Thursday, June 26, 2008
The New York Times reports that the $1.6 billion Children's Investment Fund Foundation is funded through an unusual fee arrangement with the Children's Investment Fund or T.C.I., a hedge fund. T.C.I. investors agree to pay a 0.5 percent fee to the Foundation in addition to a 1 percent fee to T.C.I., with the Foundation fee increased by an additional 0.5 percent if T.C.I. earns more than an 11 percent profit. T.C.I.'s profits are also contributed to the Foundation. The close relationship between the Foundation and T.C.I. dates from their simultaneous creation in 2003 by Christopher Cooper-Hohn, who runs T.C.I., and his wife Jamie Cooper-Hohn, who runs the Foundation. The Foundation also invests 90 percent of its assets with T.C.I., with no fees charged and no restrictions on withdrawals. T.C.I.'s success - a 42 percent annual internal rate of return - has allowed the Foundation to play a major role in shaping programs to benefit children in developing countries. The Foundation has a smaller U.S. affiliate with current assets of approximately $156 million.