be forlife, not just for Christmas.Thankfully, there is now a chance

of this message getting through,following two rather larger coniferoustransactions. Never mind the 6msmall British Christmas trees thatwill enter landfill sites next month,think instead of the 30,000 hectaresof forest that asset manager GreshamHouse can let you buy into, havingacquired Aitchesse, a forestry manager,last month for £7.7m. Tony Dalwood,chief executive of Gresham House,

In the UK, IPD Annual ForestryIndex puts the average annual returnover 22 years at 8.9 per cent, which,as Gresham House notes, beats UKequities and bonds. Dalwood attributesthis outperformance to the “illiquiditypremium”: the extra return investorsexpect for not having the ability to sellat short notice. “Returns have beengood,” he says. “In timber, we are in theearly stages of people getting used tothis. The illiquidity premium shouldreduce over time, as appreciation forthe asset class increases.”Anthony Crosbie Dawson, portfolio

manager at rival forestry adviser FIM,argues that getting used to the long-term nature of the asset class is whatgives timber investors an advantageover those in other real assets. “Forestryhas big advantages over farmland,”he says. “You don’t have to harvestannually.” He cites the example of2008-09, when housebuilding “fell offa cliff ” and timber prices plummeted.FIM kept its trees in the ground and letthem add more volume — and deferredvalue.Timber price volatility remains a

risk — FIMmay not pay its target 3per cent tax-free income distributionto investors if low prices mean it has toharvest too many trees to fund it. But,instead, FIM might look to pay a largerdistribution once prices have recovered.

Sunaina Sinha, managing partner ofCebile Capital, even sees evidence of asecondary market developing, enablingher to advise clients on half a dozenforestry asset sales.Add in sustainable policies and tax

breaks for long-term investors andit is possible to see why trees havebeen a purchase of choice in recentfestive seasons. In December lastyear, Aitchesse advised the Church ofEngland on a deal to buy 15 forests for£49m. No need to worry where thisyear’s vicarage Christmas trees willcome from. But the vodka, on the otherhand...

shares the view of Digby Guy, chairmanof Aitchesse, that the risk/returncharacteristics of forestry are “such agood fit for institutions and families”.Similarly, try to see the wood for the

35m Christmas trees in the US — inparticular the 5.3m hectares of woodthat timber group Weyerhaeuser willown after agreeing to acquire PlumCreek three weeks ago for $8.4bn.Rick Holley, chief executive of

Plum Creek, believes the $100m ofcost synergies will enable investorsto “capitalise fully on the improvinghousing market”.Timber itself, however, appears a

market on which wealthy familiescould scarcely improve. In the US,the National Council of Real EstateInvestment Fiduciaries index shows theannual return on timberland over thepast 28 years has averaged 13 per cent.

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When a talented tutor isoffered $11m to jumpship to a rival teachinghouse, you appreciatethe importance Hong

Kong places on education.And why not? Education is big

business across Asia. Ditto profits:gains at Beacon Group, current homeof the fought-after super-tutor LamYat-yan, almost doubled in the twoyears to the end of July and there areplenty of people who would argue thisis money well spent.

Asia’s love of learning has spawnedbooks such as US writer Amy Chua’sBattle Hymn of the Tiger Mother, aboutthe use of discipline in child rearing,and has inspired much hand-wringingin the west — Singaporean methodsand teachers, for example, have beenemployed to shake up maths teachingin the UK. The Asian approachhas inspired envy, griping and evenlawsuits. In November 2014, a groupcalled Students For Fair AdmissionsInc filed a lawsuit, which is beingcontested, against Harvard College inthe US alleging its admissions officewas discriminating against Asian andAsian-American applicants.

But more than anything, demandfrom Asia has spawned a multibillion-dollar industry of tutors, agents, onlinecourses and staid British schoolssetting up shop in humid climes farfrom their rainy playing fields at home.

“There is huge demand for theBritish brand,” says Richard Howorth,a former hedge fund manager who islooking to recruit teachers for an onlinetutorial company he is setting up.

Lam and Beacon are tiny cogs in theprivate tutoring wheel, an industryforecast to be worth nearly $200bnglobally by 2020, according to GlobalIndustry Analysts. The consultancypinpoints Asia-Pacific as the biggestand fastest-growing market, with aprojected compound annual growthrate of 10.7 per cent over the period.

schools in China. Eton says profits fromthe venture will be decanted into itsbursary programme.

Other venerable British schoolshave gone further. Winston Churchill’salma mater, Harrow, has replicatedits playing fields in China, Hong Kongand Thailand; boaters and bluersremain de rigeur, humidity and heatnotwithstanding. Dulwich College isin Singapore, China and South Korea,while Marlborough College can befound in Malaysia. Haileybury hastaken the daring step of opening itsdoors in Kazakhstan.

This expansion has it risks. In 2005,Dulwich College severed ties it hadmaintained for eight years with itsfranchise in Thailand after a row overmanagement at the Thai school.

In total, British private schools haveset up 44 overseas campuses, educatingalmost 25,000 pupils, according to theIndependent Schools Council — morethan double the 2012 figure.

For universities, big brains meanbig fees, but before they can persuadethe finest minds to enrol, so-calledplacement agents pop up to take theircut. Ranging from honest brokersto the plain unscrupulous — again,operating both in physical premisesand online — they promise to scourthe region to bring students anduniversities together. Some take a feefrom universities, others from students,and more than a few from both: talesabound of money disappearing with nooffers of places in return.

Others, for a handsome fee, willwrite and submit essays to educationalinstitutions in fluent English forstudents whose grasp of the languageis far more rudimentary and who thenstruggle on enrolling.

Indeed, so popular and lucrative isthe education business that even travelagents are getting in on the act: oneparent recounts a tale of seeing one“with posters on its walls of schoolsthat no longer exist”.

Children whose education is notsupplemented privately are in theminority in parts of Asia. Data fromthe Hong Kong Federation of YouthGroups’ Youth Research Centreshow 72 per cent of secondary schoolstudents in Hong Kong in 2012 usedprivate tutors — still behind Taiwan (75per cent on 2010 numbers) but aheadof South Korea’s 71 per cent (2011) andJapan’s 53 per cent (2007).

Tutorial offices proliferate across thecontinent: crammed into cheek-by-jowloffice blocks in Hong Kong. In far-flung reaches of Japan it can be easierto find a tutor than a coffee.

Online learning is proliferating too:among recent entrants is a tradingsubsidiary of the UK’s Eton College,which has formed partnerships with

@louiseflucas

THE IDEAS COLUMNLOUISE LUCAS

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10 | FT.COM/WEALTH

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the Israeli and USflags trampled underfoot at a shrine in thenorth of tehran

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or years I have put my life at risk for God and thiscountry,” Babak Zanjani, dressed in blue stripedprison uniform, told a Tehran court on October 31.“I have been imprisoned for two years under difficultconditions in a small room which is like a toilet.”Iran’s most notorious billionaire, who has claimed

he has more than 60 companies inside and outsideIran, stands accused of corruption, fraud andforging documents. In his defence, Zanjani

Iran uncoveredA coRRuPtion tRiAlis exPosing thisclosed society’slinks betweenmoney And PoliticsBY Najmeh Bozorgmehr iN TehraN

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‘The oil keeps creaTingnew rich classes.iran’s rich are noT

enTrepreneurs and noneare known in The world’

claims he served his country by helping its authoritiesmanoeuvre around EU and US oil and banking sanctionsintroduced in 2012 “when Iran could not sell one barrelof crude nor could transfer one US dollar”. In response,Iran’s oil ministry claims it is owed more than ¤2.7bn foroil exports, which Zanjani says were frozen by sanctions.But the Zanjani saga signifies more than just a tit-

for-tat between the state and a colourful businessman.The case is a microcosm of contemporary attitudestowards wealth in Iran’s closed society — wealth that isassociated, as great fortunes usually are, with politicalpatronage rather than individual entrepreneurship.Following the 1979 revolution, Islamic rulers

denounced capitalism and advocated an economybased on an amalgamation of Islamist and socialistideology. But in practice, they created a class of oligarchs,nominally operating in the private sector, linked to anddependent on the survival of the regime.The state will not let the private sector become too rich,

instead keeping it at about 20 per cent of the economy,which many argue is to prevent the independent businesscommunity from attempting to influence politics.“We have fallen into an oil trap since 1974, which has

increasingly put the economy under state control andkeeps creating new rich classes who are linked to oilrents and political power,” says Mousa Ghaninejad, aneconomist at Iran’s state-run Petroleum University ofTechnology. “Iran’s rich are not entrepreneurs and noneof them are known in the world.”

perversely, Iran’s economy was shaken by the oilbonanza produced under Mahmoud Ahmadi-Nejad, the populist president in power between2005 and 2013. The state received $650bn in oil

income, yet little trace of that money can be found inthe form of new infrastructure in Iran today, economistssay. Transparency International, the anti-corruptionwatchdog, has described Iran as one of the world’s mostcorrupt countries.Indeed, despite having described itself as “the cleanest

government ever”, billions of dollars of oil revenues wentmissing under the last administration.Zanjani, some say, is being made a scapegoat by

the centrist government of Hassan Rouhani, whichhas seized on the case as an example of a supposedcrackdown on corruption. The government has rampedup its efforts to attract foreign investment significantlysince the landmark deal with world powers this July tolimit Iran’s nuclear activities. Ph

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ft.com/wealth | 15

‘whenever The rich grow Too big andarouse public sensiTiviTy, The regime

uses Theirweak poinTs and knocks Themdown. Zanjani showed off Toomuch’

Zanjani’s case also serves as a distraction from other,possibly bigger, examples of corruption that could beembarrassing for the Islamic regime and potentiallydestabilising at a time when youth unemployment hashit 25 per cent and inflation stands at 14 per cent.

president Rouhani faces a tough battle againstcorruption — one that is not being helped byendemic political infighting. Analysts note thatpowerful hardliners in the elite Revolutionary

Guard, parliament and judiciary are infuriated thattheir sanctions-dodging, and therefore very lucrative,business interests are being undermined by the nuclearagreement.

Faced with 50,000 pages of indictment, brought intothe courtroom in a supermarket trolley, Zanjani hasdenied being a front for any government involvement.But he had admitted previously that he was “numberone” in Khatam-ul-Anbia, the construction arm of theRevolutionary Guard, in securing credit. The Guardruns an opaque business empire alongside its militaryorganisation, as do other religious and revolutionaryfoundations.

Yet to many ordinary Iranians, the story seemsvery familiar. To them, Zanjani is just one of manylittle-known oligarchs who act as a front for powerful

individuals and groups. Indeed, his refusal to disclosethe names of any partners or the whereabouts of theallegedly stolen money alongside the existence ofbountiful overseas assets fuels suspicions that he stillenjoys powerful backing in political and military circles.

Zanjani began his working life as an entrepreneurexporting sheep skins to Turkey from where, inturn, he imported shampoo, non-alcoholic beer,coffee and olive oil. His business grew quickly in

Iran and Turkey, and he founded a credit institution inthe United Arab Emirates and a bank in Georgia, andbought part of Malaysia-based First Islamic InvestmentBank. In an interview two years ago with Aseman, anow-defunct Iranian reformist weekly magazine, Zanjaniput his personal wealth at $10bn.

Yet the level of his wealth was starting to attract thewrong sort of attention in austere Iran. “Wheneverthe rich grow too big and arouse public sensitivity, theregime uses their weak points and knocks them down,”says one analyst. “Zanjani showed off too much.”

