Webinar: Choosing Your Philanthropic Vehicles

MARY JOVANOVICH:  Welcome to Choosing your Philanthropic Vehicles, the second in a series of webinars, helping families navigate family philanthropy topics.

 

My name is Mary Jovanovich and I am a charitable consultant with Schwab Charitable, which means that I work with our donors and advisors, as well as non-profits to help them reach their charitable goals with maximum impact. We are a national donor-advised fund, and, simply said, our mission is to increase charitable giving in the United States.

 

To support our mission, we have collaborated with the National Center for Family Philanthropy to create and deploy resources for those who wish to explore philanthropy together. The result of our work with NCFP is a series of guidebooks, roadmaps, and videos, and other resources that help to address timely and relevant topics for donors and their families as they seek to really maximize their collective family philanthropy. This has been a wonderful collaboration for which we’ve been extremely grateful.

 

So, with that, I’m very pleased and honored to be joined by Tony Macklin, a philanthropic advisor and consultant with the National Center for Family Philanthropy, who wrote the guides and roadmaps in the series. Bruce McNamer, President of Builders Initiative, the impact platform founded by Lukas and Samantha Walton. Bruce brings to that family deep experience in all sectors of impact work, public, private, and philanthropic. He, the founders, and his staff help people in organizations to build a more humane and healthy planet. I’ll turn it over to Tony first to provide an overview of the topics and related materials.

 

TONY MACKLIN:  Thank you, Mary. So we’ll talk a little bit about the series, in general, and then we’ll talk about this particular topic on philanthropic vehicles.

 

The Navigating Family Philanthropy Series has been launched in 2022, and there are five different topics that you can use as resources for your clients if you’re an advisor, or if you’re a donor and a donor family. It covers everything from philanthropic purpose and philanthropic vehicles to your social impact strategies, and then how do you support those with good governance and family dynamics, and think ahead to legacy and succession.

 

Each of those five topics has a written guide for individuals or for couples that has worksheets in it and context for the choices you make, and some tips for facilitating conversations with your family or for making those choices. It also has a roadmap, so if you have multiple family members or multiple generations or multiple people involved, everybody can develop their guides and then come together and develop a shared roadmap to look ahead at what the family wants to accomplish. There’s also a four- to five-minute intro video that you can use to set the stage for your conversations or to get people a window into what’s in the guide and the roadmap. And then this webinar recording will also be posted up online, so you can watch this later for an additional insights.

 

A couple of definitions before we dive into the philanthropic vehicle. In these five guides and roadmaps, we talk about philanthropy in a big picture term. It’s voluntary action for public good. And it includes the typical things like giving and grant-making, but also things like impact investing, building social enterprises, advocacy, your volunteering and care-taking, and other actions you and your family might take to benefit others, or make an impact in the world, or do good in the world. So it’s much bigger than charitable organizations or maybe tax-deductible kind of giving, which some people might use that term.

 

We also see family philanthropy as when a group of family members take all of those philanthropic actions together, but that’s family as self-defined. So it could be close family, it could be far away family, it could be your friends, it could be colleagues and coworkers. You define who your family is or who you want to help govern and make decisions about your family philanthropy.

 

As you think about those topics, you can connect some dots. Your philanthropic purpose is the why of your journey. That’s the first guide in this series, sort of your mission and your values and your motivation that leads into a plan of action, your social impact strategy, how you plan to get there. And, finally, today’s topics, philanthropic vehicles, or how you get there. What’s the engine and vehicle you’ll use to move forward on your strategy and live out your purpose?

 

As you think about your philanthropic vehicles, there are four main points to get across in this guide and you’ll think about with either yourself or with your family members or with your advisors.

 

The first idea is form follows function. That is ideally the choices of vehicles that you have follows your goals and strategies for social impact. You might think about it as what are your social impact goals and how big of an engine do you need to get there, and how complex of an engine do you need to get there? And so some families might start with one vehicle, and then as they evolve their social impact goals or their strategies that may decide they need to add some other vehicles, and there are some examples of that in a few minutes with Bruce.

 

The second big idea is what are the resources you want to bring to the table as you think about your philanthropy and the social impact you want to make? And we think about it in the 5 Ts. Your time; your talent; your ties, which are also your relationships, the kinds of people you know and maybe you want to excite about your goals; the testimony you can bring, so how do you use your voice to advocate for what you’re doing or to excite other people into action; and then, of course, your treasure, your financial assets or other assets you can use for good. You might think about those resources of what do you have available now and then what do you have available in the future? And also look externally. What trends in your philanthropic priorities might increase or decrease demand for resources? So maybe something will happen in a couple years that will call you to add more resources, or maybe something will happen in your life that will cause you to dial back. So determine your resources now and then that might evolve over time, and that’s okay, that happens for all families and donors.

