Leading investors leaving mark in city philanthropy
Fund grass-roots works as well as traditional Boston institutions
Renowned investment manager Jeremy Grantham leans against a giant, 1,200-year-old Buddha in his office overlooking Boston Harbor and ticks off some of his biggest concerns. There’s the problem of food shortages and lack of fertilizer. There’s the worry of bugs attacking so many of our trees. And the broader toll of climate change on human life.
Grantham has made a fortune for his clients, and now he’s pouring a good deal of his own wealth into environmental charities. With more than $500 million in two Grantham family foundations, he is among a handful of successful Boston investors emerging as the city’s major new philanthropists.
These investors, well-known in their business, are not household names. They rarely talk about their work or charitable giving in public. But Grantham, and hedge fund managers Jonathon Jacobson and Seth Klarman, each now oversees family foundations that exceed $350 million, according to public tax records reviewed by The Boston Globe. Longtime Boston investment executive Jeffrey Vinik, once chief of the Fidelity Magellan fund and later head of his own hedge fund, now lives in Tampa but still directs a portion of his family’s $212 million foundation giving here.
Together, these four newly emerging philanthropists control more than $1.4 billion of charitable funds that will have an impact on the city’s civic, social, and cultural future, and their own select interests, which include poverty, children’s education, health care, and Israel.
“A lot of this is below the radar,’’ said Paul Grogan, head of the Boston Foundation, a large community nonprofit, who also serves on the boards of other charities with some of these donors. “Some of the most successful people in financial services in this town are generous and very serious about their philanthropy.’’
Grantham is 75, while Klarman, Jacobson, and Vinik are all in their 50s. The amount of money in their foundations grew slowly for many years but has accelerated dramatically over the past five years. Their interests vary, but they are all hands-on in their charitable giving, and driven by an awareness of their own extreme good fortune.
What they like best are grass-roots efforts where they can have a big impact, according to interviews with the families and people who know them. The Klarmans are funding genetic research on eating disorders. Grantham has paid for environmental journalism prizes and a database that tracks pathogens and insects infesting trees. The Jacobsons are backing Youth Villages, a Memphis-based group with several Massachusetts locations that helps children in crisis. Vinik supports Horizons for Homeless Children in Roxbury.
Grogan’s assessment: “They’re clearly making big bets on social change philanthropy.’’
That could pose a challenge for the city’s traditional recipients of big donations from philanthropists, such as the major arts and medical institutions, although the new breed of donors supports those as well.
Giving to the elite organizations, Grantham said, is “better than nothing. But it isn’t as good as medical research, or more to the point even, critical environmental donations.’’
Most of the donors never expected to become stewards of such large foundations. They simply started stashing money away for tax planning and convenience in the 1990s, when their incomes were flourishing.
The size of the Grantham Foundation for the Protection of the Environment has jumped 44 percent since 2008, to $377 million at the end of 2012, according to its latest tax filing. Grantham also has a trust started with his wife that holds another $107 million.
That makes Grantham the fourth-largest individual benefactor in Boston, rivaling longtime philanthropist Edward C. Johnson 3d, the chairman of Fidelity Investments. The other larger local family funds are the Barr Foundation, started by onetime cable magnate Amos B. Hostetter Jr., and the Flatley Foundation, created by the late real estate developer Thomas Flatley.
Smart, quirky, and still bearing the accent of his native England, Grantham has already devoted millions of dollars to environmental causes, and plans to pour more of his earnings into the foundations. He’s glad he let the pot of money grow during the foundation’s first decade, rather than give it away recklessly years ago.
“We would have wasted a ton of money,’’ Grantham said during a recent interview. “Looking back, that was a terrific decision, because we knew nothing,’’ he said. “Now we know quite a lot.’’
Like his peers in this group, Grantham hopes to give away most of his money during his lifetime. But he is willing to have his children continue the foundation’s work, so long as they remain interested in the environment.
Seth and Beth Klarman are of the same mindset. Their foundation had $350 million in assets at the end of 2012 — more than double the 2008 amount, thanks to the stock market’s rise and continued family contributions. Seth Klarman, who runs the Baupost Group, Boston’s largest hedge fund firm, said the couple’s philanthropy has evolved to focus on three main areas: civic and community giving; the Jewish community and Israel; and science and medical causes.
Klarman brings his penchant for contrarian investing to his charitable efforts: put money into areas few others are betting on and see potentially big gains, rather than follow the crowd.
“Our hope is to have the greatest impact possible to affect lives for the better,’’ Klarman said. Beth Klarman noted that they also want to continue to support causes that benefit people and institutions in Boston.
Some of their largest gifts have gone to Jewish causes such as Facing History and Ourselves in Brookline, which fights prejudice and anti-Semitism, and the Boston Medical Foundation, to fund biomedical research. In 2012, they pledged $32.5 million to the Broad Institute in Cambridge for cell research. They also gave smaller sums to food banks, health law advocates, and the Boston rape crisis center.
Paul G. Schervish, director of Boston College’s Center on Wealth and Philanthropy, noted a change in successful people once they’ve attained a certain amount of wealth. They become more interested in the experience of philanthropy than in watching their own bank accounts grow.
“An unabashed dimension of charitable giving is the fulfillment it brings donors,’’ he said, at the same time they help society. They get “the great privilege of making a substantial difference, directly — of being able to be a world builder, an institution builder.’’
Not all of Boston’s new philanthropists like to see their names on buildings. The Jacobsons are the most publicity shy of the group. Jonathon Jacobson cofounded Highfields Capital Management in 1998, after working for the Harvard University endowment. He declined to be interviewed for this story. His wife, Joanna, is a former corporate executive who now runs Strategic Grant Partners, a coalition of family foundations in Boston.
The Jacobsons’ key interests are education, child welfare, and Jewish causes. Some of their largest 2012 gifts, of more than $1 million each, went to Brandeis University and Combined Jewish Philanthropies. They also gave $2 million to Youth Villages, a group on whose local board Joanna Jacobson serves, along with Beth Klarman, and Paul Grogan.
The Jacobson Family Foundation Trust’s assets hit $384 million in 2012, up 71 percent since 2008. The trust gave away $16.5 million in 2012, the minimum 5 percent required by law for charitable foundations. Jacobson put more than that back into the foundation, adding $25 million, according to the tax filing.
Vinik, too, has been plowing money into his foundation in recent years. The former Weston resident said he started giving half his income to his foundation annually over the past decade. Last year, he closed his hedge fund firm to focus chiefly on the professional hockey team he owns, the Tampa Bay Lightning.
He’s directing a large portion of his philanthropy to his new home community in Florida, including $1 million to the Tampa Bay Host Committee, a nonprofit that drew the Republican convention to the city in 2012.
He has also made a five-year, $10 million commitment to a program honoring “local heroes” in Tampa.
In Boston, Vinik said, he and his wife will continue to support education, children, and the arts.
“As you get older, you hopefully have more time to think about this, and really concentrate on those issues and causes that are most important,’’ Vinik said. “It’s an always evolving process. We are spending quite a bit more time on it now than we did 10 years ago.’’