Wealth can equal theft in Iran. The many Porsches

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and Maseratis seen on Tehran’s roads driven by peoplein their 20s lead many to question where the nationalwealth has gone.Bijan Namdar Zangeneh, Iran’s veteran oil minister

and whistleblower who has vowed not to retreat until hehas obtained “the people’s money”, insists Zanjani haspartners. When the Financial Times asked the ministerwhy he had not disclosed the names of these supposedaccomplices, he said the government was already in“enough trouble by naming Zanjani” — a clear indicationof the influence of the suspected partners.Yet Zanjani’s lawyer, Rasoul Koohpayehzadeh,

denies any connections between his client and anypoliticians: “My client is a genius in international tradeand banking and was not supported by any politicalgroup,” he says. “If he had not been in jail over the pasttwo years, he would have made much more than the$2bn [he owes].”The disputed money is in the world’s banking

system, the lawyer adds, and can only be transferredonce sanctions are lifted. In court, Zanjani himself hasclaimed he has ¤22bn in cash.

no one knows how many billionaires there are inIran. There is no known record of wealth andthere are many ways to evade the inefficienttaxation system. But many observers are amazed

at the lavish lifestyle of little-known businessmen.“Astronomical sums are held by people no one has

heard of and you don’t know the source of their money,”says a senior private-sector trader.A former bodyguard of an ex-president has put aside

$300m to bring a famous Swiss jewellery brand toIran, says one senior businessman familiar with thecase. He adds that another entrepreneur, who travelsfrequently around the world and has operations in theUS and elsewhere, is unknown even among top businesscircles. “He has 150 watches, each of which is worthmore than $100,000. I only recently realised that heowns two high rises in Tehran with 300 apartments,each with an average 200 sq m of space. This alonemakes him a billionaire.”Skyrocketing property prices over the past few decades

have created many dollar millionaires. One 67-year-oldin the northwestern city of Tabriz inherited land manydecades ago that has risen in value so much that she hasbecome a billionaire, according to a family friend. Again,this is a woman without a public profile. “She is someoneIranians have never heard of and may never hear of intheir lifetime,” the friend says.A committed gambler, she is said to have 49 gaming

tables in the basement of her mansion in Tabriz and hashosted an average of 50 guests every evening for the past15 years — except last year, when she moved to the USfor her daughter’s cancer treatment. “Last year, in themiddle of sanctions, we transferred $30m to the US afterher big losses in casinos,” the family friend adds.Tens of these “unknown billionaires” live in Tabriz and

other larger cities such as Mashhad and Isfahan, analystssay, and do not admit their wealth in order to avoidattention from the public — and the tax authorities.During his trial, Zanjani indicated there were other

businessmen, richer than himself, who enjoy immunityfrom the state.He has wondered, for example, why the name of one

individual who owed the oil ministry $5bn was notdisclosed. The oil minister replied that the money was ina safe place.Whether this defence and self-promotion can help

Zanjani escape the death sentence, which was handedout last year to Mah-Afarid Khosravi, a businessmanlinked to a $2.8bn fraud case, remains to be seen.“For my co-operation [with the oil ministry], my

companies faced sanctions,” Zanjani told the courtdefiantly. “I am an economic genius… execution doesn’tscare me. I have served this country.” Ph

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1.the Revolutionaryguard in an annualparade in tehran

2.A currency trader withrial banknotes outside

a tehran bazaar3.

oil minister bijannamdar Zangeneh

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THE 30% CLUBHOW THE WOMEN — AND MEN —TOOK ON THE OLD BOYS’ NETWORKTO GAIN GREATER EQUALITY AND ARENOW TAKING THEIR CAMPAIGN GLOBALBy saRah goRDoNPhotogRaPh By DaN BuRN-foRti

many thanks to the Sky Garden at 20 fenchurch(developed by land Securities and canary wharf Group)

cover shoot assistants: william Bond; Jude Barrett-hambling;henry willmore

ft.com/wealth | 19

20 | ft.com/wealth

HelenaMorrissey, chief executive, NewtoNiNvestmeNt maNagemeNt

When Helena Morrissey started trying toget companies to take on board the goal ofthe 30% Club in 2010 she says they were“initially dismissive”. Getting male chairmen

to recruit women was the breakthrough the club needed.Now, she says, boards realise that getting a bettergender balance in senior ranks is “a business issue, not awomen’s issue”.

Morrissey has been the most public face of the clubsince its foundation. She provided the initial impetusfor the group six years ago — recruiting volunteers at alunch she convened for the women she knew in business.As a mother of nine, and a successful woman in financialservices, she has also been a target of the somewhatprurient — and sometimes critical — interest that themedia continues to take in City “superwomen”.

Now, a lack of time has prompted her to hand over thereins of the 30% Club to Brenda Trenowden.

Morrissey believes business leaders now understandbetter the benefits of a diverse board and workforce.

“A lot of progress has been made, but I often still feelvery isolated,” she says. “We haven’t got true inclusionuntil women feel they don’t have to be honorary men andgays don’t feel they have to be honorary straights.”

‘a lot of progresshas been made, but I stIll

feel very Isolated’

would like to see the 30% Club wound up becausewomen on boards become so commonplace thatit’s simply not needed any more.”So says HeatherMcGregor, a Financial Times

columnist, better known asMrsMoneypenny,who has been involved with the club since itbegan in 2010. Her wish may have seemed elusivewhen the group was set up to increase women’srepresentation on the boards of the UK’s largestcompanies. Now the goal looks achievable.In the UK, women nowmake up a quarter of

FTSE 100 boards, a voluntary target mandatedby the then coalition government and which hasbeenmonitored by a review panel led by LordMervyn Davies. A new target of 33 per centby 2020 has just been unveiled by the DaviesReview, set up to report on gender diversity inboardrooms; a goal that surpasses the 30 per centbelieved by the club’s founders to be the tippingpoint at which the representation of any minoritygroup achieves critical mass.The founders credit the club’s success to a

number of factors. The time was right; theinvolvement of men, particularly chairmenof FTSE 100 companies, was critical; and thevoluntary nature of the target, rather than amandatory quota, was key.“Having a balanced board is necessary but it

is not sufficient,” says HelenaMorrissey, chiefexecutive of Newton InvestmentManagementand one of the 30% Club’s founders. “Below thatthere is still a long, hard road.”

Previous page,from left:

Seated: emily Lawson,chief people officer,

Kingfisher; emma howardBoyd, chair, ShareAction;

helena morrissey,chief executive, NewtonInvestment Management;chairman, The Investment

Association;anne Richards, chiefinvestment officer,Aberdeen AssetManagement;

henrietta Royle, chiefoperating officer,

British Bankers’ Association;Brenda trenowden, headof Financial InstitutionsGroup for Europe andglobal chair, 30% Club;Front row standing:Katushka giltsoff,

senior partner, The MilesPartnership;

melissa Di Donato, areavice-president for ISV andChannels, Salesforce;gay collins, founding

partner, MontfortCommunications;

elizabeth Passey, senioradviser, J. Stern & Co;melanie Richards, vice-

chairman, KPMG;Jamie Brookes,

managing director, MHPCommunications;

Baroness mary goudie,Labour Peer;

Pavita cooper, founder,More Difference;

Niamh corbett, vice-president, Investment

Banking, Morgan Stanley;tamara Box, global chair,Financial Industry Groupsian westerman, senior

adviser, Rothschild;heather mcgregor,

managing director, TaylorBennett;

Diana Brightmore-armour, CEO UK, ANZ;

Back row:claudia Kohler, events

manager, NewtonInvestment Management;Nick Jarman, partner, PwC;

sarah wiggins, headof clients and sectors,

Linklaters;Jo Bostock, joint CEO,Women’s Sport Trust;

francoise higson, seniorproject manager, CEO

Office, Newton InvestmentManagement;

Joanna santinon, taxpartner, EY;

claudia harris, CEO,The Careers & Enterprise

Company;Liz Dimmock, founder and

CEO, Women Ahead

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HeatHerMcGreGor,maNagiNg DiRectoR, tayLoRBeNNett

heather McGregor, the FT’s Mrs Moneypennycolumnist, says the beginnings of the 30%Club were not promising. “Helena [Morrissey]doesn’t really do tears,” she says, “but if I had

been Helena, I would have done tears.”The group’s initial attempts to get FTSE 100

companies to sign up to their goal yielded a verydisappointing response, sometimes even “extraordinaryrudeness”, according to McGregor. It was not until twochairmen — Sir Win Bischoff, then at Lloyds Bank, andSir Roger Carr, then at Centrica — put their names downthat the momentum took off.“We realised this was not a problem that could or

should be solved by women on their own.”McGregor’s specific area of responsibility within the

club is for women between 25 and 35 years of age andshe says the key challenge for them remains how tocombine motherhood with a demanding career. “I say tothem, career breaks are fine, but stay current and stay intouch,” she advises.McGregor believes much has changed since the club’s

early days. “I think we’ve gone from ‘Why do it?’ to ‘Howto do it?’. Lord Davies on [his] own wouldn’t havechanged the debate.”

‘I thInk We’ve gonefrom “Why do It” to

“hoW to do It” ‘

Brenda trenowden, heaD of the euRoPefiNaNciaL iNstitutioNs gRouP, aNZ

“I’m a huge supporter of women’s networks… but toactually move women up in organisations, women’snetworks haven’t been making a difference,” saysBrenda Trenowden, who has just taken over from

Helena Morrissey as chair of the 30% Club.She sees the achievement of the Davies target of 25 per

cent of women on the boards of FTSE 100 companies asmerely the starting point, a useful “measurable target”that must now be built on. The club is involved in arange of projects, she says, to address the challenge ofwhy there are so relatively few women in the “C-suiteminus 1”.As a Canadian who moved to the UK in 1991, and has

also worked in Hong Kong, Singapore and Bangladesh,Trenowden is particularly supportive of the 30% Club’sincreasingly global reach.She believes there is still a powerful “old boys’

network” in the financial services industry in which sheworks and that there remains much to do to achievediversity at the top. Nevertheless, she says: “I think it’sbecome much bigger than we had ever envisaged. We’veended up having far greater reach and influence.”

‘We have far greaterreach and Influence

thanWe had envIsaged’

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BaronessMaryGoudie, LaBouR PeeR

as an inhabitant of the world of politics ratherthan business, unlike the rest of the 30% Club’ssteering committee, Mary Goudie sees herrole partly as bringing together ministers with

chairmen and chief executives.Her understanding of the “machinery” of government

is helpful, she believes, in getting dialogue going betweenbusiness and different ministries and being in the Houseof Lords, she says, “gives you more power to makechange, gives you access”. She lauds its greater diversitythan the House of Commons.“There is a good mix of women and ethnic minorities

and people with disabilities,” she says. “There are womenin the House of Lords who wouldn’t have got selected [asa prospective parliamentary candidate].”She believes the 30% Club, and other initiatives

around increasing female representation, will lead thecharge for greater overall diversity in the workforce.“We fight all the battles,” she says. “[Women] are the

change-makers, the leaders in every community.”Like the rest of the club’s steering committee, she

is strongly opposed to mandatory quotas for female

representation, arguing that “you only have quotas fora period, then you are back to square one”. She believesthe inclusive nature of the 30% Club has made it moreeffective.Baroness Goudie would like to see “at least 40

per cent” of boards made up of women and believesheadhunters have an important role to play in this. “Theyshould automatically send a list of three [men] and three[women candidates],” but she says they prefer to searchin a “golden circle” around London or even abroad ratherthan in the rest of the UK.“They never look out to Glasgow, to Manchester,” she

says. “There are all these great people out there — evenmen!”

Melanie ricHards, PaRtNeR aND uK BoaRDmemBeR, KPmg

“hitting a 33 per cent target on boards will bea significant step in the right direction,” saysMelanie Richards. “But much more workneeds to be done on the executive pipeline.”

Richards, who has worked at KPMG since 2000,believes one of the most important contributions she hasmade to the work of the 30% Club is to provide researchto back up its work and future direction.Last year, KPMG published Cracking the Code,

a report produced in conjunction with a businesspsychologist company and the 30% Club, on “genderintelligent” approaches to developing corporate

‘We fIght battles. Women arethe change-makers, the leaders

In every communIty’

ft.com/wealth | 23

leaders. The report dispelled some of the myths aroundworkplace diversity but also made practical suggestionsabout how companies could improve their talentpipeline — one of the key ways to develop “board-ready”candidates. “Where we can create more transparency,then you can be clear on what needs to be done,” shesays. “You can’t promote unseen or unidentified talent.”

