A hedge fund and its non-profit twin

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: Christopher Cooper-Hohn and his wife, Jamie, follow a simple economic formula: He makes money, and she gives it away.

Christopher Cooper-Hohn runs the Children’s Investment Fund, or TCI, a successful — and controversial — hedge fund that has become a gadfly to corporate giants like CSX, the American railroad. Jamie Cooper-Hohn leads an affiliated charity, the Children’s Investment Fund Foundation, which uses some of the profits that TCI earns to finance programmes for underprivileged children. The partnership has made the Cooper-Hohns the most generous philanthropists in Britain. Recently, their foundation reported a £439 million ($856 million) jump in funds for fiscal 2007, reflecting £324 million in donations from TCI and the Cooper-Hohns.

In an interview, Jamie Cooper-Hohn dismissed the notion that the charity is a ploy to soften Christopher Cooper-Hohn’s hard-charging image. Creating a foundation linked to the fund was “not about putting a warm and fuzzy face” on TCI, Jamie Cooper-Hohn said. Instead, it was “very much about keeping Chris motivated” to produce the highest returns possible, she said. “Look at what we could spend on marketing,” she added with a laugh. “We could be putting a warmer and fuzzier face on Chris.”

The couple met at a party while they were attending Harvard. Christopher Cooper-Hohn was smitten immediately, but Jamie Cooper-Hohn was openly uninterested in a man whose goal in life was to become wealthy. Christopher Cooper-Hohn, displaying skills he would later use to shake up boardrooms around the world, eventually won her over.

The foundation, and TCI’s role in financing it, sprung out of a spirit of compromise between the two. The couple have four children, including triplets. TCI and the Children’s Investment Fund Foundation were set up simultaneously in 2003 with an unusual fee structure. Investors pay TCI a 1% fee, about half the industry average, as well as a 0.5% fee to the foundation. If the fund earns more than 11% profit, investors pay another 0.5% to the foundation. TCI’s profits are funnelled back to the foundation, not to Christopher Cooper-Hohn.

Investors who have been with the fund since the beginning say it has a 42% annual internal rate of return, and earned 37% in 2007. So far this year, the fund is flat, they say — not bad, given the economic environment.

Jamie Cooper-Hohn, meanwhile, runs the foundation like a business.