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John and Laura Arnold

John and Laura Arnold

John and Laura Arnold

Amount donated: around $1bn

Philanthropic Causes: education, criminal justice, pension reform

Region of philanthropic focus: USA

Ranking: 688th richest billionaire in the world (Forbes, 2016)

Net Worth: $2.5bn (Forbes, 2016)

Source of wealth: Hedge funds

John Arnold made a fortune from hedge funds before abruptly retiring at the age of 38 to focus on philanthropy.

Born in Texas in 1974, Arnold worked for Enron as a trader in the oil and natural gas sector; he is said to have received the largest bonus that that corporation ever bestowed on a single employee. After Enron’s collapse, he founded his own hedge fund company, Centaurus Advisors, which became successful through Arnold’s identification of market inefficiencies. In 2006, Arnold bet on lower gas prices in contrast to other hedge funds and made profits of almost $1bn when his position was proved correct. By 2012, though, it was time to move on: “I was troubled when I was trading that it’s hard to make that direct tie between the financial industry and the greater good,” he later said in a rare interview. My life was 100 percent trying to make money in the first phase, then 100 percent trying to do good in the second.”

He is married to Laura Munoz, a former corporate lawyer and oil company executive; the couple have three children and live in Houston. They established the Laura and John Arnold Foundation (LJAF) in 2008. Laura is seen by many as the driving force behind the Arnolds’ philanthropy: I spent my life being ambitious, she has been quoted as saying. “At some point, you realize that your highest and best use isnt related to your personal work and your ambition. Its related to the resources you’ve been given and your ability to make transformative change.

The Arnolds initially focussed on education, supporting the Knowledge is Power Programme (KIPP), the USA’s largest network of charter schools (schools which receive government funding but operate outside the public school sector); organisations like Teach For America and StudentsFirst have also received donations from the LJAF. During the 2013 US government federal shutdown, the LJAF donated $10m to the Head Start programme to ensure that some 7000 children from low income families could continue to receive educational services. They have since turned their attention to other social areas such as criminal justice and pensions reform.

Described as “one of the world’s most creative philanthropists”, John devotes himself to often under-appreciated causes such as identifying and trying to fix flaws in public policy (a similar approach to the one he took with Centaurus); “I try to look at it from supply and demand,” he has said. “Where is the need being met today, and where is there unmet demand?” He has reportedly invested $1.2m in developing an algorithm that can predict the likelihood of a defendant skipping bail as well as investing in social impact bonds which fund state programmes to help ex-convicts. In 2015, he co-founded the Coalition for Public Safety, a bipartisan alliance of political groups and think-tanks dedicated to criminal justice reform.

The Arnolds have also supported pension reform, funding groups across the USA that support initiatives aimed at scaling back unfunded public pension liabilities (the difference between what states promise workers for their retirement and the assets they have to pay for them). Pension reform is a controversial topic in the USA, and the Arnolds’ involvement has led to negative media coverage, with John Arnold being described as “that rare person who grows less popular the more he gives away”. The LJAF has emphasised the difficulty and long-term nature of pension reform. A spokesman has stated: “We don’t want to do a bunch of one-off efforts … We want to see if we can build momentum for a sustained reform effort in the state, and nationally.” On this subject, the LJAF website

emphasises that: “There is no one-size-fits-all solution.”

In 2010, the Arnolds signed the Giving Pledge, committing themselves to giving at least half of their wealth to charitable causes. In their pledge letter, they stated: “We view our wealth in this light not as an end in itself, but as an instrument to effect positive and transformative change.”

Picture:

Sourced from the Houston Chronicle

http://www.chron.com/news/houston-texas/article/Houston-billionaire-John-Arnold-retiring-at-38-3530371.php

References

Caroline Preston, ‘A Thirtysomething Billionaire Couple Take On Tough Issues Via Giving’, The Chronicle of Philanthropy (16th October 2011) https://philanthropy.com/article/A-Thirtysomething-Billionaire/157613

Mike Tolson, ‘Houston billionaire trader John Arnold retiring at 38’, Houston Chronicle (2nd May 2012) http://www.chron.com/news/houston-texas/article/Houston-billionaire-John-Arnold-retiring-at-38-3530371.php

Brad Reagan, ‘The New Science of Giving’, Wall Street Journal (17th May 2013) http://www.wsj.com/articles/SB10001424127887323372504578466992305986654

Tim Reid, ‘Texas hedge fund billionaire seeks California pension reform’, Reuters (25th June 2013) http://www.reuters.com/article/usa-pensions-arnold-idUSL2N0F01Z820130625

Dan Murtaugh, ‘Giving Back Has Made This 41-Year-Old Retired Billionaire Less Popular’, Bloomberg.com (19th November 2015) http://www.bloomberg.com/news/articles/2015-11-19/a-legendary-trader-is-making-few-friends-as-he-donates-billions

John Arnold profile, Forbes http://www.forbes.com/profile/john-arnold/

John D. Arnold profile, Wikipedia https://en.wikipedia.org/wiki/John_D._Arnold

Laura and John Arnold Foundation profile, Wikipedia https://en.wikipedia.org/wiki/Laura_and_John_Arnold_Foundation

Laura and John Arnold Foundation website http://www.arnoldfoundation.org/

Giving Pledge website http://givingpledge.org/