Like many of the women involved in the club, Richardspays tribute to the support of her employer, whosechairmen was one of the original seven to sign up toit. She believes the club’s refusal to back mandatoryquotas for female board representation, as well as theinvolvement of men right from the beginning, hasbeen key to its success. Internationally, she says, evencountries that have imposed quotas are still interested insetting up 30% Clubs.

Richards is helping to lead the charge within theclub to get more women on the boards of FTSE250 companies, which still lag behind their biggercounterparts in the FTSE 100. The challenges for thatgroup, where boards are often smaller, are different,she says. But what is crucial at any company is how“mindful” its leadership is about the issue. “You need atailored approach for different audiences,” she says.

Gaycollins, fouNDiNg PaRtNeR, moNtfoRt

gay Collins has worked for more than 25 yearsin public relations and became involved inthe 30% Club because Newton InvestmentManagement, for which Helena Morrissey

works, was a client of hers. She leads the club’s PR work,believes the media have been “absolutely vital” in gettingits message across and that some of the most supportivejournalists, such as Andrew Hill, the FT’s managementeditor, have been men.

“Female journalists have tended to be either massivelysupportive or very sceptical... whereas male journalistsget it,” she says.

Like all the 30% Club members, she gives up her timevoluntarily and spends as much as a day a week on it.She believes that, although “the numbers have movedin the right direction”, there is a danger of complacencynow that the first Davies target has been met.

“The easier fixes have been boardroom representation,”she says. “A lot of the progress has been made in peoplerecognising that companies have to change, but the paceof change has been slower than I would have wanted.

“If you want to be seen as a leader who is forward-thinking, enlightened, you’ve got to have a diverse board,you’ve got to have a diverse executive committee andyou’ve got to give out that message that the company hasthe right culture for future employees.”

‘gIve out that messagethat the company has

the rIght culture’

‘Where We can createmore transparency, thenWe can be clear onWhat

needs to be done’ PHOTO

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ow about dinner on the stage of the latestproduction of the Royal Shakespeare Company(RSC), surrounded by sets and props? Or perhaps awalk-on part in a film? Otherwise, you could meetsome of the world’s most talented orchestral playersor have a gallery named after you.

These are among incentives offered to potentialsponsors, both corporate and individual, bytheatres, orchestras, museums and other artsinstitutions. In an age of austerity, the challengefor organisations is to be all the more creative inwooing potential patrons.

Sponsorship, particularly corporate, is neverjust about giving, however charitable the gesture.Companies may deny it, but they expect somethingin return and, indeed, it should be a two-wayrelationship, with benefits on both sides. But

in on the actCorporate artssponsors’ Cashearns perks andless tangible butmutual benefitsBY DalYa alBerge

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alex hassell in anRSc productionof Shakespeare’sHenry V

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‘What We need to groWis this obligation thatthe americans have’

1. and 4.Compton Verneyfundraising and oneof its galleries

2.the London Roadstreet party scene,with national theatrevolunteer grahambarker, front right

3.new York’s

metropolitan opera

how do arts institutions compare in the beauty parade ofwhat they can offer? And how do the benefits to sponsorscompare between, say, a theatre and a museum?“It’s really important that it’s a creative relationship,”

says Catherine Mallyon, the RSC’s executive director.The theatre group is particularly excited about nextyear’s international tour, made possible with supportfrom financial services group JPMorgan, enabling itto reach new audiences in China, Hong Kong and theUS. To mark the 400th anniversary of Shakespeare’sdeath, beginning in February, the touring programmewill include established actors such as Sir Antony Sherappearing in theHenry IV plays and emerging ones suchas Alex Hassell inHenry V, following strong reviews.“This is the first time we’ve toured on this scale,” Mallyonsays. “This is an exciting moment.”JPMorgan, which sponsors cultural organisations

worldwide, prefers not to specify figures involved,but association with prestigious arts “brands” can dowonders for opening business doors. The firm fundsdifferent areas of the arts because it realises that eachdraws different clientele.On the RSC tour, it will invite clients to productions,

receptions and behind-the-scenes tours, with the chance

to chat with actors, directors and designers, amongothers. “It’s a top-end experience for those clients,”Mallyon says. “It’s relationship development for them.”The RSC is also collaborating with Google and

Samsung, which are both interested in harnessing thelatest technology for the theatre’s digital programmes.Google has worked with the RSC on social media andstreamed rehearsals, while the Korean group has createdthe RE:Shakespeare smartphone app aimed at students.But such high-profile sponsors are hard to find in

substantial numbers, which is all the more reason tomake the few feel extra special. Referring to the RSC’sproduction ofMatilda The Musical, Mallyon says:“There’s a great swinging scene: we’ve had sponsors onthe swings; we’ve had them on the stage… Richard II hasan enormous hydraulics system that lifts the floor up anddown in the final scene. We’ve had sponsors actually inthat space, learning how the hydraulics worked. It’s justvery different from a wine and cheese party.”At the National Theatre, benefits for sponsors include

the chance to hear a director discuss themes in a play orhave a preview of sets and costume designs. Some evenappeared as extras in London Road, Rufus Norris’s filmadaptation of the National Theatre musical about themurders of prostitutes in Ipswich in 2006.Graham Barker, a human resources consultant, and

his wife Joanna, an investment manager, support causessuch as hospices, but they also see the arts as “important”for society and the National Theatre as “an outstandingbeacon of excellence”. He works as a volunteer alongsidethe National’s professional fundraisers, encouraging

1.

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‘sponsors have learntabout our hydraulics.

it’s very different from aWine and cheese party’

others to donate. In return, he says, the Barkers aremade to feel involved in a way that, “in my experience,is not equalled by anybody else”. He was invited to be anextra for a day in a street party scene in London Road—“one of the most extraordinary experiences of my life”,he recalls. He was also among six National volunteerswho were taken to the London Road film set in Essex.“I thought we’d be watching from the side lines. But wewere in the thick of it, being filmed.”

Among the pied pipers leading sponsors to the musicsector is the Royal Liverpool Philharmonic Orchestra(RLPO). It has captured imaginations with its “Adopta Musician” scheme, which offers the chance “to getto know your adopted musician”. Section leaders cost£700 while the chief conductor is £5,000. The projecthas attracted individual philanthropists rather thancompanies but has been “very successful”, says MillicentJones, the RLPO’s executive director of marketing.“Nearly all the 80-plus musicians are sponsored.”

In the US, sponsorship figures can be vast. In NewYork, for example, “signage, prime seating and pre-show dinner” are among the benefits for the “$100,000Corporate Council Sponsor” at the Metropolitan

Opera, and the Hood Museum of Art in Dartmouth,New Hampshire, received an extraordinary $10m giftlast year. “That’s way beyond anything even the bigLondon guys can think of at the moment,” says StevenParissien, director of Compton Verney, the art galleryin Warwickshire, central England, which is comparablein size to the Hood. Britain, he adds, has much to learnfrom America and its culture of giving.

Beyond the big cities, the search for sponsorship isan uphill struggle for British regional arts institutions.Compton Verney, a Grade I-listed Georgian mansion in120 acres of Grade II*-listed Capability Brown parkland,has a significant collection as well as a programme oftemporary exhibitions, including watercolours to beloaned by the Royal Collection.

But Parissien says: “Because a lot of corporates rightlywant their staff to visit — and let’s assume they’reall based in London or Edinburgh — it’s just too farfor them to come.” He says state funding for the artsis decreasing and that the government is looking toprivate philanthropists to fill the gap, as it does in theUS. “What we need to grow is this obligation that theAmericans have,” he says.

Colin Tweedy is one of the leading authorities onarts sponsorship, as former head of Arts & Business,part of the UK’s Business in the Community non-profitorganisation. More than 20 years under Tweedy’sstewardship, Arts & Business attracted more than £1bnfrom the private sector for the arts: “We can’t claim itall — it was a matching grant programme,” he says.But that was a huge achievement for the business

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1.sponsor Credit suisseadopted a hoarding atthe national gallery

2.an exhibit from thebritish library’s 2015magna Carta show,

which was sponsoredby linklaters

3.dinner on stage forsupporters at thersC in stratford

and arts communities. We did our bit… The arts weretransformed by that.”

Tweedy fears for arts sponsorship today because somany organisations have abandoned corporate sponsors,focusing increasingly on individual philanthropy. “If weneglect the business community, we will damage privatesector funding generally,” he warns.

There seems little excuse when business sponsorship istax deductible, he says: “It’s a marketing activity, whichyou can offset.”

Part of the problem, he adds, is that the UK no longerhas a real picture of what’s happening. “Since 2012,the figures aren’t available,” he says. “So it’s a completeguesstimate. I sense that the corporate sector is nowdropping. Individuals may be dropping. We don’t knowbecause no one’s doing the survey.” Funding body ArtsCouncil England says a survey is “in the works”.

There is also some nervousness about corporatesponsorship. Last year, the UK’s Museums Associationasked its members to consider whether accepting moneyfrom sponsors risks compromising museum values.

There were jitters over a legal case brought byenvironmentalists against the Tate galleries and BP. In2014, an information tribunal ordered the gallery togive details of its BP sponsorship. The Tate had initiallyrefused, claiming that the information could intensifyprotests and harm its ability to raise money from othercompanies. The case was brought by environmentalcampaigner Brendan Montague, supported by thecharity Platform, whose spokeswoman, Anna Galkina,said the sponsorship deal provided BP “with a veneer ofrespectability when in reality it is trashing the climate”.

The tribunal accepted evidence that “arts sponsorshipcan be understood as a means of enhancing, maintainingor repairing BP’s brand”. The Tate was forced to reveal itsBP sponsorship between 1990 and 2006 totalled £3.8m.

But this is a rare instance. Most sponsorships are seenas mutually beneficial. At London’s National Gallery,corporate benefactors who pay an annual £35,000 areoffered two dinners or two receptions in the galleriesfor their clients. Credit Suisse, its sponsor since 2008,developed an app allowing the public to view animagined recreation of Leonardo da Vinci’s studio anddiscover more about his paintings and their contextin an exhibition at the gallery in 2011-12. Hoardingsoutside the gallery, in place during maintenancework, promoted the bank, the exhibition and theapp. Credit Suisse realises culture “has no languagebarriers” and its extensive sponsorship includes long-term partnerships with renowned arts institutions,from the Kunsthaus Zürich art gallery to the New YorkPhilharmonic orchestra.

Other sponsors are drawn to projects with an obviouslink to their own business interests. They include City

‘if We neglect business,We Will damage private

sector funding’

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lawyers Linklaters, which sponsored a British Libraryexhibition this year on the nation’s legal charter, theMagna Carta. “The relevance of our Magna Cartaexhibition to our sponsor, Linklaters, was clear fromthe very start,” says Alex Michaels, the British Library’scorporate relations manager. “We involved themright from the start and, throughout the period ofsponsorship, they were able to leverage an extensiveprogramme of activities, including an evening eventaround the unification of the four surviving 1215 Magnaph

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‘somecurious corporateguests find themselves

quite captivated’

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Carta manuscripts, to develop and deepen relationshipswith their key stakeholders.”Dirk Heinrich, managing director for Germany and

Austria of Axa Art, an insurer, says his company has “twotargets” in sponsoring art fairs and specific art projectsworldwide: “brand visibility” and underlining that Axais “part of the art community”. Its art fair sponsorshipsinclude tours with art historians and educational talks.Sponsorships can also instil a passion for the arts in

sponsors or their guests that they perhaps didn’t knowthey had. Mallyon says some people have attended RSCperformances as “curious” corporate guests, having hadlittle experience of the theatre. “They find themselvescaptivated,” she says. “We have actually developed quiteregular individual audience attendance from peoplewho’ve come to a corporate event. They then have arelationship with us, which is a double benefit.”

