How we are funded
Our independence
We are one of the largest independent grant-making organisations in the UK. The money we use to make grants comes from our endowment and our investment gains, which has accumulated over the twenty-plus years since the Foundation began. This financial independence allows us to take a long-term view and support work that others might find risky.
On occasion, we work collaboratively with other funders (including other trusts and foundations as well as statutory or government funders) to achieve greater impact. In the last few years, we’ve collaborated with statutory funders on specific projects:
- Act for Change, a joint initiative which gave grants in partnership with the National Lottery Community Fund’s #iwill Fund
- Justice Together, a collaboration of 14 funders including the Greater London Authority
You can find out more about our overall income and expenditure on the Charity Commission website.
Our endowment
Paul Hamlyn Foundation was established by Paul Hamlyn with an initial gift of £50m in 1987. He made his money in the publishing industry and when he died in 2001, he left the bulk of his estate, some £308 million, to create our endowment, with the intention for this to generate ongoing income to support our work.
The funds we hold are invested and generate returns which we use to fund the operating costs for the Foundation and all our grant making. The Foundation has made over £500,000,000 in grants to charitable causes since it was incorporated in 2004.
We are a grant-making charitable foundation. We do not fundraise and all of our activity is in pursuit of charitable aims with, and for, public benefit and governed by the Charity Commission. We are also a company limited by guarantee where all company assets support the work of the Foundation.
Our investment approach and policy
We invest our assets in order to raise sufficient returns to enable the Foundation to do its work effectively and pursue our vision of a socially just future, especially for children and young people.
We balance the need to make returns with the need to be prudent and sustain our ability to operate in the medium to long term. This is important not only for the ongoing professional management of the Foundation but also for providing some certainty to the organisations and sectors we support. We plan on the basis of generating enough growth in the overall value of the endowment every year to provide enough money to fund the foundation in a predictable way. The Board has discretion to set the expenditure of the foundation annually taking into account different trends.
We take care to consider how our investments fit with our values as a charitable foundation and use different approaches to evaluate and assess this in an ongoing way.
We compare the performance of our investments against appropriate benchmarks to help understand how we compare with similar organisations, and we embed the principles of responsible investment in our choices and strategy.
How we invest
We have an Investment Committee which reports to the Board of Trustees and an Investment Director who is a member of the senior leadership team. The committee’s main role is to guide and advise on investment strategy.
We work with advisors to secure investment in a wide variety of different funds. We do not invest directly in companies ourselves. We work through asset managers and in this way our resource is pooled into much larger funds.
Through fund managers we invest in a variety of different kinds of investment known as ‘asset classes’ these can include cash, bonds, equities, property, hedge funds, private equity and venture capital funds, and commodities including gold. When we choose managers, we assess whether they will make good returns and whether they take account of Environmental, Social and Governance (ESG) impact.
Responsible investment and good practice
The Committee and the Board are clear that PHF should always strive to invest with the highest regard for good practice. We use recognised methods to monitor this, in particular assessment against the ‘ESG’ principles – Environmental, Social, Governance and we report on this annually to the Board.
We publish our responsible investment policy which sets out how we consider environmental, social and governance principles when appointing fund managers and how we seek to use our mandate to engage effectively and hold our fund managers to account in an ongoing way.
As part of the ESG assessment we look in detail at how much investment we have in areas which are detrimental to society or the planet, such as the sale of tobacco, gambling, armaments and fossil fuels. We work continuously to reduce our investment in these areas and they represent a very small percentage of our overall portfolio.
We are signatory to Charities Responsible Investment Network where we play an active role and are signed up to the UN Principles of Responsible Investment.
Performance
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The most significant proportion of our portfolio is in publicly listed equities (33%). This is closely followed by venture capital at 26%, with the rest of our portfolio split between cash (13.5%), hedge funds (12.1%), gold (11.4%) and real estate (4%).
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Our portfolio stood at £918 million in 2022/23. This follows significant growth in the last few years, up from £780 million in 2019/20.
Investment and our mission
We are committed to social justice. In our grant-making we support activity which is trying to challenge and address structural inequality. We are very aware that wealth generated through investment has played a part in creating injustice, in the UK and around the world, and in many cases continues to do so. We are also aware that the current model of wealth creation needs to change to address the urgent challenge of climate change and inequality.
As an organisation founded on the proceeds of entrepreneurship we believe in the capacity of trade and commerce to do good in the world but recognise significant and deep-seated change is required at all levels.
Change takes time and we are proud to support organisations who are driving the movement to shift our underlying economic model to make it better for people and planet. We believe that our independence, our status as a charitable foundation and our experience in investment and the private sector makes us well placed to support those working for an economy which benefits all.
- Share Action
- Positive Money
- Good Ancestor
Whilst these grants are a relatively small part of our portfolio, they sit alongside our work in migration, rights, and expanding opportunity in the arts, youth and arts-based learning – all areas which are about building a better future built on social justice.
In our venture capital portfolio we invest in commercial organisations that are innovating and creating new businesses which we hope will be part of a more regenerative approach to businesses attuned to the future.
Our annual report and accounts
To find out more about our investments and our grant-making, see our latest annual report.