Pioneer has a social point to prove
When billionaire Paul Ramsay passed away suddenly in May 2014 in his home town of Bowral, the chairman and founder of private hospital giant Ramsay Health Care left a philanthropic bequest of more than $3 billion to charity.
It led to the establishment of the Paul Ramsay Foundation, the nation’s biggest charity by assets, whose grants are funded from the dividends of a cornerstone shareholding in Ramsay Health Care.
Brisbane entrepreneur Allan English never met Paul Ramsay, but he helped pioneer the philanthropic model adopted by the late billionaire’s foundation through his hospitality industry equipment rental and financing company known as Silver Chef.
English, who hails from the West Australian wheatbelt, moved to Queensland to start Silver Chef in 1986. He floated the company almost two decades later in 2005.
In 2010 he and his wife Tessa started the English Family Foundation to hold part of his family’s shareholding in Silver Chef, using the dividends from the public company to fund the foundation’s philanthropic work.
Back then Silver Chef shares were trading around the $1.50 mark. By October 2016 they had risen more than ten-fold to $11.74, which over eight years has allowed the family to distribute almost $11 million to charities and establish a venture fund to support social impact investments.
More importantly English has become something of a poster child for companies and executives being challenged by the mantra of corporate social responsibility.
“Corporates are seeking purpose. They are increasingly questioning their social licence to operate. There is an awareness that, ‘Gee whiz we have to start demonstrating to the community that we need to take into account what their needs are’,’’ English says. “I spend a lot of time working with leaders who are in this transition point — who are wanting to add more meaning into their organisations.”
Forty per cent of grants by the English Family Foundation are to fund microfinance programs in developing countries to alleviate poverty. A further 40 per cent is channelled into Australian-based social enterprises, and the remainder goes to a family fund.
English’s three children — London-based Clare, New Yorkbased Nicholas and Melbournebased Rachel — also each have their own philanthropic budgets.
“I would never have done the corporate journey without the social purpose. For me, you have to make money for a reason. Making money for money’s sake is a pretty hollow existence,’’ English says.
When the English Family Foundation became Silver Chef’s largest shareholder (it has just over 10 per cent of the company, while the family in total owns 24 per cent), the Silver Chef strategic leadership team went away on a retreat where it resolved to fund one million people out of poverty through microfinance projects by the year 2020.
A year later Silver Chef’s 350 staff increased that goal to 1.5 million. As of June this year, they have reached 1.3 million.
Eight thousand Silver Chef customers with rental agreements have also agreed to add $1 a week to their contracts to contribute to the vision.
Separately the Family Foundation’s Venture Fund — which takes on riskier investments — has taken a stake in the nation’s first surplus food online marketplace known as Yume, alongside the philanthropic arms of the Fairfax and Myer families.
The Venture Fund is also backing an online university called Ubiquity University, an accredited global university designed for Social Impact. Some of its most important work is in Sri Lanka, where it is partnering with one of the country’s leading educational agencies.
“Some of the investment community feel very aligned to what we do, that is great. The majority are pleased that the leadership of the company is committed to a vision and purpose,” English says.
But over the past year English has also received a brutal reminder that for all his work in philanthropy, he remains the chairman of a public company. One that has hit tough times.
Silver Chef’s bottom line plunged into the red last year after the most tumultuous year in its 32-year history.
The problem has been the distractions of its troubled GoGetta equipment financing business, which was sold in April to allow the company to return to focusing on its core hospitality operations.
“Having a social purpose doesn’t make you immune to mistakes and we did stuff up,’’ English says.
“We had to make a call because we were missing out on good opportunities overseas because we were focused on the GoGetta business. We made the hard call and we are now in that space of rebuilding the balance sheet.”
Silver Chef shares are now trading at $1.66 — they were trading above $8 a year ago — as the company moves to create a simpler organisational structure while pushing its expansion into North America and building its digital capabilities.
But the fall in profits and dividends has had a devastating impact on the company’s charitable work and the grant-making of the English Family Foundation.
“It means the amount we can give away is less. We have had to drop 40 per cent of our budget this year, which is terrible because there are plenty of causes that need backing,” English says.
But he is now confident he has the structure of the business right to continue to pursue his family’s dream. And to prove his longterm mantra that social entrepreneurs can still make money.
“Rest assured I am spending more time in the Silver Chef side of the business now than I am in the foundation,’’ he says.
“Social purpose led businesses historically around the globe have always delivered better returns for shareholders than those that are simply profit driven.
“My company has proven that it can do that and we need to live up to that. We have done it in the past and we can do it again in the future.”
Silver Chef founder Allan English: ‘Making money for money’s sake is a pretty hollow existence’