 

The third big idea in the guide and roadmap are the decision factors. If we stay with our car analogy, this is like shopping for a car. Your priorities for features and costs of a car might be different from your spouse’s or your kid’s or even the advisors that you have. And so you want to be clear about what are the priorities for your decision-making factors in picking a vehicle. Do you want to wrap it around your philanthropic purpose? Sometimes the resources you have available will define the kind of vehicle that best suits your needs. How you want to involve other people sometimes will define the right kind of vehicle. The lifespan of your philanthropy. Do you want to have something that’s short-term impact or you want something that’s going to be around for multiple generations or multiple decades. And then, finally, the level of privacy you want to have as a donor, as a family. Do you want to be very public, or very private, or somewhere in between? All of those shape the types of vehicles that are useful to you along the way. So think about your shopping list for vehicles and what’s important.

 

The last important thing then is there are three different types of vehicles you’ll see in the guide. The first type of vehicles are charitable vehicles. These are the types of vehicles people are most familiar with. They are tax-deductible gifts to tax-exempt types of organizations. You might already have a donor-advised fund or a private foundation you’re using to formalize your giving or to make grants to other non-profits. A couple of tools that people use less often are supporting organizations, sort of subsidiary organizations, and charitable remainder trusts, both grant-making organizations, but have different legal structures than private foundations and donor-advised funds. Each of them have their pros and cons depending on what you want to accomplish. The guide gives you some comparisons about those pros and cons. Some families and donors skip developing those kind of vehicles and just work directly with public charities, your average non-profits in the community like a YMCA or an art center. And some of them will even form new public charities because they see gaps in the system or they see a way to make a difference with a new public charity that’s perhaps more innovative or fills a niche in a different way. So these are very common vehicles, the ones people start off with, but then some people will add in other vehicles along the way.

 

The second bucket of vehicles are private sector vehicles. These are ways that donors or families want to connect purpose and profit or align their money with their values. Gifts to these vehicles aren’t tax-deductible, but they are ways to leverage private sector resources or leverage the markets for social impact. Some families or some donors want to create mission-driven businesses. This is especially true for rising generations of entrepreneurs, entrepreneurs who are people of color in the United States. And so they think about things like corporate social responsibility. How do you use your marketing and your giving and your employee volunteerism and your wisdom and knowhow and your vendor relationships all for some kind of impact that you’ve defined? Some people create benefit corporations or B corporations, a special class of business that embeds your purpose and your mission into your business practices. And other people use social enterprise as sort of just baking their mission right into the start of the business design.

 

Other folks look at forms of impact investing. Impact investing as a way to use your invested assets for good for both a financial return and to achieve some kind of social or environmental impact. Some families do that individually with their own money. Some people do it through other vehicles, like donor-advised funds or family foundations. And the great things about impact investing is it’s grown a lot over the past couple decades, so you can usually find impact investment funds that are of any kind of asset class, that have any kind of geographical focus, or any kind of issue focus. And so if you haven’t explored it recently, there’s lots of options.

 

Some families, and you’ll hear about this today from Bruce, create limited liability corporations as an umbrella for all the rest of the work. Limited liability corporations give them a lot of flexibility to do giving, and advocacy, and impact investing, and maybe even direct programming. So that they have a sort of an umbrella to hold all of that. So families might use a family office for the same reason.

 

So charitable vehicles are the first type. Private sector vehicles are the second type.

 

And then the third type are what we call civic engagement vehicles. These are really for donors and businesses who want to spend a lot of time involving and influencing others. They see that as the key hallmark of their giving goals or the kind of impact they want to make. And so sometimes they involve and influence others through public policy mechanisms. Most common are 501(c)4 non-profits and 521 political organizations. The 501(c)4s are non-profits that could do some advocacy work and also other kind of civic engagement work. 527 political organizations are the organizations that are about campaigns and political parties and individual candidates. Some donors will found those or co-found those because they see advocacy as a way to get at an issue they want to improve or sustain in their communities.

 

Other donors see these peer-based vehicles as a way to really engage lots of other people in a cause. So one form is giving circles where people can get together, pool their money and make a larger grant collectively to something that they care about across the world or in their own community. Crowdfunding platforms have become popular ways to give and make a difference. Social movements where you can get everybody involved and really drive energy from the ground up on an issue. And then mutual aid networks, which have been around for centuries and became very popular again in 2020 when the pandemic came through. These are all ways that people really engage their peers and friends and other families in some kind of social impact. Tax-deductibility varies on these and foundations and donor-advised funds can’t always make grants to them. You can check with your advisor on that. So families will frequently use these as an adjunct to their charitable vehicles or their private sector vehicles. And so you’ll see families mix and match all these different types of vehicles or even types of vehicles within the different buckets of them. And you’ll hear examples of that from Bruce in a minute.

 

You have a chance to think about as a family, back to form follows function, what is it you really want to accomplish with your social impact strategy? How do you really want to make a difference? And then back in do we need to do that through a charitable vehicle, or do we need to do that by engaging our peers in something, or do we need to leverage the markets in some way? So the guide helps you think through all those questions and lay out a strategy for what vehicles make sense for you now, maybe ones that you want to explore later in the future. And then the roadmap helps your family sort of write it all down and get it down for future generations to be involved with.

 

That’s it for the guide overview. We’re going to take the slide down and bring Mary and Bruce into the conversation, and get a chance to hear how this works in real life for other families. One second to stop that share.

