Latest / The Bold Lounge / Glen Galaich: Bold Thinking on Big Giving & Philanthropy

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Glen Galaich: Bold Thinking on Big Giving & Philanthropy · The Bold Lounge

0:07
SPEAKER_01: Welcome to the Bold Lounge Podcast.
0:09
SPEAKER_01: My name is Lee Burgess and I will be your host.
0:12
SPEAKER_01: If you're anything like me, you love hearing inspiring stories of people who have gone on bold journeys and made a positive impact in the world.
0:20
SPEAKER_01: This podcast is all about those kinds of stories.
0:23
SPEAKER_01: Every week we'll hear from someone who has taken the leap and embarked on an extraordinary journey.
0:28
SPEAKER_01: In addition to hearing their stories, we'll also learn about their bold growth mindset that they use to make things happen.
0:34
SPEAKER_01: Whether they faced challenges or doubts along the way, they persisted and ultimately achieved their goals.
0:41
SPEAKER_01: These impactful stories will leave you feeling motivated and inspired to pursue your own bold journey.
0:46
SPEAKER_01: I believe everyone has a bold story waiting to be freed.
0:50
SPEAKER_01: Tune in and get ready to be inspired.
2:17
SPEAKER_00: Thank you so much for having me.
2:19
SPEAKER_00: It's uh we are early in a book tour here, so it's really nice to get in some early interviews with people who have been published at Wiley as well.
2:27
SPEAKER_01: Yeah, so excited to have you.
2:28
SPEAKER_01: And I know you're in the home stretch of getting to pub day.
2:31
SPEAKER_01: I know a lot happens from there and it doesn't end.
2:34
SPEAKER_01: And excited to learn from you today as well as also understand what we can do, like how we can be part of some of the solutions to the things that you talk about here.
2:42
SPEAKER_01: So writing the book, I think, is actually a bold move because you're calling out things, and we're gonna get into this a bit.
2:49
SPEAKER_01: But when you think about being bold, how do you define it?
2:53
SPEAKER_00: I think about it as really stepping into power.
2:58
SPEAKER_00: And I don't know if this comes off the right way, but stepping in front of power.
3:01
SPEAKER_00: You know, I am a CEO and I'm a CEO of a private foundation, and those two things tend to come with a great deal of power, but I also have lots of peers and uh other leaders of foundations, some that are much, much larger than the one I work for, which is the Stubski Foundation in San Francisco.
3:19
SPEAKER_00: And they don't like to be criticized, questioned, or otherwise, from what I can tell.
3:25
SPEAKER_00: And they're very nice about it.
3:26
SPEAKER_00: I think the sector has uh that Minnesota nice kind of framing around it.
3:31
SPEAKER_00: So it takes a lot to step into it, it takes a lot to question it.
3:35
SPEAKER_00: And this sector has a lot of things that need to be questioned.
3:39
SPEAKER_00: So that is bold 100.
3:42
SPEAKER_01: I think when you speak to power, when you challenge a paper wall that exists, so to speak, of like something that doesn't really need to be there, but has been there a long time.
3:52
SPEAKER_01: So the way we've always done it, that kind of a thing.
3:54
SPEAKER_01: Or I used to be, I think a lot of the times, just throughout my life, the person asking the question that I shouldn't, right?
4:01
SPEAKER_01: Oh, you just asked something no one asked.
4:03
SPEAKER_01: That's right.
4:04
SPEAKER_01: And that's all you're about.
4:07
SPEAKER_00: We share this lately.
4:08
SPEAKER_01: Yeah.
4:09
SPEAKER_01: So the offset of stepping in front and into power, one of the things you talked about was having a group of individuals that are like you, knowing where your people are.
4:18
SPEAKER_01: Is there anything else that you have to be prepared for, or maybe have in your backpack, your skill set when you're stepping in front of or stepping to something that may actually not be very pleasant?
4:32
SPEAKER_00: You know, I'm gonna use a word that usually has a negative connotation, but I feel like it's important in a scene when you're dealing with power, and that's some sense of righteousness.
4:41
SPEAKER_00: You know, I I don't think I've ever even said that word out loud all that often, but it does come up as you're asking the questions.
4:46
SPEAKER_00: My definition of that in this case would be that you're clear-eyed about the ethical, moral reason why you're stepping in.
4:54
SPEAKER_00: And it's particularly challenging in this environment because the people who work in philanthropy are seen as people with good intent.
5:02
SPEAKER_00: And by and large, everybody does have good intent.
5:04
SPEAKER_00: There are some outliers, but by and large, people are trying to do good things in the sector.
5:08
SPEAKER_00: And I also have a podcast called Break Fake Rules.
5:11
SPEAKER_01: Oh, I love that.
5:12
SPEAKER_00: And the reason we talk about fake rules in the sector is we've created a whole bunch of rules in the foundation sector that benefit the wealthy who give, but don't benefit the people who receive.
5:24
SPEAKER_00: And again, it's not because people aren't working with good intentions.
5:28
SPEAKER_00: So, you know, I really do when I say you got to come into these in a situation where the people you're speaking to are really trying to do a good thing, not wanting to be critical of each other because they they're doing a good thing.
5:40
SPEAKER_00: It's very challenging to come into a room and and speak to where things are not being done well.
5:45
SPEAKER_00: So you have to be really sure.
5:47
SPEAKER_00: That's the righteous part.
5:48
SPEAKER_00: Like you have to be really sure of what you're bringing to the table.
5:52
SPEAKER_01: Yeah.
5:52
SPEAKER_00: And that's what I've tried to do with control, why big giving falls short is because I'm coming into a room of people who believe their big giving is great, but I think it could be a lot better.