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ri Levine could, if he wanted to, be doing something else— or, indeed, any number of other things.The Israeli entrepreneur co-founded Waze, the traffic

and mapping mobile app that disrupted the in-carnavigation business and now has more than 50m users.He and the company’s other shareholders sold thecompany to search giant Google for a reported $1.1bn in2013 in one of the country’s biggest high-tech “exits”.Levine will not disclose how much he made from the

sale; Globes, the Israeli business publication, estimatedat the time that his stake was 3 per cent and he nettedabout $38m. It is safe to say that the deal made himvery rich indeed.Yet instead of retiring early and indulging in his

hobbies — he is an avid cyclist and skier — Levine hasbeen involved in six other start-up companies, all with acommon denominator: to save ordinary consumers timeand money. “Doing a lot of good for a lot of people is theonly thing I care about,” Levine told the Financial Timesat the Herzliya office of Feex, the highest-profile of hisnew ventures. And by “good”, he says he means, “if I cansave you money, if I can empower you, if I can makethings accessible to you that were not accessible”.Levine is one of a new breed of Israeli entrepreneurs

who are holding on to their start-up companiesfor longer and shepherding them into the billion-dollar-plus valuation league known to investorsas “unicorns”. If they do sell, they are increasingly

Uri Levine, sayshe wants to savepeople time andmoney throughhis apps

mover and shakerapp king Uri Levine isshepherding his israeListart-Ups into biLLiondoLLar UnicornsBY John Reed in heRzliYaphotogRaph BY eYal waRshavskY

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1.Waze’s app offersdriver-generated

maps2.

tel aviv is a vibrantcity with a young

population who arehigh app users

ploughing their know-how and money into newcompanies and becoming serial entrepreneurs.Whereas Waze, with its driver-generated maps,

obviated the need for expensive satellite navigationdevices for its users, Feex is aiming to return toconsumers some of the money investment managerscharge for their retirement and other funds. In the USalone, these fees add up to about $600bn a year, Levinesays, more than twice the size of Israel’s GDP.Feex, which advises users on how to switch their

investments into lower-fee vehicles, is advertising itselfas “the Robin Hood of fees”.Levine’s other companies follow a similar theme: he is

also involved in Zeek, an online marketplace for unusedstore credit, and Roomer, which allows people to sell andbuy non-refundable hotel reservations. He is a boardmember at Moovit, a company that aims to do for publictransportation what Waze did for cars.Another of his companies, FairFly, allows users to

rebook plane tickets at a lower cost if the fare falls aftertheir original booking. Engie allows customers to use asmart phone to diagnose what is wrong with their car,then feeds back mechanics’ quotations, taking some ofthe mystery and murk out of car repair.“The mission is solving big problems for consumers.

In many cases, these are things I ran into accidentally,”

Levine says, wearing a black Feex T-shirt and sunglassesperched on his grey hair. “The gap between consumersand the industry is big and dramatic, and there is a hugeopportunity for disruption.”In a country where many of the top 1 per cent indulge

in large homes and lavish habits, Levine keeps a lowprofile. He lives in a rented flat in Kfar Saba, near TelAviv, riding his bicycle to most places; for longer trips, hedrives his Alfa Romeo Giulietta or his children’s RenaultClio. “In general, I don’t believe in spending more thanyou’re making,” he says.While frugal in his own habits, Levine has grand

ambitions for the new companies where he is chairmanor a board member. He believes that some, whiledestined to remain small start-ups in their first fewyears, could become “unicorns” as they succeed in solvingbig problems and one day be acquired for $1bn or more.This is something new for Israel. The country

nicknamed “start-up nation” has a reputation forproducing world-beating technology companies: Israelispioneered antivirus software and invented the memorystick, and are grabbing a disproportionate share of thenew cybersecurity industry. Israel’s high-tech militaryis a famous incubator for talents; Levine did his ownmilitary service in Unit 8200, Israel’s cyber spy agency.But the country’s groundbreaking entrepreneurs are

also famous for their impatience. Historically, they havebeen better at generating new ideas than building theircompanies into national champions. Venture capitalgroups and industrial investors from America, Europeand increasingly China, are always scouting for newopportunities in Israeli technology and are ready

‘i am not donewith therevolutions i want to do

— there are somany’

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buyers of fledgling companies. “If you are a first-timeentrepreneur, it is a difficult dilemma: a $50m-$100mexit is a life-changing event for an entrepreneur intheir 20s or 30s,” says Gadi Tirosh, managing partnerof Jerusalem Venture Partners (JVP), Israel’s biggestventure capital fund.No longer. Israel’s high-tech sector, now 25 years

old, is producing entrepreneurs, such as Levine, whoare experienced and confident enough to scale up theircompanies into the billion-dollar league. Waze’s saleto Google set a new benchmark, or in Levine’s word,a “target”, for Israeli tech, tempting other companyfounders to hold on for longer.Another member of Israel’s new billion dollar-plus

club is Mobileye, a Jerusalem company that has captureda commanding share of the world market for devicesenabling autonomous driving, with its cameras that helpvehicles to brake, park, and drive themselves.Investors in CyberArk, a cybersecurity company in

which JVP was an early investor, chose to build thecompany in Israel and list its shares on New York’sNasdaq rather than sell to a big technology group.IronSource, an online software and mobile distributioncompany, was recently listed as worth $1.1bn as ofAugust 2014 on a Wall Street Journal list of “the billiondollar start-up club”.When founder-entrepreneurs do sell, they are more

likely to do so at a higher valuation and use the companyto create new concerns with bigger ambitions. “Israelientrepreneurs are getting more experienced, moremature and want not just to make money, but to actuallymake a mark,” says Rubi Suliman, high-tech leader atPwC in Tel Aviv. “We are seeing more and more of these.”Mobile apps and the cyber-world have helped to level

the field in Israel’s favour, given the ease with whichmobile technologies can be tested and rolled out inforeign markets, with the help of small teams in the US,Europe or elsewhere.Israel’s small size — just 8m people — was traditionally

seen as a drawback in the drive to create successfulbig companies. Levine, however, thinks the country’s

companies are at an advantage vis-a-vis their Americancompetitors, as they are more likely to go internationalstraight away rather than focusing on the local market.He joined Waze’s two other founders in 2007.

The app’s breakthrough concept, which Levinetoday compares with Wikipedia, the crowdsourcedencyclopedia, was to use the collective wisdom of driversand the GPS functions in their phones to create maps.Building the critical mass and working out kinks in the

technology took time. The first, rudimentary version ofWaze worked on a Nokia phone. The company launchedin Israel and the US in 2009, then in the rest of theworld in 2010. As it went global, the company’s partnersspotted areas where it was not good enough: Israel has

‘as soon as youbecome good

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1.moovit is a public

transport app to maketravelling in any city

easier2.

cyberark securitycompany’s nasdaqbell in new york

3.mobileye, with

cameras to help brakeand park, enables carsto drive themselves

no ferries and few tunnels, so it needed to find a solutionfor what to do when a user’s GPS disappears.

In 2012, says Levine, everything changed. “As soonas you become good enough and free, you win,” he says.Should Levine and his partners have held onto Wazelonger and built an even bigger concern? PwC’s Sulimanis doubtful. “Waze is an application that is very difficultto monetise if you are not Google or Facebook,” he says.“It had to be sold.”

Notwithstanding its exit, Waze remains part of Israel,where it has about half of its 200 global staff, most ofwhom work on research and development. “Google ownsus, but we are largely autonomous and have our ownoffice space,” a company representative says.

Of Levine’s Feex venture, he says he got the idea forit in 2009, during the global downturn, when the fundsin his own investment portfolio lost 20 per cent of theirvalue, on top of which, he says, he was charged “a lotof fees”. When he approached the funds’ managers, hesucceeded in having them reduced.

Feex’s main focus is the US, where the majority of its25 employees work out of a New York office. The servicevets users’ portfolios and makes recommendations forsimilar investments with lower fees. The company saysit has more than 30,000 users in the US and morethan 100,000 in Israel. Feex aims to earn its keepthrough commissions it makes when it refers customerssuccessfully to alternative investments.

The company grew out of the Zell EntrepreneurshipProgramme, an academic course at IDC Herzliya, whereLevine mentored a team of students charged with solving“a big enough problem we could address”.

Roomer, the marketplace for non-refundable hotelroom reservations, came out of the same school year. Thecompany allows users to sell bookings they are unable touse, and collects a percentage per transaction.

Levine hints that he is not finished yet. The medicalcare industry, he says, is another sector where consumersare “getting ripped off ” and is ripe for disruption.

“We are doing more and more,” he says. “I am notfinished with the revolutions I want to start — there areso many.”

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equitiesemerging markets

assets in acronyms

Businesses never used tothink about acronyms. But,nowadays, thinking up catchybuzzwords has become abusiness in itself.

In the earliest years of my career,I worked in the same TV studio asa regional broadcaster who thoughtnothing (or certainly too little) ofpromoting his eponymous holidaybusiness: Stuart Hall InternationalTravel. I then left to join a short-livedheritage magazine that might haveachieved more prominent shelf spacehad it been sold into stores under itsunabbreviated name: Stately Homesand Gardens. I am just relieved that mycurrent employer is being taken over byJapan’s Nikkei and not merged with theSouth Hertfordshire Advertiser.

Asset managers, however, seemto have spent more recent yearscontriving acronyms to enhance theircredentials. It all started in 2001 whenJim, now Lord, O’Neill, erstwhileGoldman Sachs’ chief economist,noticed that the GDP growth of Brazil,Russia, India and China had surpassedthat of G7 countries: on those Brics hebuilt a fund, an index and a reputationas an expert on emerging markets. Fouryears later, he identified Bangladesh,Egypt, Indonesia, Iran, Mexico,Nigeria, Pakistan, the Philippines,Turkey, South Korea and Vietnamas the next 11 growth opportunitiesbut wisely chose to call the strategyN-11 rather than INVESTPIMPB. OrVISITBNPMP. Or, indeed, any otheranagram. In 2010, HSBC tried to makethe economies of Indonesia, Vietnam,Egypt, South Africa, Colombia andTurkey sound more inviting by likeningthem to small furry Asian and Africanmammals: the Civets. Then, a yearlater, Fidelity suggested how muchinvestors might make if they stuckwith Indonesia and Turkey, but addedMexico and Nigeria: a Mint.

Whether investors remain convincedby any of this is debatable. A couple

15 per cent rebound in 2012, the pastfour years have involved annual lossesof 22.7 per cent, 3.2 per cent and 2.6per cent. It was perhaps appropriate,then, that Lord O’Neill later addedSouth Africa to the original quartet ofgeographies: anyone who invested inrecent years will now be truly Bras[s]ic.

Even the newly Minted look a lotless well off, as Mexico and Indonesia’searning power is hit by the fallen oilprice and Turkey’s by fallen borders.Writing in the Financial Times lastyear, veteran City investor Terry Smithsaid: “Forget the Mints or the Civets —how about Moldova, Uganda, Greeceand Suriname? These I have christenedthe Mugs, a pretty good description ofanyone who would invest on this basis.”

But investment managers withlonger time horizons argue there is noneed to be so literal, or too offended.Last month, Neil Williams, groupchief economist at Hermes InvestmentManagement, pointed out that theC in Brics can still support its equitymarket. He argued that China couldcut real lending rates from 4 percent, further devalue the renminbiand spend more on infrastructure.Rothschild Wealth Management hasnoted a rebalancing of the Chineseeconomy alongside the slowdown.Similarly, Coutts has told its clients thatservice companies are taking over theprime position in China’s economy, as itmoves from export and investment-ledgrowth to greater reliance on domesticconsumers.

As these Bric consumers benefit fromrising wages, they even help the M ofthe Mints: rising labour costs in Chinamake Mexico appear an appealing basefor manufacturers wanting to export tothe US.