 

Bruce, welcome. Thanks to for joining us today on the conversation. And, Mary, glad to have you on camera. We’re going to start with Bruce and get a sense, a little bit about the choices that Builders Initiative and Builders Vision have made. So, Bruce, start with just the background. Before Builders Vision and Builders Initiative, there was a couple who had some hopes of giving back in the community. So what was their story before they formalized all of this?

 

BRUCE McNAMER:  Yeah. Well, maybe I’d start by saying what brought them to this in the first place was motivation similar to a lot of people like participating in this event and listening in today. It was a sense that they’ve been privileged to come into great wealth and the real desire to use that for good.

 

But maybe beyond that, I’d say, you know, that even early on and continues kind of reflect who they are as people, and both in terms of those instincts, but also in terms of their interests. You know, Samantha, like me, a Montanan, interested in animal welfare. And she is an artist and interested in the arts and access to the arts. For Lukas, it is the outdoors, it’s conservation, which he had… basically raised on the water and in the mountains, and so it came to these topics of conservation, of the environment, of sustainable food and agriculture, by way of life experience. I’d say, also, in Lukas’s case, he had been raised around philanthropy with the Walton Family Foundation, from a very young ageg involved there, and at a relatively young age, you know, active, particularly on the Environment committee. So was no stranger to philanthropy even before they had embarked in any kind of formal way on doing it.

 

TONY:  We talked about those resources, the 5 Ts—time, talent, treasure, ties, testimony. How are they thinking about using all their resources? Obviously, they’ve put money into some vehicles, we’ll get to in a minute, but what about the rest of those resources?

 

BRUCE:  Yeah. Well, all of them, and in some sense all at once. Although I would say with respect to testimony, that’s maybe the latest of those. But, you know, certainly, Lukas comes to work every day. He thinks of what we’re doing at Builders Vision, as many of us would, in terms of his job. This is what he does. And so it’s time, it’s their talents, and relationships. I think we’ve realized all along kind of the power that inheres in relationships, both in terms of bringing those to the relationship we already have to the work that we are doing, but, also, in terms of building relationships to help inform what we would do. I think they are very much at the kind of beginner’s mindset. They are eager and curious people, so eager to learn, and curious people. And aware that despite great wealth, that will never be enough. We’re going to have to work together with a lot of people. So I think the value of relationships is just woven into  what we do. And then, of course, treasure. They certainly can bring that. And I think testimony only recently. We’ve been pretty private about what we’ve doing until, you know, last year, when we sort of came out.

 

TONY:  We’ll come back to that a little bit later. You know, that curiosity and beginner’s mindset that sort of weaves through all these guides, as well, right? The guides encourage donors and their advisors to stay curious. You may learn something new and it may take you awhile to absorb it, but ask other people about it, ask other families about how they’ve used those tools or how they’ve used a vehicle, and sort of learn where it could be useful to you. You might get stuck on something and it’s good to get unstuck sometimes.

 

So they were doing things as a couple. Lukas, obviously, knew about philanthropy, formalized the foundation. What was their first step, then? So what prompted them to say, ‘Okay, we want to start one or more of these vehicles.’?

 

BRUCE:  Yeah. Well, interestingly, but not surprisingly, for Lukas, you  know, Lukas is the grandson of Sam Walton. He also has a kind of lifelong interest in business, and this intersection of kind of business and doing good in the world. And, in fact, the first kind of formal entree into kind of the mission work that has become their life was Lukas set up a venture capital firm here in Chicago, Seed 2 Growth Ventures, which was investing in sustainable food and agriculture. And not mission-based, but market returns, seeking market returns. And that was the entree into the kind of their piece of kind of how do you make a difference in the world. And that was now going on… that’s nine or 10 years ago. So that was the initial kind of entry into this. Then set up kind of the asset management, larger part of managing our assets here. And then the most recent, which is now going on, it’s three, three and a half years old, was Builders Initiative, which is the philanthropic arm of these entities, which are now go under the umbrella, our impact platform, Builders Vision. But the philanthropic arm was set about three years ago. But I would say about… and that now has evolved. So we have these three kind of entities within Builders Vision, direct investing in companies… and at this point that portfolio is, you know, 80, 90 companies… and then asset management in public markets, and then Builders Initiative, which is the philanthropic arm of the organization. So over time, the ways that they’ve thought about, you know, putting assets to work for good has been incremental. But this is where we are today.

 

But I would say about all of those, and I think just it’s pretty remarkable, one mission. It’s shifting markets and minds for good. Different pools of capital, different approaches, different tools, but one mission.

 

TONY:  I think that one of the things the National Center for Family Philanthropy and its members have found out, some people will try to unify all of the vehicles under one mission, and other people use different vehicles for different missions because if we have different family interests or different geographies they’re working on. So I think families can decide either way. So it’s interesting to then pursue this one as everything is under one umbrella.

 

So got this one mission, you’ve got the impact investing, we’ll come back to that in a minute. So run down the parts that are in the philanthropic side.

 

BRUCE:  Yeah. So and they’re not… well, I’ll do that, but they’re kind of reflective of those broader set of entities.

