Peter Lynch Once Managed Money. Now He Gives It Away.

November 8, 2013

Peter Lynch Once Managed Money. Now He Gives It Away.



The philanthropists Peter and Carolyn Lynch at their home in Boston. They make grants, ranging from $25,000 to $1 million, alongside other foundations to amplify their impact and are personally involved in some of the charities.

PETER LYNCH has gone from being the avuncular face of mutual fund investing for average Americans in the 1980s to a quiet philanthropist working with his wife to give away a good part of the fortune he amassed as a top mutual fund manager. Mr. Lynch ran Fidelity’s Magellan Fund from 1977 to 1990, as it grew to $14 billion in assets, from $18 million. His average annual return over that time was 29.2 percent. But it was as the company’s television pitchman, with his shock of white hair and schoolteacher demeanor, that Mr. Lynch became widely known.Today he and his wife of 45 years, Carolyn, spend most of their time working on the Lynch Foundation, which they started 25 years ago this month. “It’s a public foundation, but not many people know what we do,” Mr. Lynch said.

According to Katie Everett, the foundation’s executive director, the Lynches started the foundation with $17 million in 1988 and it is now valued at $125 million. It will give away $8 million this year and has made $80 million in grants since its inception. The Lynches, she said, have given a similar amount of money to charity through three separate giving vehicles.

But the Lynches, who are quiet about their wealth, estimated by Boston Magazine at $352 million in 2006, are doing more than just giving away money. They make their grants, which range from $25,000 to $1 million, alongside other foundations to amplify their impact while also remaining personally involved in some of the charities.

Last week, at the outset of the giving season, I decided to look at two philanthropists, one a billionaire, the other a multimillionaire. I spoke first with the billionaire Jon Huntsman Sr., who announced a $100 million gift to the Huntsman Cancer Institute in Utah, bringing his total donations to cancer research to $450 million of the $1.6 billion he estimated he had given away in his life. This week I’m looking at what multimillionaires like the Lynches have been doing. My goal with both was to divine lessons for the rest of us from people who give away substantial sums of money.

Like Mr. Huntsman, who grew up poor in Idaho, both of the Lynches started out modestly. When Mr. Lynch was 7, his father was found to have cancer, and he died three years later. At age 11, Mr. Lynch started caddying at a golf club outside Boston, and he later received a caddy scholarship that helped him pay for Boston College. Mrs. Lynch, who is president and chairwoman of the foundation, was the daughter of a public school principal.

Yet from the earliest years of their marriage, they said, they wrote checks to groups like the Girl Scouts — they have three daughters — their church and the Peabody Essex Museum, which was near their home in Marblehead, Mass.

In 1988, when he was 44 and she was 41, they decided to bring some structure to their giving and set up the Lynch Foundation. One goal was to have a vehicle that would allow their philanthropic dollars to grow tax-free. “A lot of people wake up at 65 and they want to do charitable giving, but they’ve been paying taxes all the way along,” said Mr. Lynch, who manages the foundation’s investments.

Another reason, Mrs. Lynch said, was that she was being asked to serve on nonprofit boards, which come with requests for money, and she wanted a way to assess the requests. The foundation brought on trustees with expertise in specific areas that allowed the Lynches to look more deeply at causes that mattered to them.

That would seem practical. But a decade into the foundation, they felt frustrated by the grant process.

“What happened was you’d have these well-meaning trustees and someone would write a 16-page report and someone would write a two-page report,” Mr. Lynch said. “You’d feel you had to give something to the 16-page report because they put so much effort into it.”

Over several months, they worked with a consultant to come up with a standardized grant application that allowed them to compare the merits of each request and not be overwhelmed by one. They also hired an executive director to put a layer between them and people seeking money.

At the same time, the Lynches felt they needed to refine their strategy. Their foundation focused on four areas: education, cultural and historic preservation, health care and religion. But those areas were fairly broad. “I thought I had a clear vision,” Mrs. Lynch said. “That clear vision has been modified and changed.”

Today, their interest skews toward funding in education. They have made grants to Teach for America; the Posse Foundation, which offers extra support for disadvantaged students at elite colleges; and the Achievement Network, which uses more frequent assessments of school students during the year, as opposed to once at the end, to help teachers know how each one is doing.

“It’s a growth of who we are as a couple and a family,” she said. “If you had to describe our overall commitment, it was change through education.”

Such refinement is not uncommon. “People who are working tend to be spread pretty thin on a lot of causes because they don’t have time to focus,” said Jennifer Kenning, director of wealth management at Aspiriant. “When they retire, 10 causes becomes three.” Then, she added, “they want to use all the things they used in their business to make the nonprofit successful.”

Despite giving away millions of dollars a year, the Lynches realized that their dollars could do more through partnerships or by investing in existing organizations. (After all, even Mr. Huntsman, one of only a handful of people to give away more than $1 billion, said he was looking for partners.)

“I don’t think there is anything that we’re the only giver to,” Mr. Lynch said.

(The exception is the Lynch Leadership Academy at Boston College, which teaches school principals how to handle the parts of their jobs beyond teaching and administration, like managing a school’s physical plan. The Lynches gave $20 million to create it.)

At a time when going it alone as an entrepreneur is attractive, philanthropic advisers counsel even their wealthiest clients to look for ways to form partnerships.

“Instead of everyone saying, ‘I have a good idea,’ and they go off and say ‘Back me,’ I spend a lot of time asking who is working on things that are similar and join them,” said Jeffrey C. Walker, a former private equity executive and a co-author of “The Generosity Network.” “We’re finding fewer families going it alone. They’re putting their money together and finding great nonprofits to back.”

One thing that has not changed for the Lynches as their wealth and renown have grown is their desire to be hands-on.

Mr. Lynch spends four months each winter, he says, doing the philanthropic equivalent of retail politicking: calling 150 to 175 small donors to the Inner City Scholarship Fund, which offers partial scholarships to parochial schools in the Roman Catholic Archdiocese of Boston, to get them to renew or increase their donation.

“It’s, ‘Nice talking to you, Joe or Susie, and thanks for raising your gift,’ or I’m trying to get them to give more,” he said. “You only have 60 business days to get through to 150 people, but I get through.”

It doesn’t seem to bother him: He has raised $125 million for the cause, which would count as a 10-bagger in his investing days.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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