Williams prefers to view the Bricslowdown as “the baton... being handedback to advanced economies to fuelworld growth” — helpfully remindingus all that international travel need notbe a bad thing.

of years ago, research by Citywirefound that fund pickers werealready “sceptical” about “marketingbuzzwords” and unconvinced by assetallocations driven more by vowels thanvaluations. Even Lord O’Neill toldBloomberg he worried about “goingdown in history as... the guy that justconstantly created acronyms”. And,now, it would seem, he has got hiswish: two months ago, Goldman Sachsclosed its Bric fund after the assetsunder management fell to $100m, froma peak of more than $800m in 2010.With China’s economy slowing on allbar the official measures and Russia’sreeling from collapsing commodityprices, it seems the countries could notbe any more unappealing if they weregrouped with Andorra and Puerto Rico.

According to index provider MSCI,equity investments in Bric marketshave fallen 14.5 per cent over one yearand 5 per cent over five. Apart from a Ph

oto

:aFP/G

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imaGes

‘moldova,uganda, greece,suriname... mugs’

President VladimirPutin of russia,

right, greets china’sPresident Xi Jinping

38 | ft.com/wealth

@JHazlehurst

family officejeremy hazlehurst

The late literary critic EdwardSaid famously invented theconcept of “Orientalism”:the idea that the west’sperception of the east is

coloured by western political ideology.A good example, arguably, is the UStelevision dramaHomeland, whichfollows the fictional adventures ofAmerican spies in the Middle Eastand is widely seen by people in thatregion as depicting Arabs as suspect,dangerous and untrustworthy. This, saythe critics, reflects and reinforces thedominant US view of the Middle East.Perhaps because this “Orientalist”

view is so embedded in western cultureit is easy to picture wealthy families inthe Middle East, especially the Gulf, aspatriarchies populated by sheikhs indishdashas and Lamborghini-drivingplayboys. The reality, of course, iscompletely different, as family offices inthe region illustrate.The idea of “putting everything

in a box called a family office” is arelatively new phenomenon, saysSailesh Barchha, an adviser to theKuwaiti royal family — who differ inseveral respects from their westerncounterparts. For a start, there is thesheer amount of wealth generated,which means the money tricklesdown a long way. “You are havingconversations about hundreds ofmillions of dollars with people who arevery young — children, really,” he says.The source of the wealth is also a

factor. If money bubbles out of theground, it is not surprising there isa more casual attitude to it than in afamily that has worked hard to createand preserve wealth for multiplegenerations, and has embedded ethicsof diligence and thrift. Those factors,rather than any innate profligacy,explain the playboys.

at Vestra Private Office. “There aresome really dynamic families doingsome sophisticated thinking aroundgovernance and succession planning,often more than in some westerncountries, where a succession can betaken for granted,” he says.This is being driven partly by the

return of the second or third generationwho have been educated abroad. Forfamily offices now, the question isabout balance: balancing the needs ofthe older generation with the dreamsand aspirations of the young.

Jeremy Hazlehurst is founder ofBusiness Family

Then there is politics. A report byInvesco Perpetual, the investmentmanager, says 85 per cent of MiddleEastern family offices are connected tosovereigns. The line between sovereignwealth fund and family office canbe fuzzy and government policy andspending commitments can affectinvestment strategy.Because much of the region’s family

wealth comes from commodities,explains Emile Salawi, head of familyoffices at French bank BNP Paribas,it is prey to price fluctuations. Thisvolatility, he adds, “makes them muchmore prudent in the management oftheir assets — they will look to diversifyaway from the core business”.These family offices’ assets tend to

be less liquid than those of typical

European institutions, which can alsoleverage existing assets more easily. Butin terms of investment, the differencescome down to style. “The teams arerelatively small,” says Salawi. “Youprobably have one or two individualswho are very close to the beneficialowner or royal family, whereas inEurope you get a more collegialapproach. There is one adviser who ispredominant and very influential overthe royal family or beneficial owner.”Despite this more informal approach

— or perhaps because of it — there is afocus on educating the next generation,particularly female family members,says Alex Hayward, wealth strategist

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played by Claire Danes

40 | ft.com/wealth

In September 2010, a longstandingterritorial dispute between Japanand China turned nasty. A Japanesecoastguard vessel caught sight ofa Chinese trawler off the coast of

the uninhabited, Japanese-controlledSenkaku islands in the East China Sea.The coastguard ordered the trawlerto leave. But, within moments of theorder, the two boats collided. A secondcollision followed 40 minutes later,leading the coastguard to seize andarrest the captain of the Chinese ship:in retrospect, not a wise move.China’s response was furious and

immediate. The government moved tocut off Japan’s supply of rare earths, apeculiar set of elements located deepin the periodic table, which form thebedrock of much modern technology.Such was Japan’s reliance on thesematerials that merely days after theexport ban, which Beijing maintains itnever imposed, Japan relented and theChinese captain was released.“The strategic importance of rare

earths is huge and will only grow,”says Gareth Hatch, founding principalat Technology Metals Research, aprovider of market intelligence andanalysis on rare earths. More and moreelements such as cerium, praseodyiumand europium are being used topower and perfect everyday gadgets,from iPhones and headphones tomicrophones. Even in tiny quantities,they are also used as the driving forcebehind certain cancer treatments,nuclear reactors and X-rays.“They fulfil a similar role to that of

yeast in pizza,” writes David Abraham,author of The Elements of Power:Gadgets, Guns and the Struggle for aSustainable Future in the Rare MetalAge. “While they are only used in smallamounts, they are essential.“Whole industries are built on just a

objects of power and risk

few rare metals,” he adds. “The magicin [Steve] Jobs’ glass screen was dueto a dash of the rare metal indium [aminor metal rather than rare earth],which serves as the invisible link, atransparent conductor between thephone and your finger. A dustingof europium and terbium providesbrilliant red and green hues on thescreen. Cerium buffs the glass smoothto the molecular level.”For a long time, this importance

was reflected in their price. Shortlyafter the Senkaku dispute, the priceof rare earths rocketed over fears ofa Chinese monopoly of the materials,creating a bubble that burst after justa few months. A $100 investment inthe Market Vectors Global Rare Earth/Strategic Metals ETF in October 2010would have been worth $148 in April2011. That same investment is worthjust $20 today.This year, the price of rare earths,

and many of the companies that mineand produce them, has fallen evenfurther. In June, US miner Molycorpfiled for chapter 11 bankruptcyprotection and in August it mothballedits operation in California, the only USrare earth mine. Australian companyLynas Corp, now the only rare earthsminer outside China, blamed illegaloperations and excessive Chineseexports for its 11 per cent quarter-on-quarter sales fall in September.According to Anthony Lipmann,

chairman of the Minor Metals TradeAssociation from 2003 to 2006, thisprice crash is representative of thehuge levels of speculation in rare earthinvestment. “The rare earth hypeconvinced ordinary members of thepublic to invest in things they had nocontrol over,” he says.But with prices so low and demand

growing, could now be a good time

investmentrare earths

BY Paul Mcclean

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42 | ft.com/wealth

1.rare earth metals

bags are checked ata mine in nancheng

county, china2.

a chinese fishingboat is inspected by a

japanese vessel

to invest in rare earths? Lipmann isadamant that people should shy awayfrom investing.

“It’s ... simply not an investment,”he says. “It would be delinquent in thehighest degree for anyone to purportto attract investors into putting moneydirectly into rare earths — metalswhich take a lifetime of professionalinvolvement to handle and deliverto end users. [It is] an investmentundiluted by any balancing factors —an investment that relies entirely on abet. That is not wealth management,just irresponsibility.”

Abraham also sees the difficulties ofinvesting in rare earths. “It’s hard togive an elevator pitch for somethingno one has even heard of,” he notes.“Relying on unclear industry jargon,many investors are often in the darkregarding the risks.” However, he doesnot rule out investment of any form.“It’s a risky investment. But the futureis bullish — the price of materialswill increase because scientists arejust realising the properties that theyhave. Ultimately, if you understandChinese policy and the processing ofthe materials, you can be comfortableinvesting into this space.”

Hatch agrees. “The conventionalwisdom is that if Molycorp can’t makeit, then how can anyone else? But that’soverly simplistic. [Rare earths] arenot a lost cause, but investors must bemore discerning.”

Compared with the boom of 2011,opportunities for rare earth investmentare today few and far between. TheMarket Vectors Rare Earth StrategicMetals ETF remains a small possibility,with assets of just $33m, and its pricehas fallen 36 per cent since the start ofthe year.

Lynas Corp is regarded by many to beone of the few safer options in a sectorbeset with risk, though it is currentlytrading at A$0.08 against a high ofA$2.60 in 2011.

As the obscure elements that sparkedyet another dispute between Japanand China continue to fall in priceat a greater rate than the rest of thecommodities market, many are unsurewhere to turn.

Their low prices are attractive,particularly as their importance grows.For others, however, they pose too greata risk and the tremors of the 2011 crashare still too strong to ignore.

Rare earths:

Ceriumce (58)

the most abundant ofthe rare earths, ceriumis a silvery metal thatoxidises easily andis used in catalytic

converters, alloys andmagnets.

GadoliniumGd (64)

a silvery-whiteand toxic metal,

gadolinium is usedto target tumoursin neutron therapy.it is also used in

Mri scans to makecertain tissues andabnormalities more

clearly visible.

LanthanumLa (57)

one of the mostreactive rare earth

elements, lanthanumis used to makecarbon arc lightsand to reduce thephosphate levels inthe blood of patientswith kidney disease.

‘scIentIsts arerealIsIng theIr

propertIes’

2.

ft.com/wealth | 43

bY AliYA RAm

PhilanthroPyeffective altruism

bangs per donated buck

It seems unlikely that a 28-year-oldphilosopher could reshape how theglobally rich and powerful, fromSilicon Valley to Downing Street,think about philanthropy.But Will MacAskill, a fellow in

philosophy at Lincoln College, Oxford,is seeking to do just that. He advocatesa more practical form of philanthropy,termed “effective altruism”, whichover the past year he has presented atGoogle’s headquarters in Californiaand at Number 10. His philosophyhas also been endorsed by billionairephilanthropists such as Facebook co-founder Dustin Moskovitz.The idea is simple: effective altruists,

influenced by philosophers such asJeremy Bentham and Peter Singer,argue that people can “do good better”by determining how they spend theirtime and money.MacAskill says investors, politicians

and philanthropists — indeed everyone— should analyse how they donatetime or money so they can be confidentof having the greatest impact or, putanother way, of improving the qualityof peoples’ lives.“Most moral philosophers think we

should be doing something more withour resources to help the very poor thanwe currently do, but very few peopleare actually acting on that,” he says.Effective altruism is primarily a

practical movement, he expands.“Ultimately it’s [about] how much youare improving others’ lives per dollar.I think like an economist.”MacAskill set up two charities,

Giving What We Can and 80,000Hours, while undertaking post-graduate studies at Oxford. The twohave subsequently been broughttogether under the Centre for EffectiveAltruism, which seeks to “use evidenceand analysis to help others as much aspossible”.When it was launched in 2011,

80,000 Hours, which gives careeradvice to graduates, caused controversy

cause neutral” and focus on giving aproportion of their income. GivingWhat We Can, for example, challengespeople to donate 10 per cent of theirincome — which may be more difficultfor people on low incomes than for thevery wealthy.“Morality can sometimes be very

demanding, especially if you’re living inthis kind of moral catastrophe, whichI think we are,” MacAskill says of theinequality in the world. “I’m prettyhappy for people to give for whateverreasons they like as long as they give tothe right places.”Walking to the bicycle shed outside

his poorly lit office, unembellishedexcept for a cheap kettle on a shelf,MacAskill says it is important toanchor a culture of giving in economicresearch and “good scientific thinking”.He acknowledges gathering evidence

of cost-effectiveness is not alwayspossible, for instance, immediatelyafter natural disasters, and can be time-consuming and expensive, but insistsit is necessary for charities to gain thepublic’s confidence. “People are dyingof easily preventable diseases and wewant to help, but it’s not enough merely

to help,” he says, adding that saving onelife is “obviously great” but if a hundredlives could be saved, “that’s obviouslymore important”.MacAskill feels his philosophy can

help to save lives. “I used to think Ishould get annoyed at myself because I[was] going to study Wittgenstein,” hesays of his academic ambitions beforeeffective altruism. “Now that guilt hasgone away.”

by encouraging people to work inhigh-earning jobs, such as finance andconsulting, and then donate part oftheir income to charity.Matt Wage, a Wall Street trader,

attracted media attention in 2013when he announced he had givenaway $100,000, approximately halfhis salary. He told the New York Timeshe had deliberately targeted a job thatpaid well so as to be able to give moreto charity.But according to MacAskill, the

main purpose of effective altruism isto wean people off clinging to theirmonthly wage. He retains a proportion(£20,000 in 2009 terms, rising withinflation) of his salary to live on andgives the rest (roughly half his overallwage) to organisations such as healthinitiatives Deworm the World and theAgainst Malaria Foundation.So why should we all become effective

altruists — and how? MacAskillsays givers should be “explicitly ph

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effective altruism’s useof analysis is designedto ensure time or

money spent has thegreatest impact

‘I’m happy forpeople to gIve, aslong as It’s to

the rIght places’

44 | ft.com/wealth

BY Katrina Manson

correspondent: specialsouth sudan

Fragile spark oF wealth

1.