6:03
SPEAKER_00: And I think we could be getting much, much more impact.
6:06
SPEAKER_01: Right.
6:06
SPEAKER_01: And it's direct, like your message is direct.
6:09
SPEAKER_01: There is no kind of be no, the my those are my favorite kind because I grew up like that's just more efficient.
6:16
unknown: I agree.
6:18
SPEAKER_01: You know, my mom and dad did a whole lot better of like just telling us what we needed to do, me and my brothers, and then we did it, and we didn't need a whole dissertation or a newsletter or anything about it.
6:27
SPEAKER_01: Like, we just needed you to tell us.
6:28
SPEAKER_01: So, like, I grew up that way.
6:29
SPEAKER_01: I know it doesn't always work, and I know it's not the way everybody always uh works best to receive either.
6:34
SPEAKER_00: So I think I've learned that especially in philanthropy, because you know, you're trying to do good things and you don't want to hear if you're not doing them well, right?
6:42
SPEAKER_01: Well, who does, right?
6:44
SPEAKER_01: But I realize that I don't do everything 100% awesome.
6:47
SPEAKER_01: So I think sometimes that feedback's really helpful, and especially the age that we're in, especially your industry, this is a challenge.
6:55
SPEAKER_01: But I bet every industry has fake roles.
6:58
SPEAKER_01: How did you identify your fake roles?
7:01
SPEAKER_01: Was it just things that people said, or was it like what you'd experienced or a combination thereof?
7:07
SPEAKER_00: Okay, that's an awesome question.
7:08
SPEAKER_00: And to answer it, I need to do just a touch of a 101 on the foundation world.
7:13
SPEAKER_01: Perfect.
7:13
SPEAKER_00: So when a person starts a private foundation, this is really important.
7:17
SPEAKER_00: So you mentioned to me before we came on that you were with the Susan G.
7:20
SPEAKER_00: Comen foundation.
7:21
SPEAKER_01: Yes, that's the board I served on.
7:22
SPEAKER_00: Right.
7:22
SPEAKER_00: Now that is what you would call a public foundation.
7:25
SPEAKER_00: So a public foundation means that more than one person is contributing to it.
7:29
SPEAKER_00: Okay.
7:30
SPEAKER_00: Okay.
7:30
SPEAKER_00: So that's what most people know from ACLU, Komen, you know, anything you can think of where people are giving lots and lots of money from various locations, it's public.
7:40
SPEAKER_00: A private foundation doesn't mean it's private in the sense that you can't know about it and no one gets to play in it.
7:46
SPEAKER_00: It just means that one donor gave the money to the foundation.
7:50
SPEAKER_00: That's all it means.
7:51
SPEAKER_00: Here, I'll throw out a controversial statement that is going to hit people right away.
7:55
SPEAKER_00: If someone tells you they started a private foundation for charitable reasons, chances are they're lying to you.
8:01
SPEAKER_00: And the reason they're lying to you is because the person who told them to start a private foundation is someone like an estate planner or an accountant or an investment advisor who, when looking at the volume of wealth coming into that person's life, they said, we want to try to reduce your tax exposure.
8:19
SPEAKER_00: So we're going to put you in a foundation where you're going to get an enormous tax exemption that will benefit your income.
8:25
SPEAKER_00: So they might say, I've never been in these conversations, but I've heard about a lot of them.
8:29
SPEAKER_00: Estate planners will often say then, and the good news is you get to give away some of the money.
8:33
SPEAKER_00: You're not required to give away much, only 5% of it a year.
8:37
SPEAKER_00: The rest of it you can invest in whatever you want to invest in.
8:40
SPEAKER_00: So you can earn more on it and give more money down the road.
8:43
SPEAKER_00: And I'm raising my voice at points that I'm hitting fake rules.
8:47
SPEAKER_00: You give more, you can put it away, and you get to give it however you want to give it.
8:52
SPEAKER_00: These are all fake rules of our sector, but those are standard ways that foundations get set up.
8:59
SPEAKER_00: Most people set up their foundation and they immediately write the bylaws.
9:03
SPEAKER_00: And guess who they put into the positions of governance?
9:06
SPEAKER_00: And I know you mentioned you have lots of people who are interested in board service.
9:10
SPEAKER_01: Yeah.
9:10
SPEAKER_00: So people who start a foundation, guess who they put on the board of the foundation?
9:14
SPEAKER_00: Their themselves and their family members.
9:17
SPEAKER_00: And the kids are out of college and they're trying to get them more involved in things.
9:21
SPEAKER_00: So they put the kids on the foundation, none of whom are typically qualified for doing social change work.
9:28
SPEAKER_00: The key point is that entity is a separate organization.
9:33
SPEAKER_00: It is not their money anymore.
9:36
SPEAKER_00: They have given it away.
9:37
SPEAKER_00: Just like you give a donation to something.
9:39
SPEAKER_00: When you give a donation, I'll ask you, Lee, when you give a donation to Sujan Ghomen, do you demand to sit on the board?
9:46
SPEAKER_01: No, I don't want to be on the board again.
9:49
SPEAKER_01: Not that it was bad, it was good.
9:51
SPEAKER_01: It was a good experience, but it's dedication, like it's time, it's a responsibility and those types of things.
9:57
SPEAKER_01: And not that I veer away from that right now, but I don't have a space right now for that.
10:01
SPEAKER_00: But when you gave the grant, did you say I have to be on the board?
10:05
SPEAKER_01: No, no.
10:06
SPEAKER_01: Okay.
10:06
SPEAKER_00: When you gave the grant, did you say, hang on a second, let me make you a deal.
