Bill Ackman Is Moving Money Fast Through His Pershing Square Foundation. Where's It Going?

Bill Ackman, the cofounder of Gotham partners and, more recently, Pershing Square Capital Management, may not be a big name outside financial circles, but his Pershing Square Foundation, founded in 2006, is quickly becoming a major philanthropic player. 

He's hugely successful in finance; Forbes estimates his net worth right now at $1.5 billion. But Ackman is still a relatively young guy at 48, an age when many hedge fund managers are still so focused on making money that philanthropy is an afterthought.

Just as when he was a prodigy when it came to making big money in his twenties, managing a half billion dollars in assets at his own fund by age 30, he has similarly jumped on the fast track with his giving.

By Ackman's account, giving away big money was always part of the plan. As an undergrad at Harvard, Ackman was influenced by John Rawls, who famously argued that we should all imagine we might have been born into any circumstances and organize society accordingly. That made a lot of sense to Ackman, and while he's been a bullying investor at times, he basically believes that his winnings should be spread around in Rawlsian fashion. 

Ackman and his wife Karen started off small with their giving, making just over half a million in grants during their foundation's first year. This grew to $7 million in their second year, and more than $15 million just two years later. Fiscal year 2010 saw an infusion of $59 million in capital, and a big jump in grants payable again, to $24.5 million. Perhaps this was a prelude to their 2012 announcement that they would sign the Giving Pledge, giving at least half of their fortune to charity. At the end of 2013, the foundation sat on nearly $80 million in assets and total giving for the year was around $31 million. 

So where is this money going? One of the Ackmans' single largest contributions was $25 million to help fix the Newark, NJ public school system, a gift that's been overshadowed by all the publicity around Mark Zuckerberg's $100 million contribution to the same cause. Ackman wasn't even mentioned in the recent New Yorker article that looked at the influx of private money into Newark's schools. 

The Ackmans have also been generous with their shared alma mater, Harvard, making a big gift recently for a new intiative to study the foundations of human behavior that we wrote about here. They've also given to other educational organizations with which they're affiliated. Another contribution of $25 million went to a capital campaign to build a venue for the Signature Theatre Company, though aside from this, their giving in the arts has been relatively limited. 

Significant sums have also gone to the Robin Hood Foundation, which fights poverty in New York City, and to a number of Jewish organizations, most notably the Center for Jewish History (although Ackman has said that he's not particularly religious). The Ackmans care deeply human rights and justice issues, and have given at least $10 million to Human Rights Watch and $2 million to the Innocence Project. Karen is on the board of Human Rights Watch. 

More recently, the Pershing Square Foundation moved into cancer research in a big way, joining with the Sohn Conference Foundation to launch a $25 million cancer research alliance in October 2013. The alliance will underwrite young scientists in New York City pursuring bold research that might not win traditional funding. 

Another cause very close to the Ackmans' hearts is global development, and they've been keenly interested in organizations that help people in developing countries lead more economically sustainable lives. One of the bigger grantees of the Pershing Square Foundation is the One Acre Fund, a microlender which helps farmers in East Africa increase their crop yields and income through small loans.

That kind of market-based strategy appeals to Bill Ackman, along with many of the donors from tech and Wall Street that we write about here. The Pershing Square Foundation is part of Big Bang Philanthropy, a group of like-minded foundations that share an entrepreneurial approach to global development. And one of the foundation's newest initiatives, launched late last year, provides scholarships to Oxford's MBA program to train young leaders to tackle social problems. This is to recognize, the foundation says, "that meaningful and innovative action to solve problems like poverty, climate change and overpopulation—particularly in a complex world that changes so quickly—demands future leaders develop business and management skills to complement their deep sector knowledge."

Putting social entrepreneurs through B-school at Oxford, like bankrolling young cancer scientists, reflects the Pershing Square Foundation's belief that the Ackmans' money will go furthest when it's given to people or programs "at an inflection point, when targeted investment will be instrumental to their ability to scale and accelerate impact."

That's smart thinking, given that, in the grand scheme of things, Bill Ackman doesn't have a huge fortune and Pershing Square Foundation remains a relatively small player in the philanthropic universe. 

As the Ackmans have stepped up their giving, they've also beefed up staffing at the foundation. Its CEO, Paul Berstein, built a successful global NGO focused on kids and backed by hedge fund money before joining the foundation in 2011. Also leading the foundation is Karen Ackman's sister, Amy Herskovitz, a social worker by training who was the foundation's first director and is keenly focused on scaling up its social enterprise work. More recently, the foundation had added staff capacity to handle its new cancer giving. 

This is still a skeletal crew for a foundation that's making 80 to 90 grants a year, and takes a pretty hands-on approach with its big commitments. So we wouldn't be surprised to see more hires in the near future. 

All told, the Pershing Square Foundation has given out more than $75 million in grants in the past four years, and, according to a spokesperson for the Ackmans, the couple has already made approximately $235 million in total commitments. That's more than 20 percent of their fortune, putting them well on their way toward fulfilling their Giving Pledge.

One question now is whether or not Ackman can increase his fortune as quickly as he seems to want to give it away. Our bet is that he can, and we can think of any number of hedge fund stars, like George Soros and James Simons, whose fortunes have grown much faster than their philanthropy. 

So our prediction: much bigger earning, and much bigger giving, lies ahead for William Ackman. 

For more on Ackman, check out his full profile