CHARITY, EXTRAVAGANTLY | April 17th 2008

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Black-tie philanthropy is part of charity, but Matthew Bishop has spotted rivalry, too. Lavish galas are a way for hedge-fund tycoons to one-up each other. So what does a recession year do to all of this conspicuous giving? 

From INTELLIGENT LIFE magazine, Spring 2008

How much will dinner with Mikhail Gorbachev cost in this year of economic gloom? Or dancing lessons from Richard Gere? Or the chance to host a series of dinner parties dished up by famous chefs? The slowdown will provide the first real test of today's new generation of philanthropists, especially the ones who made their pile in the financial markets. All eyes will be on two annual black-tie auctions for hedge-fund philanthropists, one in London, the other in New York.

The two lavish galas, which in past years have auctioned off a game of tennis with Tony Blair, a debrief with James Bond (or rather on set with Daniel Craig), and ten "power meals" with financial kingpins, have struck up a friendly rivalry--a transatlantic giving contest. In the late spring London's financial tycoons will again throw down the gauntlet at the dinner for Absolute Return for Kids (ARK), a charity founded in 2002 by the Swiss hedge-fund tycoon Arpad Busson. He got the idea from his rival, the event in New York hosted by the Robin Hood Foundation, founded in 1988 by Paul Tudor Jones, Busson's old boss.

Black-tie giving is sometimes seen as the unacceptable face of philanthropy. All that champagne and white truffle; all those pushy donors basking in conspicuous wealth and good works. Last year, in Portfolio magazine, the novelist Tom Wolfe wrote a savage description of the Robin Hood auction, accusing Tudor Jones of having a "status fixation", which requires "total control--by me".

This year's auctions come just when many people are worried about their prospects, so they may attract more critical journalism than ever. This is despite the charities' record in raising hundreds of millions of dollars for good causes--poverty in New York; orphans and other needy children at ARK. The charities put a lot of effort into ensuring that the money is well spent, and Busson and Tudor Jones both believe that the peer pressure of the galas persuades many a hedge-fund tycoon to prise open his wallet.

But this year there is dilemma. Give too much and the gala dinners will be seen as evidence that hedge-funders have sailed through a financial crisis that has hit everyone else. The dinners could become lightning rods for public discontent. They may even attract protests, as at last year's dinner by Britain's new Private Equity Foundation, its first do.

On the other hand, if the financiers give less than last year they should expect to be accused of being fair-weather philanthropists who abandon the needy at the first threat to the chalet in Saint Moritz.

The smart money is on new records being set yet again on both sides of the Atlantic, if only because of peer pressure. But there is not just the fear of being branded as stingy--it is more existential than that. After a rough year in the markets, people are bound to spend much of the evening speculating about who on the next table has taken a beating. What better way to signal that it wasn't you by bidding even more than last year for the chance to treat Gorbie to the finest tasting-menu in town?

(Matthew Bishop is New York City bureau chief of The Economist. He is writing a book on philanthropy.)