10:10
SPEAKER_00: I'm going to give you this grant.
10:11
SPEAKER_00: Now, I could give you the dollar, but instead, how about if I give you five cents and I take 95 cents of it and I keep it in my bank account?
10:20
SPEAKER_00: And what I'll do with that is I'll put it into all kinds of things like hedge funds or mutual funds or real estate speculation, and I'll grow it.
10:27
SPEAKER_00: And so next year I can give you another five cents.
10:30
SPEAKER_00: And the year after that, I can give you another five cents.
10:33
SPEAKER_00: That's how a foundation works.
10:35
SPEAKER_01: Okay.
10:36
SPEAKER_01: All right.
10:38
SPEAKER_01: Right.
10:39
SPEAKER_01: So who wins in that?
10:40
SPEAKER_01: The person with the money, right?
10:42
SPEAKER_01: So the actual private foundation gains more dollars for their dollars.
10:47
SPEAKER_01: And then maybe they can give something annually uh to another person that's their grantees.
10:53
SPEAKER_01: But it sounds like the the positive side is primarily for the foundation.
10:58
SPEAKER_01: Am I capturing that accurately?
10:59
SPEAKER_00: Yeah, no, it's absolutely for the foundation.
11:01
SPEAKER_00: So let me go back to your question because your question was what fake rules did you break?
11:05
SPEAKER_00: So the woman I worked for until she passed away in 2021 was a woman named Joyce Stubsky.
11:10
SPEAKER_01: Okay.
11:11
SPEAKER_00: Larry Stubsky, her husband, was the guy behind Chuck Schwab.
11:15
SPEAKER_00: So Schwab became an international superpower in finance, and Larry Stubski built it to that place.
11:22
SPEAKER_00: So along the way, he gathered up a lot of money.
11:25
SPEAKER_00: And so they put it into a private foundation.
11:29
SPEAKER_00: And at the time that I came into the foundation, which was 2015, there was 250 million dollars sitting in there.
11:36
SPEAKER_00: And Joyce had made a decision to do something that most foundations do not do, which is she decided I want to spend it all out.
11:46
SPEAKER_00: And what I didn't know when I was hired and didn't think I'd even have to think about, because I was so hopeful I would do this with Joyce all the way to the end.
11:53
SPEAKER_00: Yeah.
11:54
SPEAKER_00: Didn't even think about losing her from the start, is that she also had a clause in their estate that all of their assets would go into the foundation upon their passing, and all of their assets would be given away as well.
12:05
SPEAKER_00: So she is in a unique character, believe me.
12:09
SPEAKER_00: So along with that, that idea of the spend down, which is so unusual.
12:14
SPEAKER_00: So what I described to you a moment ago is that most foundations, when they're formed, the government only requires that they give away 5% a year.
12:22
SPEAKER_00: So what do they all do?
12:24
SPEAKER_00: They only give away 5% a year.
12:26
SPEAKER_01: Okay, let's back up a second.
12:27
SPEAKER_01: So let's just do easy math here.
12:30
SPEAKER_01: So I'm going to start a foundation.
12:32
SPEAKER_01: I have$100,000.
12:33
SPEAKER_01: I want to just get it.
12:34
SPEAKER_01: Can it be any amount that I start a foundation with, or does that to be a great question?
12:38
SPEAKER_00: I I don't know the answer to that.
12:40
SPEAKER_00: I need to get that answered.
12:41
SPEAKER_00: But I there are many other forms of anyway.
12:43
SPEAKER_00: Go ahead.
12:44
SPEAKER_00: Let's say it's a good idea.
12:44
SPEAKER_01: Yeah, like if you wanted, like if I wanted to start a private foundation, like I have 100K, sounds like a reasonable amount of money uh to start it with.
12:51
SPEAKER_01: I move that money, I get then a tax write-off because I've donated to my own foundation.
12:57
SPEAKER_00: Yes.
12:57
SPEAKER_01: Okay.
12:58
SPEAKER_00: And it can be massive, it can be 70%.
13:01
SPEAKER_01: Okay.
13:02
SPEAKER_01: So so you do that, and then it's sitting over here, and then I can invest it, save it, buy Bitcoin, whatever people do with their money.
13:10
SPEAKER_00: You sure can.
13:10
SPEAKER_01: And I can do all that, and I only have to spend five percent of it every year.
13:15
SPEAKER_00: You have to give away five percent of what you had at the start of a year.
13:18
SPEAKER_00: Yes.
13:19
SPEAKER_01: Okay.
13:19
SPEAKER_00: So most do only five percent.
13:21
SPEAKER_00: In fact, you can you can charge your operations to it.
13:23
SPEAKER_00: A lot of people hire big staff, that can be part of your five percent.
13:26
SPEAKER_01: Who made these rules?
13:28
SPEAKER_00: So the rules that's a long story, but you may have heard of a guy named Carnegie, and he was part of a group of very famous philanthropists of the era, Rockefeller, Sage, that were the first to really use the foundation structure.
13:42
SPEAKER_00: Okay, but the real legislation around it, what kind of created the version we're in today, was in 1969.
13:49
SPEAKER_00: And in 1969, they were required to spend five percent.
13:53
SPEAKER_00: Prior to that, they didn't have to give away anything in a foundation.
13:55
SPEAKER_00: So in 69, they were required to give 5%.
13:58
SPEAKER_00: They were no longer to give things to themselves.
14:00
SPEAKER_00: And because of the Senate at the time, there was a very powerful senator that a number of foundations prior to 69 went after him, tried to bring him down so they're putting money into campaigns against him.