 

So on the philanthropic side, I’d say, first of all, thematically, we’re investing, you know, as I said at the outset, in accord with their lifelong interests. Samantha, in access to arts, and farm animal well-being, and companion animal, we’ll call it, animal well-being, and an early kind of interest in the caring economy. And, otherwise, Lukas kind of branched out of the efforts around sustainable food and agriculture, around healthy oceans, and around climate and climate equity. Those, thematically, are how we organized. Wery much… very diverse, though, in terms of the tools that we deploy even out of the philanthropic side of the office. So, of course, we are grant makers, but with advocacy, the lobbying, media, helping to launch and fund media efforts, and impact investing.

 

And with respect to the last of those, I’d just say a couple things. One, we do actually have a private foundation with an endowment, and we’ve invested... that’s up to about a billion dollars now. Most of that, 90% of that is invested for impact. We also have a separate vehicle, I call it philanthropic venture capital. It’s impact for its investing, and companies and funds in those various areas, so sustainable food and agriculture, healthy oceans, climate equity. Companies that have high social purpose and are still early stage, still too early for market rate capital, but where we think we can, as investors, help them get there. So different tools.

 

And then the final thing, and I know we’ll come back to this, is that philanthropic, that vehicles we use for that, we have a private foundation, we use donor-advised funds, and we use an LLC, we call it a charitable LLC, which it’s an LLC, as well.

 

TONY:  All right. So we talked about those vehicles before. So like what’s the architecture? Is like the LLC sort of at the top, and then the other things are underneath of it. Is it also just mishmashed together? How does do you organize it?

 

BRUCE:  We have the LLC… yeah, so private foundation is, you know, is a… that’s non-profit… it’s a corporation. But it’s a private foundation that has an endowment. And that is growing over time and it’s funded annually. With the donor-advised fund, same thing. And, you know, that… we can probably get into this, but donor-advised fund, we have two of them, actually, one here with our local community foundation, the Chicago Community Trust, and we actually have another one, Impact Assets for some number of our impact investments. And, again, we use those, in part, because it’s a alternative tax vehicle for charitable giving. But there are other advantage that donor-advised funds, which many folks on this call will know well, but around ability to… a little more flexibility in terms of anonymity, it’s actually helpful to us in terms of some of relieving some of the workload in terms of what we do. We also see the donor-advised fund here at the Chicago Community Trust as a way of supporting our community.

 

And then the LLC is separate, and, again, we use that for… because the flexibility that is inherently in that. This is not tax-advantaged dollars, so we can actually put those money to work in investing and (c)4 kind of advocacy work, policy lobbying work, and for other reasons.

 

In terms of governance, we actually have a board over all those, but it’s an advisory board. There is, of course, a fiduciary board at the private foundation, itself.

 

TONY:  We’ll come back to that governance piece in a minute. Mary, I want to bring you in on this. You’ve had a chance to see lots of different Schwab clients use different tools or combine different tools. Tell us a story or two about what you’re seeing.

 

MARY:  Yeah, so very similar to Bruce, I have a client who had a private foundation, and he had decided that he wanted to establish a donor-advised fund account for future donations because of those tax-deductibility being a little bit more advantageous for a donor-advised fund versus a private foundation. But more importantly, it was the investment strategy. And so he was looking, similar to what Bruce said, with that directing investing, the asset management, but, more importantly, the philanthropy had that one mission. And for him that mission was honor colleges. He didn’t want to support scholarships per se, but he wanted to create environments that would bring students together so that they could really thrive in an academic experience. And so for him, that’s why he established the donor-advised fund and took it away from the private foundation model.

 

TONY:  So that donor was… he also using then like his ties and time… he’s got, obviously, his treasure, but was he also volunteering or doing other things to sort of support that mission?

 

MARY:  He is because the colleges that he’s electing to do these honors colleges at and establish these facilities and these buildings, he’s actually meeting with the students to better understand what would make it better for them and their experience, and what’s necessary to be implemented in those locations for them to actually succeed. So he’s interviewing the students as these things are being created.

 

TONY:  So a growing hallmark of effective family philanthropy. He was really taking time to listen, right? Go right to the source, figure out like, ‘What’s going on up here? What’s stopping you from progressing as a person, as a family, as a community, as an organization?’ So I think that’s really admirable that donor is listening, you know, firsthand at those students.

 

Bruce, talk a little bit about the Builders Vision and Builders Initiative. How are you sort of setting context for your work? Who are you listening to? What kinds of information are you using to inform this fairly complex strategy you’ve got going on?

 

BRUCE:  Yeah. Well, something we take very seriously. I would maybe start with kind of the fact, and not privileges as the most important, but we listen to each other. And so the insights that we can glean in our philanthropic oceans work are, you know, from walking down the hall and having a conversation with kind of the investment team that’s investing in companies. Same, food and ag, and in our kind of climate and energy transitions portfolios. And that goes two ways, and the ability to kind of compare notes and collaborate in many instances, you know, in a more formal way. Again, when we have instances where a company that we might have financed or made grants to early on kind of graduates, we have this notion of kind of NGO to IPO. And we’ve had companies where we’ve been with them at the philanthropic stage and now our colleagues down the hall are investing in them in venture capital. So, certainly, listening to each other, but assiduous, I think, in our outreach to others.

