Numbers make the world go round

I like numbers. Knowing them gives you a sense of understanding the world—especially the hedge fund world. Numbers are a big part of everything we do here at AR, from calculating the monthly performance on thousands of funds to quantifying the assets under management of our Billion Dollar Club to tallying the earnings of the top 25 hedge fund managers in our annual Rich List.

This month, we’ve got some different numbers for you—the dollars spent on charities and on politics.

In 2009 the top 25 hedge fund managers made a record $25 billion—an astounding number that garners lots of press. But a number that gets less attention is the sum hedge fund managers gave away.

These extremely wealthy individuals are continuing to build up their charitable foundations, albeit at a slower pace following the financial crisis of 2008.

Our annual philanthropy survey shows that the top 25 hedge fund givers had philanthropic assets of about $6.1 billion and gave away about $464 million of it in 2008, the latest year for which all the numbers are available. Hedge funds were also generous last year, giving to causes such as the rebuilding of Haiti after the devastating earthquake there. Last month, the annual Robin Hood gala raised $87.8 million in one evening.

Compare those numbers with the amount hedge funds give to political candidates, and it’s apparent that managers are still far more interested in charity, an activity in which they can largely control the efforts, than in politics, which is a bit more of a wild card.

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During the 2008 presidential election cycle, hedge fund political action committees and their employees donated $18 million to various candidates, and so far in the 2010 cycle, they’ve given $5 million. Think of it: they gave away multiples of that in one evening of Robin Hood fundraising.

Hedge funds are still bit players in the world of political arm-twisting, or so the numbers show. Total hedge fund lobbying amounted to $6.6 million in 2009, compared with $50.6 million by commercial banks. And although we report this month that the increased lobbying by hedge funds has helped make financial reform less onerous on the industry, it’s uncertain how much their advocacy influenced the legislation. Although many in Washington don’t understand hedge funds all that well, the financial crisis seems to have made it evident that the bigger problem is the banking industry itself.

But before you jump to any conclusions about the generosity of hedge funds or their political muscle, it’s probably worthwhile to take note of another number: $493.55 billion. That’s the total assets under management of the top 25 hedge funds as of January 1, according to our Billion Dollar Club. Looks like there’s still room for a lot more largesse.

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