Take one philanthropist plus one hedge fund

Business schools seem to be doing well out of hedge funds of late. Just three months after Brevan Howard gave £20.1m to Imperial College Business School, the Pershing Square Foundation has announced a gift of £4.5m to Saïd Business School at Oxford university.

The Pershing Square Foundation was set up by Bill and Karen Ackman in 2006. Mr Ackman is the prominent activist hedge fund manager and founder of Pershing Square Capital Management. He is making a name for himself not only as a philanthropist but also in influencing big companies and with his public battle with activist investor Carl Icahn.

The gift will fund up to five scholars a year on Saïd’s “1+1” programme, which allows students to study an MBA and an Oxford university specialist master’s degree in two years. The gift will be matched by a further £3m from the Oxford Graduate Scholarship Matched Fund.

Mr Ackman has a strong history of philanthropy. He is a signatory to The Giving Pledge under which many of the world’s wealthiest individuals – including Jeff Skoll, whose endowment founded the Skoll Centre for Social Entrepreneurship at Saïd – publicly commit to dedicating the majority of their wealth to philanthropy. The Pershing Square Foundation invests in organisations that “use innovative and scalable solutions to attack the compounding roots of poverty: poor health, injustice, substandard education, economic limitations and isolated communities”.

Mr Ackman discussed the endowment with the Financial Times.

Why are you funding these scholarships when the scholars have clearly not had a substandard education?

The way that this scholarship helps the mission is not by helping a student get into Saïd. We’re looking to train a new batch of social entrepreneurs.

How strongly are you involved in the choices that your foundation makes? Very.

Why did you choose Saïd’s 1+1 programme?

The purpose of the scholarships is to train the next Andrew Youn [founder of the One Acre Fund, which provides small loans to farmers in Africa in the form of seed and fertiliser, gives training and helps sell the harvest. It takes a share of the profit as repayment on the loan.]

One of the problems with a lot of social entrepreneurs in non-profits is they don’t have a business background. The idea of the scholarships is we don’t want someone to be forced to work for an investment bank when they graduate, the idea is that we subsidise someone’s education so that they can afford to pursue a career which can have a meaningful social impact. I like the 1+1 programme because it delivers a graduate with more specific knowledge.

Why have you made this donation to Saïd rather than Harvard Business School, where you studied? The reason is Peter Tufano, the dean of Saïd. He was my finance professor at HBS and when I was in London a year ago we met and he explained what he had been doing and I really liked the sound of the 1+1 programme.

Should business schools be doing more to prepare students for the hedge fund world?

I didn’t go to business school to train to be a hedge fund manager. Business schools should be training future business leaders.

What long-term benefits do you expect to see from the endowment?

The programme is unique because it will select candidates who are able to demonstrate, through experience, an aptitude and commitment to addressing global challenges. The scholars will have to pledge to serve the greater good following graduation and to donate back the value of the scholarship should their means allow.

You have received a lot of good press, but there has also been some criticism of some of the investment stances you have taken and also your trading techniques, specifically the short selling. In a way, your philanthropy does not seem to fit with how you live your professional life. How would you respond to that assertion?

I think we’ve accomplished more for society in our for-profit activities than in our not-for-profit activities. My work with the Foundation is a continuum of what I do in my professional life. When the Foundation sees a problem we always ask if there is a business solution. I think most of the criticisms you have heard relate to my position on Herbalife. If I manage to close down that company I will consider it the greatest achievement of my life.

[Herbalife has become a battlefield between Mr Ackman and rival billionaire activist investor Carl Icahn. Mr Icahn has bought up 16.5 per cent of the nutrition group since Mr Ackman announced in December last year that he was shorting Herbalife because he considered it no better than a pyramid scheme – a charge the company strongly denies.]