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June 26, 2017updated 29 Jun 2017 2:59pm

How divorce affects your philanthropy

By Spear's

Couples involved in joint philanthropic activities may find themselves inextricably linked even when the relationship breaks down, writes Katie O’Callaghan

Many will have read in the media about the £337m pay-out that hedge fund manager Sir Christopher Hohn made to his ex-wife Jamie Cooper in 2014. At the time, it was believed to be the biggest ever sum awarded to a wife in this country and few have come close since.

However, the litigation between these two spouses did not end there. The battle then commenced in relation to Sir Christopher’s £3.13 billion philanthropic organisation, the Children’s Investment Fund Foundation (CIFF) which seeks to transform the lives of vulnerable children and adolescents in developing countries, set up during the parties’ marriage. In a significant ruling this month, the High Court approved a payment by CIFF of £282m to Ms Cooper’s new charity, Big Win Philanthropy, which she set up in 2015 after the parties’ divorce.

Both spouses worked hard for the CIFF cause during their marriage: Sir Christopher ran the associated hedge fund with Ms Cooper managing the charity. Given that both were trustees the governance of CIFF became increasingly difficult following the marriage breakdown. It was therefore subsequently agreed that Ms Cooper would resign as a charity trustee and that Sir Christopher would support the monetary grant to her new cause.

However, Sir Christopher had originally opposed the payment, arguing that the amount was purely as a result of ‘haggling bound up in the financial dispute originating from divorce proceedings’ rather than based on the new charity’s needs. His barrister raised concern about the precedent it would set, allowing charity money to become involved in resolving personal disputes between trustees. Given that this city already holds the reputation as being the divorce capital of the world due to the generosity of its pay-outs to the financially weaker spouse, it could be said that there is some justification for that concern.

The court’s approval of the payment was based on a number of reasons: the charitable benefits of making the grant outweigh the arguments against, particularly given that Ms Cooper committed to donating £32m of her own personal wealth to her charity if the grant was approved; it should bring the dispute between the former couple to an end and the associated costs that come with it; and it should allow, in the court’s words, both to ‘return to devoting their efforts and talents to charity’.

The payment now needs the approval of the Charity Commission but it is thought that this will be granted following the High Court judgment.

So what impact does the ruling have on the divorce world? While this was a separate set of proceedings to the divorce itself as it related to charitable funds rather than the personal wealth of either spouse, it obviously only came about as a result of the marriage breakdown. Of course there will no doubt be other cases where both spouses are intricately involved in a charity at the time of a divorce. However, the applicability of the judgment in this case even to other big money cases is likely to be limited.

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The very nature of a marriage breakdown is of course unique in every scenario and each case turns very specifically on its individual facts. The sheer sums involved in this case and the enormous contribution that each spouse has made to the charitable sector and is likely to continue to make in the future was one of the key reasons for the approval of the grant and is therefore likely to set it apart as an exceptional case. However, the ruling does highlight the court’s willingness to extend its consideration beyond what most would expect to be the parameters of a dispute as a result of two people’s failed marriage.

Katie O’Callaghan is an Associate in the Family team at Boodle Hatfield

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