Are Hedge Fund Managers’ Charitable Donations Strategic?
52 Pages Posted: 14 Dec 2015 Last revised: 12 Oct 2018
Date Written: April 12, 2018
We study whether hedge fund managers’ charitable donations are strategically made to further their business interests. We find that donations are driven by poor fund net flows and performance. Post-donation, donors’ poorly performing funds experience significantly lower outflows compared to matched non-donating peers. These results are stronger for donations that are more likely to be strategic ‒ single one-off donations, donations to focal charities popular among the hedge fund community, and donations to charities that hold fundraising events catering to the hedge fund community. Taken together, these findings are consistent with strategic motivations driving at least some hedge fund donations.
Keywords: Hedge funds, Philanthropy, Goodwill, Trust, Altruism, Capital Formation
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