3.

The most conspicu-ous feature of SouthSudan’s elite is itsabsence.The newest

country in the worldis in dire need ofcommitted, educated

nation builders. But many of its mostwealthy citizens park everything fromtheir assets to their families — andthemselves — outside the country.Little wonder, perhaps. The people

of South Sudan spent decades fightinga war of secession with the Khartoumgovernment to the north, only toplunge into its own civil war soon afterwinning independence in 2011. In thepast two years, more than 2m peoplein a nation of 12m have fled death andethnic atrocities. An August peacedeal may see government and rebelsform an interim joint administration,but even if that comes off, trenchantpoverty and insecurity will pervade foryears.Alongside that, due to reduced

petroleum output because of fighting,a bad deal agreed with the northand falling world prices, the oil-based economy is shattered. Withoutincoming dollars to sustain centralbank reserves, the currency is now inmeltdown.Yet many have found a way to make

money, thanks to the combined impactof oil revenues, aid dollars and anunhealthy dose of corruption. Manyare even proud that South Sudan is oneof the few African countries that, onbalance, sends millions of dollars outto its diaspora, rather than relying onremittances sent in from abroad.Lual Malok, a businessman who

rents out warehouses and offices inthe capital Juba, is among them. Everymonth he sends thousands of dollars tohis family in Kampala.“I have four kids; these are from my

first wife. Then I have two youngerkids with my second wife. She’s here,”

says Malok, whose business supportsthem all. Like many South Sudanese,his first wife lives in neighbouringUganda so the children, three of whomare of school age, can get a good, safeeducation that poorer South Sudanesecannot hope to access at home.“For renting I have to pay $1,100 per

month, then for the food I send another$1,000, plus every three months I send$3,200 for school fees,” says Malokin his dishevelled Juba office. “All thebusiness people here are the same: theytransfer money out to their families,especially for school fees; that is amust.”

46 | ft.com/wealth

1.the UN refugee camp

at Malakal2.

president salva kiir inthe capital Juba

3.a model presents acreation by a local

designer4.

Developers aremoving into Juba

2.

4.

drives that circulate the leafy suburbof Lavington. The Kenyan governmenthas also put up South Sudanesepoliticians in an elegant hotel, whilethe Ethiopian government hostedmonths of peace talks.Even so, the streets of Juba bear

the marks of much change over thepast 10 years. While the city wasonce a dustbowl in which the onlyaccommodation comprised shacks,tents and containers, today it hashigh rises and even higher hopes.Developers speak of creating roof-topcigar rooms to serve the country’s elite;businesses from insurance to banksmake record profits. At the Da Vincirestaurant, couples chat and pose forfamily snaps beside a river, sippingbeers as the sun goes down.Car dealerships are still doing a

decent trade, but they rememberwistfully the best of the good old days,when the new government of 2011 putin orders for dozens of new vehiclesat a time for ministers and senior civilservants. Even today the odd Hummerhugs the streets and parks up outsidelate-night bars. But friends of theowners caution it is a fragile show ofwealth: many live in run-down homesand can no longer afford the cars’upkeep.In a country marked by decades of

war, still home to an inflated armyconsisting of hundreds of generals,many former fighters at the helm havealso always professed the ease withwhich they are prepared to “go back tothe bush”.“We are now spending less and it

means we can live within our means,”says a senior military officer. He offersthis unlikely belt-tightening theoryto help dismiss the significance of adollar crisis so acute that foreign-builtfactories and formal businesses havethis year started to close.“This austere style of economy that

we have to have now is better for us,”he adds.

Underdevelopment at home is onlypart of the explanation. One regionaldiplomat involved in protracted peacetalks describes the South Sudaneseleadership as “shameless looters whoare living in luxury while showingbreathtaking indifference [to theirpeople]”.South Sudan was ranked 171st

of 175 countries in TransparencyInternational’s annual corruptionperceptions index (CPI) last year, worsethan Iraq, Pakistan and Bangladesh.The rot set in early. Within a year

of independence, President SalvaKiir declared officials had alreadystolen horrifying amounts from thefledgling state. “An estimated $4bn isunaccounted for or, simply put, stolenby former and current officials, as well

as corrupt individuals with close tiesto government officials,” he wrote.“Most of these funds have been takenout of the country and deposited inforeign accounts. Some have purchasedproperties, often paid [for] in cash.”An investigation commissioned by

Avaaz, an online campaign group,indicates South Sudan’s top leadersmove considerable property andbanking assets outside their owncountry, into east Africa, the MiddleEast and Europe.“While South Sudan goes up in

flames, the families of the elite enjoy aluxurious lifestyle outside the countrysubsidised by endemic corruption ofstate coffers,” Sam Barratt at Avaaztold the Financial Times last year asdiplomats pressed for sanctions.In Kenya’s capital Nairobi,

South Sudanese number plates arecommonplace on the four-wheel

‘many havefound away

Tomake money’

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ft.com/wealth | 47

BY neil munshi

correspondent: specialcHicaGo

A show of force

1.rendering of theproposed Lucas

Museum of NarrativeArt in chicago

2.The latest star wars

film, The ForceAwakens, will bereleased later this

month3.

The Lucas Museumis to be built on whatis now a car park,

but critics say shouldbecome a parkland

1.In Star Wars, producer George Lucaspitted a scrappy band of rebelsagainst a powerful galactic empirebent on building a massive spacestation at the edge of the galaxy.But in Chicago, it is Lucas who is

being cast as the evil emperor and it isa local civic group, Friends of the Park,that sees itself as the only hope for thegalaxy — or America’s third-largestcity. Their version of the film’s DeathStar bears a far less ominous name: theLucas Museum of Narrative Art, a giftfrom the producer to the city.The parks group is suing to halt

construction under a 19th-century landusage law. But barring the unexpected,the museum, which will cost hundredsof millions of dollars to build, will beamong the largest gifts given to anAmerican city for generations when itopens on the glittering shores of LakeMichigan by 2020.The museum has the backing of

nearly every prominent Chicagoanor institution, fromMayor RahmEmanuel to Lucas’s wife, MellodyHobson, the president of Chicago-based Ariel Investments.Hobson says the project is “something

that is going to outlast us and hopefullybe an educational centre for people fromall over the world”. Its ability to attracttourists is a major reason the mayorlobbied hard for the museum afterLucas’s original pitch to the Presidionational park in his hometown, SanFrancisco, fell through. Though themuseum has not released an officialprice tag, the Chicago project is roughlythree times the size of the Bay Areaproposal, which Lucas had said wouldcost him about $300m to build. Lucassaid then that he would provide a$400m endowment upon its openingand another $400m upon his death. Itwas, to paraphrase Luke Skywalker, abig womp rat for the mayor to bullseye.Emanuel “understands the vision”,

Hobson says. “He’s supportive of it andsees what this can mean for Chicago —

it’s probably the biggest philanthropicgift to a city since the time of therobber barons.”The unprecedented nature of

the gift is hard to overstate. Thisis not naming rights on a room atthe Met. But it is the “robber” partthat strikes opponents, especiallywhen they consider that huge giftnotwithstanding, the city has offered abillionaire a 99-year lease on 17 acres ofprime lakefront property for $10.The museum itself could be “a

wonderful gift to the city of Chicago”,says Juanita Irizarry, executive directorof Friends of the Parks. “We are justagainst the location,” which is currentlyhome to a car park but advocates sayshould be turned into parkland.“What we find extremely problematic

is, even if you think the Lucas Museumshould go there, whether Chicagoanswant our public lands to be given

3.

48 | ft.com/wealtH

2.

about all that’s wrong with architecturetoday: a celebration of object-makingat the expense of public space, plus ashameless coddling of the powerful”.He has argued that it should be builtinland so as not to “foul” an alreadycrowded stretch of “Chicago’s greatestpublic space, a nearly 30-mile-longchain of parks and beaches along LakeMichigan” with more congestion.But the design has its defenders.

In a column in the Tribune, architectFrank Gehry compared criticism of thebuilding with complaints that initiallygreeted his GuggenheimMuseum inBilbao and Walt Disney Concert Hallin Los Angeles. He said the designfollowed in the footsteps of Snøhetta’sMalmo Concert Hall and the flowingwork of Zaha Hadid.Lynn Osmond, president of the

Chicago Architecture Foundation, saysthe design fits a “city of innovation andrisk… I think this is really pushing thatenvelope.”But perhaps the greatest endorsement

the museum has received comes fromthe people whose rejection sent itto Chicago. The public debate overthe project pitted old-money SanFranciscans who had funded thePresidio’s revitalisation and opposed themuseum against tech titans includingTwitter’s Jack Dorsey, Netflix’s ReedHastings, Yahoo’s Marissa Mayer andGoogle’s Eric Schmidt, who backed theproject. Ultimately, old money won out.Lucas’s proposed Beaux Arts design didnot conform to the trust’s guidelinesfor the space, though they proposed analternate site within the park that themuseum rejected.“The Lucas project had a lot going

for it — programmatically the boardand public were very excited about.The real challenge was around design,”says Joshua Steinberger, chief ofstrategy for the Presidio Trust. “It wasone of these projects… that broughtout a lot of excitement and we were alldisappointed not to get it in the end.”