14:12
SPEAKER_00: He banned foundations from being involved in any direct lobbying, campaigning, or any kind of legislative work.
14:20
SPEAKER_00: So I'm not allowed to talk to an elected official.
14:24
SPEAKER_00: I can't speak in favor of an elected official if they're running for office.
14:28
SPEAKER_00: I can't speak about a piece of legislation that I might like, but we can't talk about it because I'm not allowed to.
14:33
SPEAKER_00: And I can't give money to any campaigns out of the foundation.
14:36
SPEAKER_00: I can do things privately, but I can't do it as the CEO of the foundation.
14:40
SPEAKER_00: So those are the rules that came in in 69, and that's it.
14:43
SPEAKER_00: It's really it.
14:44
SPEAKER_00: When you think about that, it's still a wide, wide lane for foundations extremely wide.
14:50
SPEAKER_00: Yeah.
14:51
SPEAKER_00: And there's really no accountability.
14:52
SPEAKER_00: The IRS is responsible for us, but I cannot come up with any case where the IRS has come crashing in and said, You did something wrong.
15:00
SPEAKER_01: Yeah.
15:00
SPEAKER_00: It's very rare that anyone really gets their hand slapped in the sector.
15:05
SPEAKER_01: But it sounds like the majority of the people who do this who have significant amounts.
15:10
SPEAKER_01: I mean, your book says$18 trillion with a T is on its way.
15:13
SPEAKER_00: We're getting there.
15:14
SPEAKER_00: So we are currently at$2 trillion in charitable assets, which I refer to as warehouse money.
15:20
SPEAKER_01: That's still a lot.
15:21
SPEAKER_00: It's a lot of money.
15:22
SPEAKER_00: And you know, when you think about 20 years from now, when it's supposed to because there's this big wealth transfer underway, and that wealth transfer, I think wonderfully is it looks like it's gonna go mostly to women, and that's a fantastic thing.
15:34
SPEAKER_00: But still, that money as it transfers will be put into other tax shelters, and as it goes into those shelters, it's gonna accumulate to 18 trillion in charitable assets, is the estimate.
15:46
SPEAKER_00: That estimate was like 10 trillion a little while ago.
15:48
SPEAKER_00: So we're seeing this number clicking up.
15:50
SPEAKER_00: That, by the way, is two years of the US budget.
15:53
SPEAKER_00: You know, that's a lot of money that'll just be sitting there.
15:56
SPEAKER_00: So anyway, I digress.
15:58
SPEAKER_01: Yeah, no, I think it's very fascinating.
16:00
SPEAKER_01: I think for me, you know, I'm sitting here going, well, why do people do it?
16:03
SPEAKER_01: Why do people do it?
16:04
SPEAKER_01: Is it just to get around the taxes?
16:06
SPEAKER_01: Is it just to make more money in a better way?
16:09
SPEAKER_00: Initially, I, you know, again, I think someone tells you otherwise, Lee.
16:12
SPEAKER_00: I think they're I think they're probably not telling you the full truth.
16:15
SPEAKER_00: And, you know, I'm not here to beat up on people.
16:18
SPEAKER_00: I mean, there are people that want to do good things with it.
16:21
SPEAKER_00: I can tell you having worked in the sector for 25 years, I have advised probably thousands of donors.
16:28
SPEAKER_00: Most of the stories I hear when people have come to me is hey, I was working, I retired, and now I want to pay more attention to my charity.
16:35
SPEAKER_00: So there is that thing sitting out there that they have used to benefit themselves from a tax basis.
16:42
SPEAKER_00: And now they're like, huh, now I think I want to give some away and I want to do it as well as I can.
16:47
SPEAKER_01: Yeah.
16:47
SPEAKER_00: Those are the good stories.
16:48
SPEAKER_00: Those are the positive stories.
16:49
SPEAKER_01: Yeah, there are good ones out there.
16:50
SPEAKER_01: So yeah, we don't want to people think that's all bad or anything like that, but it does sound like there's some loopholes here for sure.
16:58
SPEAKER_00: I'll tell, I'll put it to you this way.
17:00
SPEAKER_00: I find it amazing.
17:01
SPEAKER_00: Uh, and why when I the reason I wrote this book was not so much to get into the broader systems and sectoral issues of the foundations, yeah.
17:10
SPEAKER_00: But as I've been writing it and talking with people about it, it does kind of blow me away that we spend a lot of time talking about our political system, we spend a lot of time talking about our financial system, our economic system.
17:25
SPEAKER_00: No one really talks about this one.
17:27
SPEAKER_00: And what's really amazing about it is as we approach the 2028 federal election cycle, that cycle, two-year cycle, is estimated to cost$15 billion over two years.
17:39
SPEAKER_00: So that's$7 billion this year, no, next year, and$7 billion the year after.
17:44
SPEAKER_00: Okay.
17:45
SPEAKER_00: On an annual year, big giving to philanthropic causes from very wealthy people totals$250 billion.
17:54
SPEAKER_00: So while we are obsessed with the influence on politics of$7 billion, no one pays any attention to the$250 billion coming in.
18:04
SPEAKER_00: And you might say, well, again, Len, that's all nice stuff.
18:07
SPEAKER_00: Okay, well, let's play nice, which is museums, hospitals, schools, research, arts and culture, all of this stuff is being covered by philanthropy.
18:18
SPEAKER_00: And on the bright side, it's covered by philanthropy, and that's awesome.
18:22
SPEAKER_00: However, who is covering that and what they want for society means they're setting the agenda.
18:29
SPEAKER_00: So one I love to use, which I hope I don't upset parents all around the country, is I wonder today, like, where would the nutcracker be if it weren't for all the philanthropy that's coming to make sure we have it?
