Investment management legend and new philanthropist, Chris Cuffe, has created a fund aiming to assist social entrepreneurs while delivering returns to investors. Meanwhile, a domestic microfinance pilot run by NAB has helped people excluded from mainstream credit establish their own businesses. SIMON MUMME writes.
Chris Cuffe has combined his experience in investment management and philanthropy to build a fund that directs most of its fees to the non-profit sector.
The Third Link Growth Fund can guarantee an income stream towards Social Ventures Australia (SVA), a non-profit organisation that supports a portfolio of social entrepreneurs by providing funding, mentoring and specialised organisational tools.
The underlying managers and service providers to the fund have agreed to waive most or all of their fees, enabling SVA to capture the bulk of the 1.4 per cent management fee. Meanwhile, retail investors in the fund are dealt investment returns. “People give to philanthropy without dipping into their own pockets,” Cuffe says. Cuffe, an executive director with SVA and former chief executive of Colonial first State, says the fund is the first of its kind in Australia and had merged philanthropy with traditional investment.
Third Link is an Australian equities-biased fund-of-funds with a growth orientation. Cuffe aims to channel 1 per cent of the management fee directly to SVA to provide a steady stream of income to enabling sustainable operations and long-term planning. The fund’s capacity is $150 million, which could potentially net $1.5 million for SVA each year. “It will attract new resources to the non-profit sector. Non-profits are plagued by a hand-to-mouth existence.”
Michael Traill, SVA chief executive, said the organisation held three-to-four months of funding at any time. “Third Link has the potential to drive an annuity stream for non-profits, and this is critical in terms of our planning cycles,” Traill said. “Anchor funding is very important,” Cuffe added.
Cuffe approached a selection of prominent industry figures to advise him about funds managers, asset allocation strategies and specific investments on a pro-bono basis. They include: Doug McTaggart, chief executive of Queensland Investment Corporation; Fiona Trafford-Walker, managing director of Frontier Investment Consulting; and Stephen van Eyk, managing director of van Eyk research. Treasury Group Investment Services is he responsible entity for the fund, RBC Dexia is the administrator and custodian while Minter Ellison provides legal services and BlueChip Communication Group supplies marketing and publicity.
The fund is available through BT Wrap (the minimum amount that can be invested in $20,000) and does not pay commissions to financial planners. Cuffe heads Third Link Investment Managers, the private company responsible for managing the investments in Third Link. It does not conduct any other business.
The non-profit sector is often called the ‘third-sector’ alongside business and government. Cuffe says that a major difference between a prosperous and a great society is the strength of their non-profit sectors, and that a “truly great Australia” would only be achieved if these sectors worked together in new ways. In this, the third sector needs to find innovative means of securing guaranteed income.
