12 January 2016
The decision by Allan Gray and his family to donate the profits from their entire company assets to charity is an unprecedented move for the South African investment company owner, according to Bloomberg.
It puts him in the company of American philanthropists Warren Buffett and Bill Gates, who began the trend in 2011 that encourages billionaires to give the majority of their wealth to philanthropic causes. In South Africa, Patrice Motsepe, the chairman of African Rainbow Minerals, also pledged a percentage of his wealth to charity in 2013.
Announcing the news in a letter to clients at the end of December 2015, Gray stated that the donation will end more than 40 years of family control of the Allan Gray investment company. The current equity value of the majority stake is estimated to be billions of rands; all the money will be transferred to the Allan and Gill Gray Foundation, to be managed for philanthropic endeavours, with additional dividends from the company to be used exclusively for charitable endeavours in South Africa and the rest of the world.
“The controlling interests (and almost all of the family’s interests) have already been transferred to the foundation,” Allan Gray chairman Ian Liddle told Business Day newspaper on 7 January 2016.
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According to Forbes, Gray, who is 78, is a self-made billionaire. It ranked him as the seventh-richest South African and 1 227th richest person in the world. He founded his company in 1973 in Cape Town, turning it into the largest privately owned asset manager in South Africa, overseeing $40-billion (R663-billion) in assets.
The company was also South Africa’s fourth-largest money manager in 2014, according to an Alexander Forbes retirement investment survey. In 1989, Gray founded Orbis Investment Management in Bermuda, which manages $30-billion.
This is not Gray’s first venture into philanthropy; he founded the Allan Gray Orbis Foundation in 2005, which invested $130-million into fellowship grants for emerging business leaders, mostly from Africa. The foundation received 7% of the taxed profits of Allan Gray Limited, Forbes reported.
The Orbis Foundation’s scholarship and fellowship opportunities focus on developing individuals who will become high impact responsible entrepreneurs. Individuals are selected on the basis of being willing and able to shape and transform the future of the Southern African region. They must also be driven to make a life-altering positive impact on the world around them.
The Allan and Gill Gray Foundation will follow the same principles, but broaden its scope.
“If we continue to do a good job for our clients and retain their trust and confidence, we hope that the annual dividends will run to the hundreds of millions of rands,” Liddle told Bloomberg TV. Gray, he said, “wants our businesses to continue to thrive and he thinks that this is a governance structure which will allow our businesses to continue to thrive”.
According to the Allan Gray company charter, the new foundation will devote all the dividends, estimated to be in the hundreds of millions of rands, to charitable causes, particularly those that address education, health and social needs across Southern Africa and beyond.
“We consider this both the right thing to do and a small but necessary contribution toward a society full of hope for all humanity,” Gray said in his letter to clients last month.