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Hedge funds try hand at charity fundraising

Who says Canadian hedge fund managers don't have a heart? The industry really does care and it has set up a charity to prove it: Hedge Funds Care Canada.

It only has $137,000 in assets, as of Dec. 31, 2005, and it struggled to re-establish itself last year, but the charity's organizers say Hedge Funds Care is ready to start making a difference. "The whole idea behind Hedge Funds Care is to have a philanthropy that's dedicated to the industry because [managers] want to give back at least part of what they make to help other people," said the charity's president, Corey Goldman of Marhedge, a publication that tracks the industry.

The organization's objective is to fund the prevention and treatment of child abuse, and it is affiliated with Hedge Funds Care Inc., a New York-based foundation. While the New York foundation has raised about $19-million (U.S.) since its creation in 1998, Hedge Funds Care Canada has had a rougher start.

The Canadian outfit was established in 2004 largely at the instigation of John Xanthoudakis, the founder of Norshield Financial Group. Mr. Xanthoudakis helped organize Hedge Funds Care's first big fundraising event in the fall of 2004, a gala ball that raised about $240,000 (Canadian). But when Norshield was forced into receivership last year by the Ontario Securities Commission, the charity struggled to continue.

Mr. Goldman and the others reorganized the charity into a private foundation last year and last night they played host to the new foundation's first fundraiser, a dinner in Toronto called "Diamond Rush." The evening included fine wine and food, an auction for a 2006 Saab Aero Convertible and a hunt for a diamond worth $15,000 (U.S.).

According to its first financial report with the Canada Revenue Agency, Hedge Funds Care Canada raised about $500,000 (Canadian) in 2005 and spent slightly more than $211,000 on fundraising.

It gave $160,000 to three Toronto-area organizations: the Child Psychotherapy Foundation of Canada, which got $60,000; the George Hull Centre for Children and Families, which received $50,000; and the Hincks-Dellcrest Centre, which also got $50,000. Mr. Goldman said the charity recently made another $60,000 worth of donations to the same charities.

When asked how he responds to suggestions the hedge fund industry is not normally associated with charity, Mr. Goldman replied: "It may have a few bad apples but generally it's an industry that I think conducts business quite fairly, especially in Canada."

He added that while the level of donations may seem small given the size of the Canadian hedge fund industry, estimated at about $30-billion, "I think that amount is still pretty good considering the marketplace here." And, he said, hedge fund managers contribute to many other charities. Hedge Funds Cares Canada "is not the only charity by a long shot that these guys represent or that they contribute to," he said. "If we can get a share of that, then that's great."

© 2007 The Globe and Mail. All rights reserved.

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