18:41
SPEAKER_00: Americans aren't like clamoring for symphonies and operas and museums.
18:46
SPEAKER_00: They're great.
18:47
SPEAKER_00: Again, I'm not opposed to any of it, but is that the arts and culture agenda that we've all set for the country?
18:54
SPEAKER_00: So philanthropy gets to set that.
18:56
SPEAKER_00: The way a museum, uh way a hospital structure, who gets the hospital, who's in the hospital, what the hospital has, whose name is on it, how large it is, what the wings look like, all determined by philanthropy.
19:07
SPEAKER_00: The kinds of schools we have, where we have schools, who has the best schools, whether we have schools, all in many ways determined by philanthropy.
19:16
SPEAKER_00: And yet no one is really looking at that.
19:18
SPEAKER_00: It's in many ways, it's kind of a chaotic environment in a good way.
19:22
SPEAKER_00: And I'm not saying it's wrong, but I am asking the question who should control?
19:27
SPEAKER_01: Yeah.
19:28
SPEAKER_00: But to go back to your original question, the biggest fake rule we broke right off the bat, and that kind of set the stage, was to go to spend down, to give more than five percent.
19:36
SPEAKER_00: Last year we gave 75% of our grant-making assets away.
19:40
SPEAKER_00: It was by far the most anyone gave last year.
19:43
SPEAKER_01: Wow.
19:44
SPEAKER_00: And that's because we broke the first rule, the most important rule, and just rolled with it.
19:48
SPEAKER_01: Yeah.
19:49
SPEAKER_01: So the title of the book is Control, Why Big Giving Falls Short.
19:53
SPEAKER_01: Why control?
19:54
SPEAKER_01: What does that mean when it comes in the aspect of this book?
19:58
SPEAKER_00: So the way I look at the spectrum here, let me do a spectrum, which is on the one end of the spectrum, is what I would say where most foundations show up, and I will define that for you, which is excessive donor control.
20:09
SPEAKER_00: And on the other end is something that I call comprehensive community engagement.
20:13
SPEAKER_01: Okay.
20:14
SPEAKER_00: So the very important principle here, which we were touching on just a few moments ago, is that the American people have a stake in what these foundations are doing because we are subsidizing them.
20:24
SPEAKER_00: The sense that we are giving away tax dollars back to a very wealthy person to decide how to allocate them for social good.
20:32
SPEAKER_00: And we're saying to that wealthy person, you can take that money.
20:36
SPEAKER_00: There should have been tax money, but you can have it because we believe in you and we believe you'll do it with the public in mind.
20:43
SPEAKER_00: That's the agreement we have with them.
20:45
SPEAKER_01: Okay.
20:45
SPEAKER_00: So control gets to this point of when you give someone that much power and you say, hey, we trust you, we think you're going to be good at this, you do it.
20:54
SPEAKER_00: The people we're talking about, when they hear that, they think, I'm going to control the assets and I'm going to do it my way.
21:00
SPEAKER_00: And so they do things in ways that they think are very important.
21:03
SPEAKER_00: The problem is it's kind of a paradox because we want them to do it the public in mind.
21:08
SPEAKER_00: We want them to move these dollars as governors of these foundations with the public in mind.
21:13
SPEAKER_00: And so I'm really trying to raise the volume on the behaviors, the barriers, the structures that exist in foundations that protect, support, and center the donor and try to encourage people out of that place to become more of a public steward, to do things that what communities really need.
21:33
SPEAKER_00: I'll give you a really trite, simple example.
21:35
SPEAKER_00: Some of the wealthiest people in our country love to give to Ivy League institutions.
21:40
SPEAKER_00: Most of them went to Ivy League institutions, they care about Ivy League institutions, they probably want their names on the side of buildings at Ivy League institutions.
21:49
SPEAKER_00: So when they think, hey, there's a problem out there, there's a community that's really struggling out there.
21:54
SPEAKER_00: They go ahead and they set up a center at an Ivy League institution to study, to research, to Do something about that community.
22:01
SPEAKER_00: Now, if they just went to the community and said, What do you need?
22:05
SPEAKER_00: What would make life better for you?
22:07
SPEAKER_00: You live in this.
22:08
SPEAKER_00: What's the solution you have to get out of this?
22:11
SPEAKER_00: I'm fairly certain if they did that, the answer would not be, please give money to Harvard.
22:16
SPEAKER_01: Yeah.
22:17
SPEAKER_01: Or please build a five million dollar building, right?
22:20
SPEAKER_00: Yeah.
22:20
SPEAKER_00: Please hire a bunch of elite researchers to come back to us and ask us questions about the things we already know.
22:26
SPEAKER_01: Yeah.
22:27
SPEAKER_01: My mom used to call that the no duh institute, meaning that's no duh.
22:31
SPEAKER_01: Like I know that.
22:35
SPEAKER_01: Yeah, exactly.
22:36
SPEAKER_01: Yeah.
22:36
SPEAKER_01: Yeah.
22:37
SPEAKER_01: So they find a way to, in a way, gain more visibility for people to see that too.
22:43
SPEAKER_00: I mean, I don't know what motivates them.
22:45
SPEAKER_00: I don't know what motive.
22:45
SPEAKER_00: I mean, that's their own personal motivations, but what we tend to see time and time again is that when given the opportunity to do something, they do something that they think would be good based on their own experience, but they haven't actually spoken to the communities of what they want.
22:59
SPEAKER_01: Yeah.
23:00
SPEAKER_01: Yeah.
23:00
SPEAKER_01: Have we asked?
