Charity and company move along diverging routes

The paths of the Wellcome Trust and the Wellcome Foundation, which became a publicly quoted company in 1986, have diverged since then, and the parting of the ways is logical and not entirely surprising. The Trust, and its income, is devoted to charitable purposes and especially to supporting medical research. It was set up in 1936 on the death of Sir Henry Wellcome. Sir Henry jointly founded the business with fellow American Silas Burroughs, who died in1895.

For half a century after it was set up the Trust was the sole proprietor of the company, and the company was the Trust's sole asset. The decision to sell 21 per cent of the shares was taken in 1986 in order to create a market for the company's shares which could then be used to finance acquisitions.

For the first time the Trust also had a pool of cash it could use to diversify its investments and try actively to maximise its income independently of the company. In 1992 the Trust sold a further 39.5 per cent of the company and took the process a stage further. The company and the Trust are both active in medical research, but the company's interests are now commercial. The Trust puts money into backing individual research projects, with an increasing emphasis on Aids.

Its latest policy statement emphasises its commitment to long-term support for research in universities, in an attempt to offset the reduction in support from government.

The Trust is run by eight governors, independent of the company, who meet once a year to review the Trust's priorities, and rarely seek the public eye. The chairman is Sir Roger Gibbs, a City banker, and the director is Dr Bridget Ogilvie, a lady with animpressive list of medical qualifications.

In recent years the Trust's income has been approaching £300m a year, but barely a fifth came from the company, which has been sparing with its dividends.

Last week the shares were earning just 3.2 per cent against 5 per cent at Glaxo. The Trust will expect to make a massive profit and reinvest the cash element to earn something closer to the average market yield, which in London is comfortably over 4 per cent.