By contributing 1 per cent of their profits to a central fund, family-run European venture capital and private equity firms could raise €92 million a year for philanthropic purposes, calculates Carlo Umberto Bonomi, senior partner of InvestIndustrial. InvestIndustrial, a southern European industrial private equity fund, currently contributes 1 per cent of profits to its own corporate foundation, Invest for Children (i4c), a practice it began two years ago.
The great argument in favour of a central fund, he believes, is efficiency. His scheme would provide a definite amount of corporate giving going into one central fund, directed at a single philanthropic object each year and managed on venture capital lines, thus removing the need for individual corporate foundations. ‘The biggest problem in charity is inefficiency,’ says Bonomi. ‘In today’s world philanthropy must be seen as a business and you must look at how to get the best return on your investment because the needs we’re trying to address are so big.’
Initially, he is approaching family or largely family-run private equity companies in southern Europe with the idea of such a fund because most institutional investors will, he believes, be restrained by their own systems and regulations from taking part. Even so, given that over the last five years 28 per cent of investments were made by ‘family-related’ investment funds, he calculates that his 1 per cent scheme could generate some €92 million a year. And given that some institutional investors might chip in, he does not believe that this is an optimistic figure.
The biggest obstacle to be overcome, he thinks, is that families often have their own preferred objects of giving and might be resistant to seeing their money go elsewhere. Similarly, firms might be reluctant to invest in something they don’t see as a local problem. He acknowledges that it will be a long process, ‘but maybe ten years down the line, we’ll have a European fund where people have overcome their preferences and put significant money into one cause or problem.’