 

And in the Builders Initiative context, even as we’re fairly young, this year we established kind of advisory committees for all of our program areas, and so bringing kind of outside perspectives onto that. Our grantees inform almost everything that we do at the individual grant level, but how we think about our theories of change, and how we think about, you know, really facts on the ground and how that works. And then we’re pretty attentive to kind of building networks of other funders and being purposeful as we do that.

 

TONY:  You might have used a term that folks don’t know on the webinar. What’s a theory of change?

 

BRUCE:  Yeah. Well, philanthropy is just, basically, the touchstone for your strategy. It’s what do we believe to be the true. If we do this then that, elementally, is a theory of change. And then you articulate it much more specifically as you build out your philanthropy. And so we do that for each of our issue areas and then we build out strategies behind that. And we now have a kind of formal what we call IMM, which is Impact Measurement Management that we lay over that to know how are we doing, what kind of data and other kind of input we need to understand that. What are our aspirations with respect to each of these theories of change?

 

TONY:  For the folks watching this webinar, Bruce is teeing up content for the webinar that comes after this one, which is about choosing and developing your social impact strategy. So you’ll want to pull that document out and then probably rewatch this because he’s giving you some great ideas in that.

 

We’re going to give Bruce and Mary a chance to breathe and give you some hints as an audience in how you might use these materials. Give me one second here.

 

So for family members and donors, as you’re thinking about these kinds of conversations that Bruce and Mary have teed up or you’re thinking about the guide and roadmap, one of the tips we heard from other families is be more inclusive than less. The more voices you have that you’re listening in on and saying, ‘Here’s how I think I can make a difference, but what do you know about this issue? How do you think you want to make a difference on this?’ the better off you’re going to be in developing and using a vehicle in the long run.

 

Second, it may take you some time. I’ll come back to Bruce if I get… they didn’t turn all these dials on instantly. It took a little while to figure out which vehicles were correct. And so it may take multiple conversations with your family to decide it’s this private foundation or this donor-advised fund, or this mission-oriented business. That’s okay. It shouldn’t be a rushed process. It should take a little bit of time.

 

The third tip we heard from families is really think about the vehicles that can play to your family members’ strengths or their availability of resources. A family that I knew was really interested in environmental issues, and the family foundation did a lot of work in environmental grant-making, but there were younger generations that used their volunteer time and crowdsourced or crowdfunded for certain projects that were in the area the foundation wasn’t funding. A couple of the family members were involved in politics, looking at bills and legislation that were involved in the environment. And so they were using each of the family’s own ties, and treasures, and testimony abilities as sort of adjuncts to the foundation’s work. And it gave all the family members a chance to say, ‘I have something to do here, even if I’m not directly part of the foundation or I’m not interested in that particular grant program.’ So what kinds of assets, and tools, and strengths that you can build on for all your family members?

 

And then, lastly, as much as possible, be transparent about your plan. So if you have a donor-advised fund or impact investing now, but you’re hoping to do something else in three years or five years. Your advisors are going to want to know that… your financial and legal and wealth advisors, so they can help you think ahead about what it might take to develop that tool and sort of fund it. And your kids, or grandkids, or your friends, or your colleagues, or your business associate will all want to know because maybe they will want to raise their hand to say, ‘Yeah, I want to be involved later on in that tool.’ So the more you can clue people in, the better off, your vehicles will survive in the long run.

 

For the advisors that are watching this webinar, wealth advisors, and tax, and financial, insurance and all the rest, you can use the guide and the workbook and everything else with your clients. A couple of ways that Schwab’s team have seen using this is you can do like a 60-minute Zoom or in-person meeting with the client family just to help kick off a conversation. Say, ‘Here’s some things that are in here. Watch this webinar. Read it through. Let’s talk about where you want to make a difference in philanthropy.’ You might host a client event where you can pull a couple of exercises or worksheets from the toolkits and get a chance to work those through with the family just to get them started in their thinking and they can take stuff back home. Some family members will want a day-long retreat. You might decide if you want to do that retreat or have other people manage a retreat for yourself, and kind of dive through one of the guides or roadmaps, or maybe divide that retreat up over quarterly family conversations and help them. Sometimes they just need an outside coach or facilitator to help them move things along. And there are tips for facilitating the conversations and for developing those processes in the guide and the roadmaps, so you’ve got some tips to work for. We know that so many more advisors are interested in including philanthropy in their planning efforts. And so we want to make sure that advisors feel very comfortable using these guides and roadmaps to help deliver good value-added services to your clients. So quick tips for families advisors.

 

Let’s come back to Bruce and Mary then, back to these vehicles that Builders Vision and Builders Initiative have chosen.

 

So, Bruce, you touched on the governance piece for a minute. I want to dive back into that and operations. You’ve got more stuff running than the average donor might, so there are probably questions like, ‘Well, how do you actually operate all of that? How do you keep it organized and managed, and who does what?’