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away to rich people,” she says. Criticshave decried the process as a classicbackroom Chicago deal. Some havecaught a whiff of take-it-or-leave-itnoblesse oblige. Public hearings wereonly held after the site was announced.Lucas ultimately hired a member ofthe mayor-appointed site-selectioncommittee, architect Jeanne Gang, todesign the grounds.Lucas did not help matters when

he told an audience in Chicago lastyear that after the San Francisco parkrejected his proposal, his wife, whohas donated to Mayor Emanuel’scampaigns, said, “Don’t worry, I’ll talkto the mayor.” Some wondered whetherthey had discussed it when Emanuelattended the couple’s wedding the yearbefore.From the outset, there were

criticisms of the process and that lease,which can be renewed for an additional

198 years for an extra $20. But it is themuseum’s design, by Chinese architectMa Yansong, which has proved themost controversial.Depending on whom you ask, the

interactive museum, which will houseeverything from film to comic books topopular and digital art, looks like “anintergalactic zit” or a volcano capped bya toilet seat. It has been unfavourablycompared with Jabba the Hutt.Blair Kamin, the Chicago Tribune’s

Pulitzer Prize-winning architecturecritic, has called it a “vanity project, theTemple of George”. He wrote that the“mountainous blob… speaks volumes

2.

ft.com/wealtH | 49

BY Joe LeahY

correspondent: specialbrazil

Scandal on diSplay

Art lovers in Brazil’ssouthern city of Curitibahave been treated to anunusual sort of showthis year. “Works UnderGuard”, at the Oscar

Niemeyer Museum, is an exhibitionof 48 important art pieces seizedfrom allegedly corrupt businessmenwho took part in Brazil’s biggest graftscandal, a kickback scheme at state-owned oil company Petrobras.The works on display, including

pieces from the great Brazilianmodernist painter Cicero Dias,composer and painter Heitor dosPrazeres and many others, weredeposited with the museum becausethe federal police did not have thefacilities to store them properly.“The museum fulfilled its mission to

conserve and house art collections, andalso to democratise access to them for

visitors,” Juliana Vosnika, director ofthe museum, wrote in the guide to theexhibition.The collection seemed designed

to confirm the worst prejudices ofordinary Brazilians: that the corruptare fabulously wealthy and thefabulously wealthy must be corrupt.Indeed, as Brazil slips into recession

and unemployment rises, the scandaland the economic meltdown havemade it unfashionable to be filthy richin Brazil, says Daniela Falcão, editor-in-chief of Vogue Brazil, the stylemagazine. When Brazil is booming,she says, “it is even OK to spend a lotbecause you are helping the country togrow. Now, on the other hand, there isso much uncertainty … you don’t wantto be connected to the elite involved inthese corruption schemes.”In a country in which the wealthiest

10 per cent control 54 per cent of

income, it is hard to shock peoplewith displays of ostentatious riches.But in the past year, the lifestyles ofBrazil’s A-list have been put under theX-ray like never before — with oftensurprising results.The exposés started with Eike

Batista, an oil magnate who wasBrazil’s richest man until he admitteda couple of years ago that his oil fieldswere lacking a key ingredient — oil.He was accused of insider trading anda judge ordered a public auction ofthe belongings of the tycoon and hisfamily. Brazilians watched as policeconfiscated a collection of luxury cars,yachts and jet-skis from the Batista

‘there is uncertAinty Aboutbeing connected to An elite

involved in corruption’

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50 | ft.com/wealth

1.the oscar niemeyer

Museum’s ‘worksunder Guard’

exhibition2.

an untitled work bycicero dias from the

exhibition3.

eduardo cunha, whohas been implicated in

the petrobras case

1.

2.

3.

is also accused of involvement in thePetrobras scandal by prosecutors.He had a Lamborghini, Ferrari andPorsche briefly confiscated beforegetting them back under a court order.These shows of alleged corruption

and ostentatious wealth are crampingthe style of Brazil’s super-rich when itcomes to doing what they do best —spending prolifically, analysts say.Vogue’s Falcão says the elite are

still consuming but doing so morejudiciously, investing in high-endjewellery and often offshore. Theyare keeping their purchases secret,especially the most extravagant.Retailers are having to be smarterto maintain an effective service forclients who don’t want to be seen to bespending extravagantly, Falcão says.Beyond this, the rich, like everyone

else, are worried about losing moneyin the recession, so they are opting foritems that should hold their value. “Ifyou are buying diamonds or emeralds,it will be a piece that will last forgenerations and be safe because even ifthe economy goes bananas you will stillhave this as an asset,” says Falcão.As for the Oscar Niemeyer Museum

in Curitiba, as long as wealth andcorruption go together, it seems therewill be no shortage of new pieces todisplay — the museum is preparing toexhibit a new batch of 139 works fromthe Petrobras investigation.

clan’s many residences. But Batista’strappings turned out to be modestcompared with what was hoarded bythose involved in the Petrobras case.One of the company’s former directors,Pedro Barusco, confessed in courtstatements that he had stashed away$100m solely from the proceeds ofcorruption — that and another $1m hesaid he had spent on medical fees andtravel.Another Petrobras director, Renato

Duque, is accused in documents madeavailable in the federal court of thestate of Paraná of accepting art worksin exchange for contracts — charges hedenies. His colleague, Paulo RobertoCosta, was “given” a new Range RoverEvoque by his partner in the Petrobrasscam, black-market money-dealerAlberto Youssef. Police found morethan $500,000 in cash in Costa’s home.Indeed, the Petrobras officials are

only the beginning. Politicians too havebeen accused of living the high life,among them Eduardo Cunha, head ofthe lower house of congress. A staunchevangelist — his big idea is to have a“heterosexual pride” day — he has beenimplicated in the Petrobras case andis accused of having secreted millionsof dollars in Swiss bank accounts. Hedenies any wrongdoing.Former president Fernando Collor,

who was impeached during his rule inthe early 1990s for alleged corruption,

ft.com/wealth | 51

BY SimoneY KYriaKou

PhilanthroPyDonor-aDviseD funDs

models of efficiency1.

The American Redcross, seen here

responding to a southcarolina flood, is a

beneficiary of moneyfrom the siliconValley community

foundation2.

Priscilla chan andmark Zuckerberg

3.The Wildlife

conservation networkis another sVcfbeneficiary

Mark Zuckerbergis the one tothank. In the lastdays of 2013,the Facebookco-founder andhis wife PriscillaChan donated

18m Facebook shares worth nearly$1bn to a donor-advised fund (Daf)called the Silicon Valley CommunityFoundation, shining a spotlight on ascheme that was formerly little known— in the UK, at least.

Dafs are not new. Described byGuy Simonius, head of wealth and taxplanning at Julius Baer, the privatebank, as “an efficient way to irrevocablydonate money for charitable purposes”,they have been a useful means of tax-efficient giving for US families since 1931.

“In the US, people are opening Dafsat a rate of three to one, compared withsetting up their own charitablefoundation, whether paying in $20,000or millions,” says John Canady, chiefexecutive of National PhilanthropicTrust UK, a Daf manager.

Billions of dollars have been flowingin: US Dafs’ charitable assets undermanagement had grown from $32bnin 2007 to $71bn by the end of 2014,according to the NPT.

The UK is a little way behind. NPT’sUK office, set up at the end of 2013,has raised just £5m from UK donors,while the UK Charities Aid Foundation(CAF) has run Dafs and Daf-likefunds since the 1970s and has 2,800donor-advised funds on its books, with£800m of assets under management.Investment bank UBS puts its latesttotal at SFr60m ($60m).

Traditionally, philanthropists haveestablished foundations or charitabletrusts. But the structure of a foundationmeans that while the family has greatfreedom over where the funds areinvested, they and the trustees mustalso bear the burden of administration,due diligence and compliance.

“Unless it is professionally managedand staffed, with the help of a clearstrategy, an autonomous foundationoften proves demanding to run fora donor,” says Luc Giraud-Guigues,secretary-general of Switzerland-basedFondation Philanthropia, an umbrellafoundation. “Also, in the context of lowfinancial return, a foundation whosefiduciary responsibility is to preservecapital for the mission decided byits founder will need sizeable capitalto function and provide meaningfulsupport to society.”

Setting up a Daf also involves lesspaperwork. “I’ve met several clientswho set up a trust and ended upfeeling a bit put out when they realisedthey could have had a donor-advisedfund instead,” says Tom Hall, head ofphilanthropy services at UBS WealthManagement. “A full charitable trustcould take three to nine months toestablish, together with fees of upwardsof £2,000. But we can open a Daf forour existing clients within a week ortwo at the most.”

Dafs are not just for billionaireseither. Many firms in the US will setup a Daf for $5,000. The UK CAF’saverage starting value is £10,000 andwhile it has 100 client accounts inexcess of £1m each, with the largest at£50m, the average fund is £250,000.

Another attraction of Dafs is thatinvestors can put nearly anything inthem. For years, the ability to donateshares to these schemes has been a bigdraw for US investors, and has becomemore popular in the UK since formerchancellor Gordon Brown introducedcharitable tax changes in 2000.

This is not pure altruism butsensible planning: rising stock marketsand share values create potentialcapital gains tax liabilities, butdonating shares results in a reductionto an individual’s CGT bill.

Cash and shares are the assets mostcommonly held in a Daf, but portfoliosare often laden with interesting Ph

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alternatives, such as cars, land, fineart or wine. The CAF says such assetscould be put into these schemes too.The flexibility lent by Dafs might beuseful for parents, who can makean irrevocable donation of valuableitems to prevent future squabblesover inheritance.

The structure’s anonymity alsomakes this type of fund more appealingthan a publicly registered familyfoundation if donors do not wantthe world to know the family silverhas been earmarked for WaterAid,for example. “Sometimes prominentfamilies appreciate the ability to bediscreet,” explains Canady.

This may be why some peoplehave criticised the scheme. In April2014, Marc Benioff, chief executiveof business software companySalesforce, himself a billionairephilanthropist, questioned the use

2.

52 | ft.com/wealth

3.

1.

Once donated, money in aDaf may not be reclaimed — it isearmarked irretrievably for charitablepurposes. “Once it comes to us, itbelongs to the charity,” points outKeziah Cunningham, senior advisorymanager at CAF Philanthropy. “Wesee a huge variation among donorsabout how they want to use their Daf,but it has to be for charitable purposes,as long as these pass our robustvalidation process.”

With their flexibility, anonymity andtax efficiency, could these schemes everreplace foundations? Not for everyone,thinks Canady. “Some people might befed up with the compliance and chooseto close their charitable trust, butothers might prefer to have the familyfoundation and the complete controland discretion this brings,” he says.

Not every benevolent billionairewants complete control over theircharitable giving. It is no surprise,therefore, that Dafs are gaining inpopularity with affluent altruists onboth sides of the Atlantic.

of Dafs in an interview with SanFrancisco Magazine: “Silicon ValleyCommunity Foundation is a bunch ofDafs. You give your money to SVCFand get your tax write-off for the year,but [the foundation] has no obligationto administer that money. Where’s[Zuckerberg’s money] gone? Whatgood is it doing now?”

True, Daf accounts often holddonations for an indeterminate period.Disbursement is at the discretion ofthe founders or their successors. “Adonor can hold a Daf in perpetuityand pass it on to the next generation,”explains Stefan Velvick, senior privateclient manager at CAF Philanthropy, adivision of the UK foundation.

But hesitation to apportionmoney is not the same as reluctance:a donor may not yet know exactlywhere they want their donations toend up. They only know they wish togive charitably and tax-efficiently.Therefore, a Daf can provide anideal vehicle to swell a war chest foreventual allocation.

