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About the newly created Allan & Gill Gray Foundation

We have fielded many questions about the nature and objectives of Allan & Gill Gray Foundation (the Foundation). Tamryn Lamb offers some insights.

How does the new Foundation impact my investment at Allan Gray or Orbis?

There will be no change to the day-to-day management of these businesses, and no change in the way in which your investments are managed.

This move, initiated by the Gray family, entailed a transfer of their ownership in the businesses to a foundation. This transfer of ownership ensures that our businesses will remain privately owned by a committed shareholder who has a deep understanding of and shares our philosophy and values. This means that the executives of the businesses can focus entirely on what we have always done: adding value for clients for generations to come.

The Foundation has dual purposes: to lend continuity to and to promote the ongoing success of the businesses, while ultimately devoting the economic benefit from the Foundation’s interests in those businesses exclusively to charitable, benevolent or philanthropic ventures. Only if we do well for our clients will the funding for philanthropy be secured.

When was the new Foundation established?

The Foundation was established in Guernsey in April 2015. The charter is available for you to read in the ‘Our ownership’ section of ‘About us’ on our website. Effective 1 January 2016, the Foundation holds a controlling interest in the Allan Gray and Orbis Groups.

Does the Foundation manage the Allan Gray Group?

No. The Foundation is a shareholder which entrusts control and oversight of the firm to Orbis Allan Gray Limited, a holding company whose board consists of a majority of executives of Allan Gray and Orbis and includes non-executive directors. The board of Orbis Allan Gray Limited is appointed by the Foundation.

Is there any impact on Allan Gray’s BEE status?

No, this has no impact on Allan Gray’s BEE status.

How is the Foundation governed?

The Foundation is governed by a council, currently comprising members of the Gray family. The council operates in a similar way to a board of directors. A guardian has also been appointed and her primary role is to ensure that the council carries out its functions in order to achieve the purposes of the Foundation.

Which philanthropic purposes will the Foundation support and is it possible to apply for funding?

The Foundation’s policy, rather than grant giving, will be to engage in active strategic philanthropy. In due course, the Foundation intends to implement projects for the public benefit, which aim to meet unfilled needs, initially in communities in which Allan Gray and Orbis have offices. These philanthropic projects will invariably require their own dedicated staff and financial resources to bring their long-term objectives to fruition. Our experience over the past decade with the Allan Gray Orbis Foundation, is an example of such a project. We expect its success will encourage those in the new Foundation to follow a similar route.

How much of the dividends will be used for philanthropy?

In terms of its charter, the Foundation must ultimately devote all of the dividends it receives entirely and exclusively for philanthropic purposes. The charter does not require the Foundation to spend all of its income in any one year though.

Who are the beneficiaries of the Foundation?

The Foundation has no specific beneficiaries. It has been established with enduring, exclusively philanthropic purposes and it is intended to be perpetual in nature. Hopefully the philanthropic activities of the Foundation will make a difference and contribute to the common good as it chooses areas of focus over time. According to the charter, the Gray family is specifically excluded from economic benefit from the Foundation.

In which countries will the philanthropic endeavours take place?

The Foundation is not restricted by its charter and this will be a decision for the council to make.

Is there any impact on the cash flows to the Allan Gray Orbis Foundation?

It is important to clarify that Allan & Gill Gray Foundation is a new initiative and separate from the Allan Gray Orbis Foundation , which was established over 10 years ago. There will be no impact on the cash flows to the Allan Gray Orbis Foundation and Allan Gray will continue to donate 5% of its pre-tax profits in perpetuity to the Allan Gray Orbis Foundation. The Allan Gray Orbis Foundation will also continue to be managed as it has been previously.

How much of Allan Gray and Orbis did the Gray family own?

The family held a controlling interest (more than 50% of voting and economic interests) in both Allan Gray and Orbis. Minority shareholders in the Allan Gray group remain unchanged and include E(our empowerment partner), a staff share trust and past and current executives.

How much in annual dividends will be donated to the Foundation?

We do not disclose these numbers. Our profits and dividends vary in line with the investment returns that we earn for our clients, so they can change significantly from year to year. If we continue to do a good job for our clients and retain their trust and confidence, we hope that the annual dividends from Allan Gray will run to hundreds of millions of rands.

After the transfer, what is Allan’s role in the investment management businesses?

None. Allan stepped off the board of the Allan Gray Group in South Africa many years ago. He has also not been involved in the day-to-day running of Orbis (including the investment process) for many years. He is passing on his responsibilities at Orbis so that he can focus his time on the Foundation. This completes a succession plan that began more than a decade ago.

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