23:01
SPEAKER_01: You know, that's always like have we ask them, you know, whether you're having a problem at work or your parents, or you know, have you had a conversation?
23:08
SPEAKER_01: So usually communication is in there, right?
23:10
SPEAKER_00: Yeah.
23:10
SPEAKER_01: With good intent.
23:11
SPEAKER_01: I still think, you know, good intent of like having a center like that.
23:14
SPEAKER_01: But like you said, if it's not community integrated or informed, it's it's going to miss the mark.
23:20
SPEAKER_00: And this is like a bipartisan issue.
23:22
SPEAKER_00: Like, you know, conservatives that do philanthropy.
23:24
SPEAKER_00: In fact, conservatives, I think, give more credit.
23:26
SPEAKER_00: I give them more credit in many ways because they tend to do things in the faith-based community or they do things within the church community.
23:33
SPEAKER_00: They are in touch with the communities and they're funding that way.
23:36
SPEAKER_00: Yeah.
23:37
SPEAKER_00: And they've had tremendous impact doing things in the way they want.
23:41
SPEAKER_00: And whereas progressives tend to, I think it's very ironic, but we tend to distance ourselves from community, even though we may care about, say, the black community or the under-resourced community or the Latino community.
23:53
SPEAKER_00: We do it from a distance and we find ways outside of what they're looking for.
23:58
SPEAKER_00: It's very, it's very interesting that way.
24:00
SPEAKER_01: Yeah.
24:01
SPEAKER_01: What do you think is the root of this?
24:04
SPEAKER_01: I don't know if it's an epidemic challenge, issue, all of the above.
24:09
SPEAKER_01: What do you think the root?
24:10
SPEAKER_01: Is it just that the rules are the rules and they haven't been updated?
24:13
SPEAKER_01: Like if everyone knows this, like why isn't anybody doing anything about it?
24:17
SPEAKER_01: Is because the wealthy don't want anything done about it and they have that much influence that no one pays attention to it.
24:23
SPEAKER_01: And there's nothing wrong with being wealthy.
24:25
SPEAKER_01: I am not jamming at all.
24:28
SPEAKER_01: I'm just I just want people to know that.
24:29
SPEAKER_01: Yeah, because I think that's great.
24:31
SPEAKER_01: Just do good with it, right?
24:33
SPEAKER_00: Yeah.
24:33
SPEAKER_00: I don't really have, you know, I'm focused on the charitable assets, honestly.
24:37
SPEAKER_00: I don't know how someone lives their life, you know, I have a 401k.
24:41
SPEAKER_00: I'm invested in things that I don't think should be invested in charitable accounts.
24:44
SPEAKER_00: But once you're talking about this public asset, which is what we're talking about here, I don't have an answer to your question other than to say we all have a role in the sense that the American people give permission for this to happen by not asking the question, how's it going with this money?
25:04
SPEAKER_00: What's happening with this money, by not putting pressure on any policymaker or policy to make sure that there's greater use of it.
25:12
SPEAKER_00: Because at the end of the day, on an annual basis, I said earlier, I'm gonna I don't want to confuse your audience, total giving annually is about$600 billion in the United States.
25:23
SPEAKER_00: Of that, about$250 billion is coming from very wealthy people, and of that, 100 billion is coming from the foundation sector.
25:33
SPEAKER_01: Yeah.
25:33
SPEAKER_00: So when you consider the fact that as we sit here today, there's two trillion dollars sitting there, and only 100 billion of it will be spent in the midst of what I think is some serious crises going on right now that could really use it.
25:48
SPEAKER_00: Democracy, climate change, all these things are going on, and the money is piling up.
25:53
SPEAKER_00: That's the part we have to really address, in my opinion.
25:56
SPEAKER_00: Okay.
25:56
SPEAKER_00: And Americans need to start asking questions about why that's happening.
26:01
SPEAKER_00: But then you go backwards from that and you get to this mindset.
26:04
SPEAKER_00: We revere wealthy people in America.
26:06
SPEAKER_00: When Carnegie writes about why he's a philanthropist, he basically says very directly to the reader, I'm smarter than you about how to make money, I'm smarter than you about this economic system, and therefore I'm gonna make a lot of it, and I'm going to make sure that you, those of you who are not as smart as me, have something too.
26:24
SPEAKER_01: No.
26:25
SPEAKER_01: So he had a true altruistic reason when he did it.
26:28
SPEAKER_00: He did, but it came from a place uh you so it's based on the idea that because someone can make money, they're smarter than all of us.
26:34
SPEAKER_01: I don't think that's actually equal, right?
26:36
SPEAKER_00: Right.
26:36
SPEAKER_00: And I think that needs to get, but it is, you know, underneath all of us, I think there's a little Carnegie.
26:41
SPEAKER_00: I do.
26:42
SPEAKER_00: I think most people think if you've made a lot of money, you're really smart, and you should have the ability to make decisions about anything.
26:48
SPEAKER_01: Yeah, I guess what the way that I I don't, I definitely don't look at people who have money as being smarter than me.
26:54
SPEAKER_01: I think they did something potentially smarter than me, which means either aligning, you know, with someone that's smarter than them, those type of things, or they invented something, or those types of things, or they did something that wasn't smart, or they know a loophole, which means they're, you know, I guess in the sense of they're smart about that particular thing, you know.
27:14
SPEAKER_01: But it is interesting.
27:15
SPEAKER_00: That's the key, what you just said there.
27:18
SPEAKER_00: That's the key.
27:19
SPEAKER_00: They're smart about that particular thing.
27:21
SPEAKER_01: Yeah.
27:21
SPEAKER_00: But what we've said with the foundation structure is if you're smart about that thing, then man, you must be smart about a lot of things.