‘a Donor-aDviseD funD canbe an iDeal vehicle toswell a war chest foreventual allocation’

ft.com/wealth | 53

book reviewfamine, affluence and morality

What would you do if youwere walking past ashallow pond in whicha small child wasdrowning? There can

be little doubt that the vast majority ofpeople would wade in to save the childeven if it came at the relatively trivialcost of getting their clothes muddy.This is the starting point of a famous

essay by Peter Singer, an Australianmoral philosopher, first published in1972. It has just been republished,along with two additional essays bySinger and a foreword by Bill andMelinda Gates.Of course, Singer does not stop with

the example of the drowning child. Hisnext step is to argue there is no moraldifference between letting the childdrown and letting one die in a farawaycountry as a result of extreme poverty.The two cases are different in

psychological terms, though. The smallchild in the hypothetical example isin front of you whereas those livingin severe poverty are generally a longway away. But in moral terms, Singerargues, the challenge posed is the same.In both cases it is possible to

eliminate the suffering at no risk toour physical well-being. We might getour clothes muddy or be able to affordfewer luxuries, but that is minisculewhen set against the value of a humanlife.Over the years Singer’s argument

has inspired countless philanthropicinitiatives around the world. With theendorsement of Bill and Melinda Gatesin this new edition it has gained publicrecognition from perhaps the world’sgreatest philanthropists.Perhaps its influence is not surprising

since, at first sight, its argument seemsunimpeachable. Who, after all, wouldwant to be seen arguing the case for

letting a small child drown? However,a closer examination shows there arereasons to question Singer’s moralreasoning. In particular, the use of asmall child as a starting point risksinfantilising the people it is ostensiblydesigned to help: the poor themselves.It casts western philanthropists asheroic saviours of the helpless andthose living in dire conditions aspassive victims of dire circumstances.An alternative starting point

would be to see human beings ascapable of shaping and reshapingtheir own circumstances. People havethe ability to transform the worldaround them for the better, ratherthen simply lying back helplessly andaccepting their fate.This sense of agency is the main force

for eliminating poverty. Perhaps themost striking recent example is China’swidely acknowledged success in liftinghundreds of millions of people out ofpoverty from the 1980s onwards. Thiswas achieved by a drive to transform itseconomy, rather than allowing itself tobecome the object of western pity.That is not to say contemporary

China is perfect or that its modelshould be followed slavishly. Onlythat, through their own efforts,people have often succeeded in liftingthemselves out of poverty througheconomic growth.Indeed, long before China’s rapid

fighting poverty asa heroic venture

bY Daniel ben-ami

‘PeoPle have the abilityto transform theWorldaround them for the

better, rather then simPlylying back helPlessly and

accePting their fate’ photo

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54 | ft.com/wealth

surge in development began in thelate 1970s, that is precisely how thewest’s own prosperity was created.Western affluence is primarily theresult of concerted action by earliergenerations, rather than the gift ofexternal charity.This alternative view does not, of

course, preclude saving drowningchildren or even giving aid to thosesuffering in an emergency. A keyproblem with Singer’s argument isprecisely that it blurs these exceptionalcircumstances with the everydaybusiness of conquering poverty.In fact, Singer is, at least in passing,

critical of the forces that do most toeliminate poverty. In his original 1972essay on famine he favourably citedtwo of the most prominent critics ofeconomic growth of the time.There are additional reasons

to resist Singer’s arguments. Hisexplicit condemnation of those whofail to accept a duty to eschew newclothes or cars for the sake of thepoor risks generating resentment.He is essentially trying to guilt-tripwesterners into giving up luxuries.Yet there is not a fixed amount of

wealth in the world. It is quite possible— indeed, it has been the norm inrecent times — for the world’s poor tohave become richer at the same timeas the affluent countries have alsobecome wealthier. Those who want tocontribute to famine relief or povertyalleviation should be free to do so.But viewing the world’s poor as merepassive recipients of western charity isa temptation that should be resisted.

Famine, Affluence, and Morality byPeter Singer. Oxford University Press.

The writer is the author of Ferraris forAll (Policy Press 2012)

1.life in a slum area ofBeira, mozambique

2., 3. and 4.starting from the

bottom and workingtheir way up inBeijing, china

2.

1.

3.

4.

ft.com/wealth | 55

BY Stephen Wilmot

INVESTMENT PASSIONSMUSIC MANUSCRIPTS

STRINGS THAT RESONATE1.For collectors, music represents

a challenge. It is by natureephemeral, fleeting; theprecious objects associatedwith it — instruments,

manuscripts, autographed black-and-white photographs — are curiouslysilent, their significance usually evidentonly with expert training.

Yet where there is passion there arecollectors. In the amateur camp, myfather owns the autograph of EmilGilels, a piano virtuoso from Odessain what is now Ukraine, scribbled inone of my dad’s old Oxford Universitydiaries. He also obtained the signatureof Shura Cherkassky, another pianistfrom Odessa, when he saw him at aconcert given by Sviatoslav Richter,perhaps the most famous Soviet pianistof them all, despite Cherkassky’sprotestations that my father shouldsolicit Richter’s instead. But that hasbeen lost. My father took better careof his record collection, but mass-produced articles rarely have aninvestment value.

My husband has taken on my father’smantle, having picked up a charityshop score of Benjamin Britten’s operaRape of Lucretia some years ago thatincluded the composer’s signature. Buthis most prized possession is a double-sided sheet of 15th-century Spanishmanuscript with an early form of musicnotation running alongside gorgeousblack and red calligraphy. It came froma dealer in Ohio, via the internet anda specialist framer in the old printingdistrict of Southwark, south London. Itis, unusually, music as visual art.

Limited supply is often cited asthe key driver of so-called alternativeinvestments. But Nestor Masckauchanof Tamino Autographs, who claimsto have the largest inventory of operaand classical music artefacts in theworld, running to about 75,000items, also stresses the importanceof demand. He says there are a lot ofsigned photographs of Maria Callas

56 | fT.COM/wEAlTh

1.Pinchas Zuckerman,

Jacqueline du Pré andDaniel Barenboim in

the 1960s2.

Maria Callas in 19643.

Title page of theParthenia with music

scores by William Byrd,John Bull and Orlando

Gibbons

2.3.

museum-style exhibition. “This is aworld where everyone knows everyoneand people want the discretion ofprivate sales,” says Paul Cutts, Christie’sglobal managing director for decorativearts.The location of the exhibitions in

Shanghai and Hong Kong is revealing.The Chi Mei foundation in Taiwan, anoffshoot of the Chi Mei petrochemicalempire founded by Shi Wen-Long,owns one of the world’s largestcollections of fine violins, many ofwhich are loaned to players. Cutts isexpecting a philanthropist such as Shi,rather than a musician, to stump up thecolossal sums required. “There are stillartists who own their instruments butit’s increasingly uncommon,” he says.The price increases that have pushed

these antique instruments beyondthe reach of musicians have alsomade them an excellent investment.The Stradivari Society has calculatedthat the famous luthier’s violins cost$18,000 on average in 1960, rising to$7m in 2008 — an inflation rate about10 times higher than that of gold. Cuttsclaims the market remained robustthrough the subsequent recession.Others are less enthusiastic about

the high prices commanded byunique items. Lisa Cox, an expert inmanuscripts, complains that “it hasbecome almost impossible for ordinaryprivate collections to buy majormanuscripts because the Chinese havecome in and jigged the market”.Globalising demand for scarce

assets may have made the top tier ofthe manuscript market, like that forinstruments, the preserve of the super-rich. But there are tiers below: printedmusic by such people as William Byrd,the 16th-century English composer,remains accessible, says Cox.Those of more modest means can

console themselves with the thoughtthat manuscript is the next best thingto music. And music, unlike musicalantiques, is not limited by supply.

on the market, yet because Callas isthe most famous soprano the operastage has ever produced they fetchsteep prices — typically from $800 to$2,000, depending on the message andcondition. “If something is very rareit doesn’t mean it’s very expensive,” hesays. “People also have to be interestedin it.”These people range from expert

collectors on the hunt for specificitems to novices looking for gifts.Masckauchan recently helped a womanwith little musical background find a25th wedding anniversary present forher husband. Knowing he enjoyed themusic of Gustav Mahler, she settled onthe programme for a concert conductedby the Austrian composer in the early1900s, an object that typically fetches$300-$500.“It was a good present; he loved it,”

reports the dealer.But such artefacts may prove

harder to sell than more mainstreaminvestments if consumer sentimentweakens. Masckauchan recalls thatbusiness suffered in the 2008-09downturn. “These are items peopledon’t buy when there’s a recession,” hesays.At the other end of the price scale

are the famous stringed instrumentsmade in the workshops of Cremona,northern Italy, in the 17th and early18th centuries. Christie’s, the auctionhouse, is marketing a private collectionof one Stradivari cello and sevenviolins, including four made by AntonioStradivari and three by Guarneri delGesù. The collection is valued at a littlemore than $60m, partly because all theinstruments are associated with famousartists.The cello, one of only 65 made by

Stradivari, spent many years in thepossession of the cellist Jacquelinedu Pré, who in the 1960s became thepopular face of British classical music.They are not being auctioned but

sold by private treaty following a

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fT.COM/wEAlTh | 57

AMBITIOUS WEALTHSTEPHEN FOLEY

ALL IN A NAME

In the US sitcom, Curb YourEnthusiasm, in which writer andcomedian Larry David plays asocially clumsy version of himself,our hero is honoured for his donation

to a local museum. Except that,alongside the “Larry David Wing”, asecond wing funded by an anonymousdonor is also being inaugurated, andguests are cooing over the modesty ofthe other benefactor.“Now it looks like I did mine for the

credit, as opposed to ‘Mr WonderfulAnonymous’,” David huffs.The scene comes to mind because the

social and reputational complexities ofmodern philanthropy, and the fraughtissue of naming rights, have come upin real life in upstate New York, in asituation of such awkwardness thatit could have been conjured up byLarry David himself.The famous protagonist in this case

is Joan Weill, wife of Sandy Weill, theretired banker who created Citigroupfrom the merger of Citicorp andTravelers Group. Mrs Weill is along-time supporter of Paul Smith’s, asmall private college in the beautifulAdirondack Park, and a sponsor of itsambitious expansion into four-yeardegrees. However, the school communityobjected to a plan to rename it JoanWeill-Paul Smith’s College in return fora further $20m gift.Naming buildings, professorial chairs

or scholarships after their donors is onething; tampering with a historic nameis quite another. Mrs Weill was roundlycriticised for asking for such a thing.A court agreed, saying it violated theterms of the Smith family’s foundinggift some 70 years ago.One might have expected Mrs Weill

to content herself with some othercommemoration in return for her gift.Instead, she withdrew it, provokingvilification. Her commitment toPaul Smith’s was attacked as shallowand selfish; her right to call herselfa philanthropist questioned if her

of precedent and of what the marketwill bear,” he says. “What the Harvards,Cornells and Yales negotiate for theirrights is tracked by others.”To the extent that there is similar

scrutiny on donations at less well-known colleges, we have all just learntthat $20m is not the right price forrebranding Paul Smith’s. That is auseful market lesson, but it does notanswer the question of whether MrsWeill should gift the money anyway.Arguably, donating $20m withoutstrings would now be doubly generous,resetting the bar so that future donorswould need to chip in more.Christopher Oechsli, president

of The Atlantic Philanthropies, theorganisation that is giving away an$8bn fortune from Duty Free Shoppersco-founder Chuck Feeney, has tussledwith the question of naming rightsbefore — and his conclusions arealso not especially supportive of JoanWeill. Feeney’s name is not on anybuilding or institution.An Atlantic study found that naming

rights and publicity surrounding grantscan be of value to the recipient, Oechslisays. “When you lend your name tosomething, it is an imprimatur. Thename is a brand and it can be apositive thing for recipients to pointto a specific major donor as anexample of why they are worthy ofgrants from others.”However, leaving one’s name

off a building or a programmecan be of even more value, hesays. That way, the institutioncan still sell the naming rightsto someone else. Ultimately, itseems defenders of the Weills areleft with what Kosnitzky calls “thegolden rule: it’s their money”.“My attitude is that the rich

are different,” he says. “Theyview their name as part of history,they are thinking about issues of

legacy. TheWeill name is important;it’s historic.”

donations came with strings.Mrs Weill gave no immediate public

response to the criticism and did notreturn a message I left with the Weillfamily foundation. Paul Smith’s hasalso been declining to answer questionson why she walked away, citing theconfidentiality of the negotiations.The contrarian in me wanted to

write a defence of Mrs Weill, if noton moral grounds then at least onpractical ones. Naming rights, afterall, are negotiated like a business deal,a formal agreement complete withcontractual obligations on bothsides. If Mrs Weill’s $20m chequebounced, no one would expectPaul Smith’s to keep her nameabove the door. It should workthe other way, too.I wondered whether there

might also be a market-basedargument. Educationalinstitutions have developed asophisticated and very lucrativesystem for the monetisationof ego. Mrs Weill’s withdrawalkeeps that market mechanismintact.Mike Kosnitzky, a partner

at law firm Boies, Schiller &Flexner in Miami, has drafted afair few of these deals for clients.“Valuing naming rights is a lotlike valuing artwork: a matter PH

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58 | FT.COM/WEALTH