 

BRUCE:  Yeah. Well, I’d say… and every situation is going to be particular. We do have access to a lot of resources that other people not. But as this impact platform has evolved, we do have these three entities, which I described, but we also have Builders Vision, the platform, which not only is the umbrella brand, but it also is that part of our office which helps us to organize for operations, particularly, and to help us coordinate across each other in terms of strategy and the like. So we have staff there that work with us on more traditional parts of the back office, as it were, of HR, of finance, of IT.

 

We also can rely for support on a broader… I’ll call it the Walton’s ecosystem. And this maybe not that helpful for people, but there is a whole set of resources that we relied on almost entirely when we were small and we just slowly separate and build our own capacities internally. So that, operationally, I’d say, is a great help.

 

But we built a lot of kind of internal muscle here over the last... first, on the investment side, you know, eight or nine years, and then the last four years on the philanthropic side, first, relying on others and then bringing a lot of that in-house.

 

TONY:  So you’re right, Lukas had a different track than lots of folks. He started with the impact investing, or the investing side. So he probably built out finance staff or investment-minded staff. And then what was the first staffing the couple brought on for the philanthropy piece? Was that you or is there somebody else?

 

BRUCE:  My colleague, Haven Leeming, was brought on four years ago, and she and Lukas were out in Chicago visiting grantees, and she helped build our first strategies. And I came in three years ago and we built the staff since then. We’re not a big staff on the programs. Programs, we grant about $200 million a year at this point, but we probably have on the programmatic side, probably 11 colleagues. We do grant administration, we have two colleagues doing that who were kind of seconded to us from the Walton family, but they’re full-time employees. And then I have relied and we have relied as we built the organization on some consultants who are very close to us, and who have grown with us, and who can provide kind of outside perspectives, a skill set that we don’t have, can play different roles. And that’s been critically important to us as we look out.

 

I’d also cite something that really helped to accelerate our growth. As I say, three years ago, quite small, just getting our program strategies outlined and making our first grants in that world, and then COVID hit. And we scrambled, and we put together a $200 million effort to help fund COVID. And that’s a scale… I realize, you know, I use these numbers, but for some that won’t… but that was for us at the time, a sizable commitment immediately to get money out the door. And that really accelerated, you know, because we had to, the development of the organization in terms of... and, again, relied on flex capacity with outside consultants and we knew we were close to, to help us both on a let’s get the strategy up and running… and it was pretty straightforward, we got to get money to people… and then to help to execute that. So we were helped in that, so we continued to build on that basis.

 

And then on the investment side, again, we had investment expertise in-house that we built-out over time. And, you know, for instance, my colleague, Noelle Laing, is the CIO now for our foundation. She had worked at Cambridge Associates for a long time with Lukas as an advisor, as a third-party advisor to him, and then came in-house to help us steward first our endowment investments and then our impact investing.

 

So over time, transferring from outside consultants, from organizations we were close to, from the Walton ecosystem, and bringing that in. I say in all this, our instinct has always been let’s crawl, walk, run, but I think COVID really accelerated that kind of growth.

 

TONY:  There are certainly lessons for the folks that are watching this webinar recording. One is scale accordingly, right?  You know, if you’ve just got a small scale thing, it’s okay to be all volunteer or just have one person. Second, is rely on other folks. You don’t have to start from scratch. You’ve got lots of other people around you, other people who might have some extra capacity or some extra time and talent they can loan you for a while or to adapt from it. Third, is there are lots of trade associations and consultants and other folks that you can borrow expertise from before you sort of build your own. And then the crawl, walk, run, I think, is a good thing. The last piece is, and Bruce mentioned this, is as you’re thinking about staffing your vehicles or operating your vehicles, what can you do to leave flexibility for unexpected circumstances? The next pandemic comes, natural disaster comes, something happens in your family and your business, and you always want to think ahead about, ‘Do we have some adaptability and flexibility in our vehicles and how we operate them so we can meet the moment when it happens.’ And I think that most donors have gotten a lot smarter about that coming out of 2020 and 2021. So make sure you think ahead about your own vehicles and how they operate.

 

The founding couple, as you mentioned earlier in the recording, became more public in the past year or so about this philanthropy, sort of adding their own testimony to that. Tell us about that transition from being quiet to being more public. Why did they decide to do that to further their mission?

 

BRUCE:  Well that was it. It was to further the mission. I mean, they are not publicity-seeking people. And, in fact, if you tried to get any information about Lukas or what we were doing, it was very difficult to do. And that’s purposeful. They’re private people and not kind of limelight-seeking. So that’s just personal preference as much as anything else.

 

I think what prompted the official launch of Builder’s Vision in the public sense was a couple things. One, we referred earlier to like the power of relationships and relationship building, the extent to which we rely on to do our work, to learn. And I think just being in the public eye helps to facilitate that. People are aware of what you’re doing, we’re able to tell our story. That was very important. But I think more than that… put that in the context of a broader worldview that said people are aware of what we’re doing. We have many opportunities to do it better and to do it as scale that we might not have done before. And to use that public platform to talk about where we’re going to solicit feedback. And it was really driven by that desire more than any notion that we needed to see our names in the paper.

