Finance

The rich column: Modern means to finance an old country estate – Financial Times


It is a place that has drawn architect Walter Gropius, cellist Jacqueline du Pré, philosopher Bertrand Russell and poet Rabindranath Tagore. Now it wants to attract . . . you — as a visitor, a social impact investor, or even as both.

Dartington Hall Trust, the charity that runs an English country estate synonymous with 20th-century social innovation, has been turning to a very 21st-century financial concept for its latest fundraising: £20m of retail bonds to be traded on the impact segment of London’s NEX Exchange Growth Market. These will offer buyers the chance to make a 4.3 per cent annual return — and, apparently, a real difference.

That’s because the funds are intended to revitalise the Dartington Experiment, which began in 1925 when American heiress Dorothy Payne Whitney and her Yorkshire-born second husband Leonard Elmhirst bought 1,200 acres of land and buildings in Devon, to explore how progressive education, farming and land use might change lives.

Dorothy, who found herself both an orphan and the third richest woman in the US at the age of 17, turned quickly to funding social causes: supporting women’s suffrage, setting up the reformist New Republic magazine and founding the New School for Social Research with philosopher-psychologist John Dewey.

But it was meeting Cornell University agriculture student Leonard that led her to Dartington, where the couple built a school, began to teach new agricultural techniques and explored the role of culture with leading thinkers of the day. It was at the hall that Imogen Holst, the only child of composer Gustav Holst, organised the wartime Council for the Encouragement of Music and the Arts — a forerunner to Arts Council England. It was also at Dartington that Michael, later Baron, Young was educated — and returned to draft the Labour Party 1945 election manifesto, ushering in a new National Health Service.

Today, the trust that administers the Elmhirsts’ legacy wants the estate to contribute to modern British society in three similar areas: education provision; use of land, but this time for housing; and the development of a world-class cultural programme.

Chief executive Rhodri Samuel sees a continuation of Dorothy’s focus on “the expression of a many-sided life”, but also a new reality. “You can’t rely on a few extremely wealthy philanthropists these days,” he says.

Hence a £20m bond issue with a minimum commitment of £1,000 to finance property-backed commercial activities to boost the trust’s income. Dartington Hall is today run as a hotel and restaurant that brings in £2.9m a year, with another £3m coming from 22 retail units. Its Schumacher College of ecology and sustainability and additional learning initiatives bring in £2.2m. A property portfolio of 50 residential houses and 170 commercial tenancies brings another £1.8m. Finally, a social care charity adds £2.4m and philanthropy adds £1.7m.

However, more investment in the commercial operations is required if there is to be a much-needed step change in the trust’s income. So, as charities cannot raise equity, Samuel has turned to social impact bonds.

“The future of philanthropy is moving from individuals to a more collective response,” he argues. “Social impact investors are looking to collaborate and partner.”

If he can persuade enough to collaborate, £20m will help to refurbish the Dartington hotel, rejuvenate the retail space and redevelop the former school site. New experimental homes that can “move the dial forward in terms of rural housing” may follow.

Are higher-yielding impact bonds the best way to fund such projects, though? Investors appear unsure. Shortly after announcing its fundraising, Dartington Hall Trust had to extend the offer period “in order to allow sufficient time for investors who have not yet made arrangements to apply for bonds to do so”.

Christopher Aldous, head of asset management at wealth manager Charles Stanley, wonders if the timing and the instruments are right, given interest rate expectations. “Arguably, Dartington has missed the very best of the opportunity. Last December, Oxford university managed to borrow £750m by way of a 100-year bond issue with an interest rate of only 2.54 per cent. Dartington’s challenge is now to generate a bigger return on the £20m over the next 10 years than the 4.3 per cent they are paying to borrow it.”

Given the brains it has attracted in the past, Dartington may have a chance of rising to the challenge — but that’s assuming it can raise £20m in the first place.

Matthew is reading . . . 

A list of items left behind in French ski chalets, compiled by holiday website Skibeat. Apparently, these include diamond jewellery, an entire wardrobe of clothes, passports, gloves and teddy bears. It’s the bears I feel sorry for.

@MPJVincent

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