From hedge funds to running a charity – an interview with Diana Barran

By: Jane Lucken

Ever wondered if you should use your corporate-honed skills for the benefit of the wider community? Diana Barran moved from a successful career in fund management to found and run CAADA (Co-ordinated Action Against Domestic Abuse ), a charity that has improved the safety of over 40,000 victims of domestic violence. The Glass Hammer met Diana to find out how she made the move.

Career path with a conscience

One of the few female fund managers who took part in the investment exuberance of the 80s, Diana looked beyond her personal bonus. In 1992 she was managing a long-only fund, one of the top five performers in its sector. Seeing that returns were no more than those delivered by high street savings accounts she decided her investors would be better served by a fund focusing on absolute returns. Her chairman supported her and she set up The Magus European Fund, only the second hedge fund to be launched in Europe. This time the fee structure ensured that ‘if clients got rich, we got rich, if they didn’t we didn’t’.

In late 1999 she sold her stake in the business and with the luxury of financial success chose to do something different. Fellow financiers asked her to join New Philanthropy Capital, a charity that advises donors on how to give more effectively. She was already a trustee of The Henry Smith Charity and an employee of NPC which provided a great way to work out which sector she’d like to explore further.
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Helping Poor Women through Microfinance

This is a story of two women. In New York, a successful young woman in finance spends her days at a major investment bank structuring billion dollar loans to finance telecom deals. In Calcutta, a poor young woman who spends her days as a street sweeper takes out a $50 loan to buy enough supplies to open a grocery stand, and in doing so, builds a business that can feed her family of four.

What do these two women have in common? They are both involved in microfinance lending. The woman in Calcutta took out a loan from the SEWA Bank of India, which specializes in providing small loans to the poorest women. The woman in New York used her skills and knowledge of global financial markets and the economics of structuring debt to volunteer for a micro-credit lending organization in Ghana, where she spent her vacation advising local women’s cooperatives about the benefits of microfinance.

What is microfinance lending? The practice was pioneered in Bangladesh by Nobel Prize winner Muhammad Yunus, founder of the Grameen Bank and author of the recent book “Banker to the Poor: Micro-Lending and the Battle Against World Poverty.” The micro-finance lending model works by providing small loans without collateral to poor people, most of whom are women. In order to increase repayment of loans, institutions like the Grameen bank facilitate voluntary formation of small groups of five people to provide mutual, morally binding group guarantees in lieu of the collateral required by conventional banks. In this way, women who would not otherwise have access to credit can engage in income-generating activities, business ownership and entrepreneurship. This simple but powerful model has spread around the world, and has provided millions of dollars of capital to the poorest of the poor, in addition to providing auxiliary services including job and financial training, literacy classes, and empowerment workshops for women.

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A New Sector for a New World: The Rise of Social Entrepreneurship

Is it really possible to do well by doing good? The meteoric rise of social entrepreneurship in America, Europe and the developing world has breathed new life into the elusive goal of running a financially successful organization that uses business principles to contribute to the public good. Although the sector has been growing for over twenty-five years, social entrepreneurship has only recently become abuzz word in financial circles. At Echoing Green, the non profit organization where I work, our mission is to identify and support emerging social entrepreneurs. When I mention the concept to motivated young people today, I am more likely to be met with an “ah-ha!” look of recognition and excitement then with a confused stare. Indeed, more and more college and graduate students are enrolling in courses on social entrepreneurship and developing their own socially responsible organization.

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