 

TONY:  That’s a the two-way relationship and how you can get other people involved in the mission, right?  And for folks that are nervous about publicity, about what their work is, it doesn’t have to be the marketing angle. It can be you’ve got a chance to use the relationships to get people involved and motivated.

 

BRUCE:  There was also an extent to which it was helpful, honestly, with our grantees. If you’re contacted and we’re asking you not to talk about it. And, you know, initially in COVID, we were very private. I mean, we did this under a donor-advised fund. People didn’t know who was funding them. And that’s a little bit unsettling for people sometimes. And just to be able to take the wraps off a little bit and say, ‘Yeah, this is what we’re doing.’ And, you know, ultimately, our grantees would know, but they couldn’t really speak to it. And, initially, they might not even know. So it, I think, did help the kind of credibility, as well.

 

TONY:  I want to plant a question with you, Bruce, and then let Mary talk so you can over the question. You’ve had a chance to work with all of these different vehicles here and you’ve had lots of experience before Builders Initiative and Builders Vision. So just thinking about what lessons might you want to share with donors who are earlier in their philanthropic journeys about choosing vehicles? I’ll let you mull on that.

 

Mary, bringing you back in, you’ve got a couple other stories about donors that have been thoughtful and creative about using vehicles or multiple vehicles. Tell us more about what you’re seeing.

 

MARY:  Yeah, so I think to go back to like the start, like one of the things that I know that we’ve been working on a lot with donors here recently is the ability to identify that mission. And so one thing that is very relevant because of the pandemic is there’s so much need as a result of the pandemic on many fronts. And so we have really started to work at the values-based exercise, like at that entry level point to determine what’s most important to the family to create that value statement, so that they can form the mission, so that they can start focusing on that.

 

And so with one family here recently, we’ve determined that what’s important to them is the financial empowerment and economic independence of women. And so that’s really important for the family. And so there’s a lot of focus on workforce development of how to get women into the workforce and have them be sustainable, and support their families and be independent.

 

And so we refined their giving strategy because there’s so much need out there. Women were really impacted tremendously because of the pandemic. And there’s so much need as a result that we really wanted to refine the giving strategy, so that it would align better with the mission to help them become economically empowered and independent. And so it aligned with their personal beliefs.

 

So now what we’re doing is we’ve focused on a giving strategy that’s going to enable them to enthusiastically say yes to certain causes, but then also give them the permission to be able to say no to other causes. And so I think that that’s the most important thing. And as we’re going through this process, and I’m sure Bruce can agree, it needs to be flexible and it needs to be fluid so that it can adjust because things are going to change. So what we see now may not be what we see five years from now. So the focus will change and the alignment is going to have to adjust. So it’s that ongoing conversation to make sure that the vision and value and the mission is all aligned.

 

TONY:  And you’ve also had experience with a vehicle that I mentioned very early on, but Bruce hasn’t talked about donors that are using giving circles alongside a private foundation or personal giving or donor-advised funds. Where do you see the advantage of giving circles as part of this myriad set of tools?

 

MARY:  Yeah, so I really like giving circles because they’re truly democratizing philanthropy. And the reason that they’re able to do that is it goes back to… it’s one of my favorite quotes, it’s by Margaret Mead. And so it’s, ‘Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed, it’s the only thing that ever has.’ So now you’ve got these small groups of committed, thoughtful citizens coming together on a certain cause to make a change and to make an impact. And so the way that a giving circle works is that… and you can find these online, you can find them through your community foundations. A very well known organization is Philanthropy Together. They’re one of the world’s largest giving circles. You can go in and you can do some research by topic. And what you can do is you can join. And, normally, there’s an entry level that you would commit a particular dollar amount. But, more importantly, is you come together and you get to have conversations, and you get to learn, and you get to decide collectively. So instead of you giving one small amount of money, you’ve empowered yourself to give a larger amount with this collective gift.

 

So they’re very powerful and they can actually make change happen as a result. And I highly recommend them. I use my donor-advised fund, personally, to fund various giving circles. So that’s a way that you can complement the two concepts together.

 

TONY:  That’s a great example, right? Some families also have a donor-advised fund or a private foundation. They get their kids or grandkids involved in giving circles so that they can do something with their peers that maybe is sort of an adjunct to the family or something different than their family. So you see people combining those. And it’s back to the earlier slide, when you’re thinking about choosing vehicles as a donor, as an advisor, what’s that shopping list with the priorities of what do you want to accomplish? If you want to start small and do it with a lot of other people, then giving circles could be right. If you want to leverage the markets right off the bat, go right into impact investing and then add the other things around it. So don’t assume just because somebody else is using the vehicle, it’s the right one. You’ve got to figure out what your own priorities are, what resources you want to put together, and then choose the vehicles from there, form follows function.

 

So, Bruce, back to my question to you. And, Mary, you’re welcome to weigh in if you want to after Bruce. Go back. If donors are early in their philanthropic journey, if we just have one vehicle, like sort of what do you recommend as they’re thinking about, ‘What do I do next?’ What’s your recommendations for choosing vehicles?