27:28
SPEAKER_00: So let's just take some of our favorite hits out there.
27:31
SPEAKER_00: So there is a very wealthy man, I won't name names, but you'll figure it out quickly, who invented an online auction platform where I can sell my Star Wars figures.
27:40
SPEAKER_01: Okay.
27:41
SPEAKER_00: He made billions and billions of dollars doing it.
27:43
SPEAKER_00: He currently has about 14 family foundations across many different issue areas.
27:49
SPEAKER_00: So we're saying to him, if you can have an online auction platform where I can sell Star Wars figures, you are also capable of solving democracy, advancing economic justice, addressing issues in Hawaiian, native Hawaiian life.
28:05
SPEAKER_00: You can do any of that.
28:06
SPEAKER_00: Or take another guy.
28:07
SPEAKER_00: And there was a guy that came along, saw a really interesting operating system, saw that they weren't marketing it as well for computers, did his own version of it, and became one of the wealthiest people in the world.
28:17
SPEAKER_00: And then we said, Hey, can you get rid of malaria?
28:19
SPEAKER_00: He's like, sure, I'll give it a shot.
28:21
SPEAKER_00: So that's kind of how they are set up.
28:24
SPEAKER_00: Nothing against them, but when we hold the very wealthy people up who have done these things in an economic setting, and we're saying, hey, maybe you can also solve vaccine problems, or maybe you can solve anything.
28:36
SPEAKER_00: I mean, we've got they're in everything.
28:38
SPEAKER_01: Yeah.
28:38
SPEAKER_01: So what do you think the initial solution would be?
28:42
SPEAKER_00: So there are two ways to approach it.
28:44
SPEAKER_00: So with my book with control, why big giving falls short, I am making an impassioned argument for the people who are in these positions of power to ask the question: are they being a true public steward?
28:57
SPEAKER_00: Are they engaging community in their work?
29:00
SPEAKER_00: Are they in the mindset of control or are they willing to come out of it and help and work communities that way?
29:07
SPEAKER_00: I'm making a mindset appeal.
29:09
SPEAKER_00: Shift your mindset.
29:11
SPEAKER_00: The only other way I can see this being addressed is through policy and structure issues.
29:16
SPEAKER_00: And this is where I'm really enjoying doing podcasts and speaking to audiences outside of philanthropy because we really want to know for those of us that are trying to reform this sector, can we get Americans interested in this sector at all?
29:29
SPEAKER_00: Can we get Americans asking the kinds of questions that I'm not the only one trying to get reform?
29:34
SPEAKER_00: There are many, many names inside our trying.
29:37
SPEAKER_00: And we're just trying to find out will Americans take an interest in these dollars?
29:41
SPEAKER_00: Will Americans put more pressure on the people who control these dollars to be more public oriented?
29:46
SPEAKER_00: There is a there is a risk in getting too partisan with this.
29:49
SPEAKER_00: Ultimately, what we want is the money moving.
29:52
SPEAKER_01: Well, inform yourself first.
29:53
SPEAKER_01: That's what I want to say.
29:54
SPEAKER_01: Yeah, yeah.
29:55
SPEAKER_01: Inform yourself.
29:56
SPEAKER_01: Whenever you want to get involved in policy or structure or reform, the first thing I would say, and I would want for myself, so I try to share that, is that I need to be up to speed and understand as much as I possibly can from the role that I will play, right?
30:12
SPEAKER_01: Right.
30:12
SPEAKER_01: And then I think the call to action really comes is does anyone even think this is a problem?
30:18
SPEAKER_01: And that's where I worry a little bit about this, because those that think it's a problem don't have enough influence to actually influence the policy, potentially.
30:27
SPEAKER_01: But I do think people can.
30:29
SPEAKER_01: I that is not a little people can't make a difference.
30:32
SPEAKER_01: That is not that because I'm a little person in this big world.
30:35
SPEAKER_01: But I think, you know, from the perspective of money, the a lot of influence does come from having it.
30:40
SPEAKER_00: Oh yeah, absolutely.
30:41
SPEAKER_00: Yeah, hugely.
30:42
SPEAKER_00: Yeah.
30:42
SPEAKER_00: And that's you know, that's ultimately why I think the policy angle is a tough one.
30:46
SPEAKER_01: Okay.
30:46
SPEAKER_00: So I'm I I am really trying to play it as someone who has some influence in the philanthropic sector.
30:51
SPEAKER_00: I'm turning to my peers who have their own directive.
30:54
SPEAKER_01: Is there anything in it for them like to make that type of a change?
30:58
SPEAKER_00: It's a great question.
30:59
SPEAKER_00: And I had someone who helped me with this book, and she asked me up front, why would anyone read this book if you're going to be so critical of them?
31:07
SPEAKER_00: And ultimately, I do believe that people want to get as much impact with these dollars as they can.
31:12
SPEAKER_00: And I think that's the incentive.
31:14
SPEAKER_00: If you really care about getting impact, the incentive is to read the book.
31:18
SPEAKER_00: Use the book as a mirror on how you do philanthropy and ask yourself, am I doing some of the things I'm seeing in this book right now?
31:27
SPEAKER_00: Because if I am, I can do it differently and I can get more impact.
31:31
SPEAKER_00: I mean, this country is built on the idea that local is important and that local actors know what's going on in their lives.
31:38
SPEAKER_00: It's why we have states' rights, it's why we have city halls, it's why we have people on, you know, can run for office on city councils and school boards and all these things because we really believe that the local community knows.
31:49
SPEAKER_00: So if you buy that argument, then get in with community and find out what they need.
