John Kennedy is not your average philanthropist. Like many who had profited from a successful City career, he decided to find a way to help those who were less fortunate. Unlike the rest, he has not given away millions of pounds or gone to work in the developing world. Instead, he has initiated a strikingly businesslike solution to raising cash for charity by opening an investment fund that donates part of its management fees to children's causes.
Kennedy, who has fled the City for a more relaxed freelance career in Cyprus, is humble about how his grand scheme came about. "A friend of mine was telling me about a guy in the City who'd given up his million-pound-a-year job to go and work in Africa digging wells, and we thought 'what use is he going to be doing that?'" he says.
"From my experience in investment, I know that if you have the right sort of fund at the right time, it is relatively easy to raise a lot of money, and I thought this charity fund would be a potentially quick and easy way to raise money at a time in my life when I should be a little more altruistic."
The new scheme forms part of an existing fund, from the city bastion Cazenove Capital, that is cautiously managed and specifically designed to protect investors' holdings. If investors choose to use the scheme, the firm surrenders its initial charge and at least half the management charge, and the resulting income is channelled to the new Fund Aid Foundation, from which the grants are distributed.
But Kennedy hasn't had an easy ride. "I took the idea to a few investment houses in the City and was met with quite a lot of scepticism," he says. "They didn't quite grasp the philanthropic intent of it, and said: 'Why would we want do this?'"
Cazenove, however, was able to see the advantages. "From their point of view, it could have been seen as a commercial manoeuvre because the more successful it is, the more investors they'll get and the more they'll be able to present the other services they offer," Kennedy says. "But I do actually think it was the philanthropic side they picked up on first."
He admits the reputation of City philanthropy was another potential stumbling block. "With private equity, you do read about big dos at the Grovesnor House Hotel and people larging it up with Dom Perignon and paying £20,000 for one evening out," he says. But he promises that his foundation will be different: with no salaries to pay, zero fundraising costs and charity applications being handled by New Philanthropy Capital, it has relatively low overheads.
"We don't want to make the foundation into an established organisation if we can avoid it," he says. "In the long run, we'd rather the model was copied by other fund managers than that we were involved forever."
Kennedy believes that one area ripe for copycat charity funds would be the emerging markets, where growing interest from UK investors could be harnessed to meet the need for more overseas aid. "The Charity Commission saw that this had a wider application, so they were keen to approve our fund," he says.
For now, however, the fund is expected to thrive in the conservative investing environment that exists in the wake of the sub-prime collapse. As a result, Kennedy is confident the foundation will reach its target of raising £3m in the first year.
"If this doesn't raise money, that's because we haven't explained it properly," he says. "Why would you not invest, knowing that your fees could be going to children rather than City fat cats? It really is that simple."
2007: Chairman, Fund Aid Foundation
1996: Sales and marketing director, Brandeaux Group
1991: Sales manager intermediaries, LAS Life Association of Scotland
1989: Sales manager intermediaries, Target Life
1983: Intermediary sales manager, NEL Britannia