 

BRUCE:  If I were just getting going, I’d say donor-advised fund. They’re so flexible. You can rely on the staff to be your allies and your kind of work with them as you learn, to take care of the kind of back office of making grants and understand what’s required. At Schwab and community foundations and others, donor-advised fund sponsors are just great at that. And it enables you to kind of get into the game with a lot of flexibility, with tax advantages that’s beyond what you would get by setting, let’s say, a private foundation. A lot of flexibility in terms of keeping your giving anonymous, which people have a lot of reasons to do. Some people are so modest about what they want and the difference they want. You might not want every non-profit in the world knocking on your door because that’s what happens if you have a private foundation. So a lot of reasons I think to start early on.

 

Now, private foundations have their advantages, too, but with them come a certain amount of overhead, not just financial, but time and there are reporting requirements, you need a board, there are certain regulatory requirements, you know, the form 990 is a tax form that you got to be… you’ve got to think about required minimum distributions, thinking about succession in ways that you don’t with others. And yet as you get further along in the journey, they have many advantages, too.

 

And then an LLC is probably the most flexible of all, you just don’t get tax advantages for using it. But you can give to individuals, you can give to businesses, you do whatever you want. And it’s the home for your... but, of course, in that case, you don’t have any of the advantages of, you know, colleagues at Schwab, or advisors at Schwab, or a community foundation that can help process a lot of things for you, and recordkeeping and the like. Nor do you have, as you go to a donor-advised fund, a chance to know that your charitable assets are being invested in ways that kind of agree with your outlook on investing those assets.

 

TONY:  Again, back to those priorities for the donor. What is it you’re really looking for? Do you need the multiple flexibility? Do you want something that’s simple and easy? Do you like lots of administrative stuff and you’ve got a high tolerance for paperwork, or you want that offline? That’s all part of the things that your checklist as you’re thinking about which vehicle makes sense for you now. And it may be five years, it might be different. Maybe you retired, you’ve got more time for something, or you’re changing jobs, you’ve got more time for something. And so thinking ahead about sort of what’s the carrying cost or the operating cost, you know, years from now, and decide is that still what you want, or if you want to add some layers on or subtract some layers. So know if you have one vehicle or a couple vehicles, you can always change. You can always switch around and decide, ‘I want to close one down and open a different one, or minimize what I’m doing with this one and do something different with the second one.’

 

Mary, any other thoughts about how you’re seeing clients choose vehicles?

 

MARY:  Yeah, so I think you’ll appreciate this as a fellow CAP. And for those who don’t know about the CAP, it’s the Chartered Advisor in Philanthropy. I think the most important thing is about, you know, your research and informed decision, and it’s really important to engage all your advisors. And when I use the term ‘advisors,’ I’m using it as your CPA, your attorneys, your financial advisors, and even your family and friends as your advisors. And getting everybody to weigh in on all the different features and benefits and nuances of all these different charitable vehicles, so that you can make the most informed choice at the time, so the right decision at the right time. And to your point, Tony, sometimes you’re going to modify that because things change in your life. So being informed is, for me, the most important. Understanding options and what’s available.

 

TONY:  Great. Bruce, thank you so much for preparing and spending time with us on this webinar recording. For folks who are watching this, you can find Builders Vision and Builders Initiative online. So you’ve got hints into what they’re working on from Bruce. You can dive into more details when you look them up and get a sense of what does that impact investing actually look like when you actually do it in the communities? What does the grant-making actually look like when you’re pursuing those kinds of issues? And how are Lukas and Samantha starting to use their voices to back all that up? And you get to look up information about Bruce and his colleagues and see how they’re staff’s structured. So just teasing you to be curious about how you could grow multiple vehicles or park multiple vehicles in your garage, if that’s our right analogy, I guess.

 

I’m going to close this out. Got a couple things to preview and then turn things back over to Mary to end things up.

 

So what’s next? As Mary said, this is the second of five webinars in a series about the five topics that we outlined at the beginning of this. You’ll see an expanding set of resources at this website, schwabcharitable.org\family-philanthropy. And you’ll find all the guides, the roadmaps, upcoming webinars on some of the other topics, and, again, these sort of three- to four-minute videos just to tease people’s interest in the topics. We hope you will take advantage of these great sources to start thinking intentionally about your philanthropy and the kind of impact you want to make over time as a donor with your family and with your colleagues and your community.

 

Thank you so much for your time. I’ll turn things over to Mary.

 

MARY:  Well, first, I want to thank Bruce for your participation today. I found the discussion to be really interesting and enlightening, and I know that those listening will also. What you have achieved as a family is inspirational, and I appreciate your thoughtful and inclusive approach to family giving, so thank you, both, so much for your time and for leading the conversation.

 

As I mentioned at the beginning of this, I am one of a team of charitable consultants who are here to really help provide you with any information that you would find helpful as you really think about the process for embracing family philanthropy as a priority. Please do reach out, as we are here to answer any questions you might have about philanthropy. And once again, I want to express our thanks for this really wonderful opportunity to speak with you all about family philanthropy.

 

With that, we’ll end this webinar and wish you success in choosing and using philanthropic vehicles to achieve your goals and to make positive impact in your community.