31:55
SPEAKER_00: And you know, it's even possible people don't have to be on the boards of the foundations named after them.
32:00
SPEAKER_00: There's a form of public stewardship that could be just stepping away and letting people to know what they're doing, do it.
32:06
SPEAKER_00: Yeah.
32:07
SPEAKER_00: So it really is about impact.
32:08
SPEAKER_00: That's the call to action.
32:09
SPEAKER_00: Do you want to see these dollars used as effectively as possible?
32:12
SPEAKER_00: I think there are better ways to do it and I get into them and control.
32:15
SPEAKER_01: Yeah.
32:16
SPEAKER_01: So as we close out, if someone really wants to know, like where there's maybe, you know, obviously something's been set up as a private foundation, they can actually receive other donations, correct?
32:27
SPEAKER_01: And and if they want to know where those are going, is that maybe the first step to action or to understanding?
32:34
SPEAKER_01: It's like I'd love to sit down and you know go go over something more than the annual report, but you know, how do we really know?
32:41
SPEAKER_00: So I'm obviously uh I'm shilling a book here, Lee.
32:44
SPEAKER_00: So I'm gonna I'm gonna point people to control.
32:46
SPEAKER_00: And the reason I am is not because what we haven't talked about, and I haven't tended to talk about with the book, is that the first half of the book, if not even more, takes you inside of how a foundation operates, takes you through how if these are stories, my own stories, stories of people I've worked with, how boards are set up, how the bylaws are set up, how the money gets distributed, how systems are set up to get the money out or not get the money out.
33:11
SPEAKER_00: And I do think there's a real advantage to reading that part of the book before you start going out to understand specific foundations from there.
33:19
SPEAKER_01: Yeah, educate yourself, learn as much as you can.
33:22
SPEAKER_00: Like anything you brought up today, like it really is just knowing the jargon a little bit.
33:26
SPEAKER_00: And I try to be really friendly to the reader and make sure you can follow along because it is it's like anything, you have to learn a little bit of a new language.
33:32
SPEAKER_00: But then when you start going into websites, because websites are great, a lot of foundations are very transparent and they show you what they're giving grants to.
33:40
SPEAKER_00: You can look at online.
33:41
SPEAKER_00: I'm gonna use, I am gonna use a tax form number here, but it's an important one.
33:46
SPEAKER_00: It's called the 990.
33:48
SPEAKER_00: And you can look up any 990 and see what, for the most part, what foundations are giving to, and more importantly, where they invest the other 95%.
33:58
SPEAKER_00: We haven't talked about that today, but the story of where we invest our money is so wild.
34:03
SPEAKER_00: And in most cases, this is the punchline, we're working against the missions that we signed up for.
34:10
SPEAKER_00: One example is a lot of foundations work on housing, homelessness, things like that, but they're invested in real estate speculation schemes that create it.
34:20
SPEAKER_00: So that's the weird stuff.
34:21
SPEAKER_00: Yeah, but that is common.
34:23
SPEAKER_00: You need to kind of know all this when you start to dig in and find out.
34:26
SPEAKER_00: And I love your call to action.
34:28
SPEAKER_00: I hope more people will find out.
34:30
SPEAKER_01: Yeah, don't take someone else's word, take action.
34:32
SPEAKER_01: I think that's what it comes to taking agency in your own life and thinking someone else is gonna fix a problem you talk, not you personally, but we talk about or whoever talks about.
34:40
SPEAKER_01: Like, what are you doing to fix it?
34:42
SPEAKER_01: Would be my question to them.
34:43
SPEAKER_01: And nothing, usually nothing is the answer.
34:46
SPEAKER_01: I'm just talking about it.
34:47
SPEAKER_01: So this takes it from talking about it to learning more about it, being able to speak the language, and then start a you know, conversation in a way that curiosity can lead you through and maybe understand what questions you should be asking next.
35:00
SPEAKER_00: And I'm guessing that for people to be bold, they need to do the things you just said.
35:05
SPEAKER_00: I'm assuming that.
35:06
SPEAKER_01: Right.
35:06
SPEAKER_01: You need to be aligned with your vision for who you are and your morals and your ethics of how you operate in our society.
35:12
SPEAKER_01: So yeah, that's bold all around.
35:15
SPEAKER_01: When you live aligned to that and you realize that you won't be the most popular person, you will not always be understood.
35:22
SPEAKER_01: And most leaders do the best that they can, but I think at times there are situations in which, you know, they have to do the best thing for the and insert, whether it's organization, company, you know, those types of things.
35:33
SPEAKER_01: So I think the more informed you can be and not just take someone else's word is always good advice.
35:38
SPEAKER_00: Yeah.
35:39
SPEAKER_00: Yeah, I'm with you.
35:40
SPEAKER_01: Well, thank you so much.
35:41
SPEAKER_01: So I hope everyone gets out there on March 17th and picks up this book and they're able to be able to educate themselves, learn more, and understand what control looks like in the philanthropic world.
35:55
SPEAKER_01: Thank you so much for being on the Bold Lounge.
35:57
SPEAKER_00: That was fun.
35:58
SPEAKER_00: Thank you so much for having me.
35:59
SPEAKER_01: Absolutely.
36:01
SPEAKER_01: Thank you for listening to the Bold Lounge Podcast.
36:04
SPEAKER_01: Through the continuum of bold stories, vulnerability to taking the leap, you will meet more extraordinary people making a positive impact for others through their unique and important story.
36:14
SPEAKER_01: By highlighting these stories, we hope to inspire others and share the journey of those with a bold mindset.
36:20
SPEAKER_01: We hope you've enjoyed this podcast and look forward to sharing the next bold journey with you.