Oct 10, 2019

The philanthropic interests of billionaire David Shaw

Illustration: Aïda Amer/Axios

A ProPublica investigation has given significant insight into the philanthropic predilections of hedge fund billionaire David Shaw.

What we know: Shaw donated $37.3 million over the course of 7 years to Harvard, Yale, Princeton, Stanford, Columbia and Brown. The donations, most of which went to universities where neither he nor his wife had any connection, accounted for the majority of his charitable giving. His apparent aim: "Making selecting a college as easy as ordering from a takeout menu."

  • The money spent on donations was backed up with millions more spent on school fees, tutors and other personal services for his 3 children. The great cartoonist Jules Feiffer, for instance, was given what he describes as "real money" to illustrate a book written by Shaw's 9-year-old.
  • Shaw's two eldest children went to Yale after receiving every conceivable advantage in life. Even the children’s friends who visited the Shaws’ apartment on the Upper West Side were not aware that the family owned other apartments in the building brimming with personal staff.

By the numbers: The overall cost of raising a child in America was $233,610 in 2015, or just under $14,000 per year. But, as Yale law professor Daniel Markovits demonstrates in his new book, the average child in America has essentially zero chance of getting into Yale — or any of the other schools that Shaw attempted to buy entry to.

  • If you pour tens of millions of dollars into maximizing your children's opportunities in life, they will generally end up outperforming most normal children. But in no sense can that expenditure be considered philanthropic.

Elsewhere in academia, MIT has launched "a groundbreaking philanthropic venture fund" called Solve Innovation Future. It plans to take in some $30 million in tax-deductible philanthropic dollars, starting with a $3 million pledge from Noubar Afeyan, the CEO of Flagship Pioneering.

  • All of the money will be put into for-profit investments or internal expenses. When the investments pay out, any profits will be rolled into yet more for-profit investments, in perpetuity.
  • There's no limit to how big the fund can get, there are no limited partners to get any payouts, and there are no plans for the fund to ever give away any money in the form of philanthropic grants.

Our thought bubble: The giant tax-exempt hedge funds known as Harvard and Yale lose about 5% of their assets every year, in the form of donations to their venerable educational subsidiaries. Solve Innovation Future makes one wonder why that's even necessary.

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Trump's G7 and trade adviser Kelly Ann Shaw departing the White House

Photo: Michael Kappeler/picture alliance via Getty Images

Kelly Ann Shaw, the adviser to President Trump on the Group of 7 and trade policy who served as the U.S. "sherpa" for the G7 and G20 summits, told Reuters Tuesday that she's leaving his administration because she's ready for a "new adventure."

Why it matters: Shaw is one of the most senior women on Trump's economic team and was among those advising Trump during trade talks with China, Reuters notes. White House officials told the news agency she plans to exit her post on Friday to work in the private sector.

Go deeperArrowOct 23, 2019

Hedge funds see 6th consecutive quarter of outflows

Adapted from eVestment; Chart: Axios Visuals

Hedge funds saw overall negative returns for the second month in a row in September and investors continued to pull their money out, data from research firm eVestment shows.

Why it matters: It’s the latest piece of negative data for an industry that appears to have its best days behind it.

Go deeperArrowOct 29, 2019

Venture capitalists on track for $100 billion in startup investments

Photo: JOSEPH EID / AFP

Venture capitalists are on pace to invest over $100 billion in U.S. startups for the second straight year, including a record number of rounds more than $50 million. This might be the industry's high-volume mark.

The big picture: The dizzying numbers have been driven by an influx of new money that has helped companies stay private longer. But much of that new money comes from what I've previously referred to as "VC tourists" — or investors for whom startups aren't their core competency.

Go deeperArrowOct 10, 2019