Gift Hub

Partnering with Advisors for Happy Clients and Large Gifts

Thursday through Saturday of last week I was in Houston for a workshop with Tracy Gary and about 30 nonprofit professionals and a handful of financial advisors. We discussed how to uplift the philanthropic ecosystem by getting donors, nonprofit and advisors to work together more effectively.  We agreed that good planning begins for a donor or a client from the donor/client's vision and values. We also agree that clients need good plans.  Where nonprofit people and advisors differ, I think, is the scope of the plan controlled by the donor's vision. This is a hugely important point; let me make it clear with a real world (now fictionalized) example.

Max Smith, age 70, sells commercial real estate. Last year he netted $14 million. He has zero interest in philanthropy, but is increasingly interested in doing something new. He feels he has one more big project in him and is casting about for what that might be.  His net worth is $100 million. Max is married to Lorraine. He gives her a $30,000 a year charitable budget. He and Lorraine have 2 children in their 40's. Both children have one child. All is well with the kids and grandkids. But Max and Lorraine are concerned about "how much is enough for the kids." Lorraine is concerned too about the health of society. What kind of world will these children and grandchildren inherit? What whirlwind will they reap?

Maxine is a "major donor" to Women's Foundation of Anytown, USA.  Maxine has worked through Tracy Gary's Inspired Philanthropy and has created a giving plan in the light of her vision and values, and her long term goals. She has decided to reduce her scattershot giving and to focus increasingly on the Women's Foundation.  She will up her gift this year from $10,000 to $15,000. She will also serve on the Board. Her sense is that it is women who will lead as we all seek to preserve a loving, just, and sustainable community for our heirs.

As an advisor, what I see is that the one with a vision is Lorraine, but that her vision only governs a piddling $30,000. The sad fact is that Max has not acheived a long term vision at this point. Another sad fact is that he is not a giver, yet. And a big sad fact is that he and Lorraine will owe, say, $30 million in estate tax some day. Perhaps another sad fact is that the children will inherit the remaining $70 million, more than Lorraine and Max may feel the kids really need.

As an advisor I believe that the vision for this family should govern and drive the entire $14 million a year of income and the entire $100 million of assets. For that to happen someone has to debrief this couple about their shared vision for the rest of their lives, for their children, their grandchildren, and for society. I suspect that Max will dominate the discussion of the numbers, but that he may well defer to Lorraine for a vision that goes beyond self and family. When it comes to kids, grandkids, and the claims of humanity, her voice may prevail.

I am reasonably sure that with proper planning this case calls for annual gifts over one million and a legacy of over $30 million. That would be a going in expectation. The real numbers will flow from their deepest, mutual goals. I also suspect that in setting specific giving goals that Lorraine may take the lead not only because she has the heart for it, but also because she has the relevant expertise and experience. She has been out and around in the community. She has served on boards, done volunteering, done site visits. She knows what fuels her own passion, and she knows the needs of the community. She knows what might interest the children and grandchildren, and she knows her husband well - what would interest him and engage him if he does decide to do one more major project. Perhaps he too will go into nonprofit service, or perhaps he will start a social venture.

Who knows where this case will go; it is a real case and it is still open. Max is meeting with a woman who is not a financial advisor, but a nonprofit person who holds herself out to the public as a giving consultant. Now, if this consultant operates with blinkers, she will work hard on that $30,000 annual giving budget. If she caught the point of view I was presenting in Tracy's workshop, she will get Max and Lorraine to clarify their big picture life and legacy goals. Then she will get them involved with advisors who can do financial and estate planning with a philanthropic twist. Net results? Mostly likely $50,000 plus in planning fees for the professionals. Commissions to advisors for products sold, perhaps in the hundreds of thousands of dollars, particularly for life insurance for estate planning. Annual giving budget increased by a factor of 100 ($3 million annual rather than $30,000 annually) and a legacy up from zero to at least the current amount slated for estate tax, say, $30 million. If $1 million each is enough for the kids, then maybe the charitable portion is $98 million. Who knows; but these are quite reasonable outcomes given the facts above. 

So, when you say you start with vision and values and do a legacy plan, what do you mean? Are you a giving professional who tweaks the $30,000 giving budget, trying to increase it a little, or to get a bigger slice, or are you the one who engages advisors and nets tens of millions of dollars in gifts now, later, and at death?

Working well with advisors is just working smart; and, it pays off in better plans for clients, and bigger gifts for charity. Also, the advisors to whom cases like this are referred will likely reciprocate with referrals back. 

Human Flourishing in a Constitutional Republic

Jay Hughes is the best read and most cultured and probably the wisest of those writing about wealth in families. He has taken certain concepts (such as human flourishing and systems of governance) from political and moral philosophy, along with sources in psychology, religion, and literature to create both a vision and a methodology for perpetuating dynastic families. The truth is that this is an aristocratic vision going all the way back, and honorably so, to Aristotle's Ethics and Politics. What Jay helps wealthy families see is that their success is not just perpetuating the family wealth, but optimizing the family's lived life, their human potential, or human capital. So he talks in terms of developing each family member as a family asset. This means nurturing and cultivating human excellence, productivity, virtue, and wisdom. It also means, I would imagine, getting Junior elected to the Senate, and having Sister run the Family-Owned Bank, and Uncle run the NY Times, and so on, so that the family weaves itself into the power centers of our society in such a way as to become puissant and indomitable. From family, to clan, to dynasty. Aristocracy at its best works like that. At its worst such a system devolves into an Oligarchy, or Plutocracy. And in the ambit of these increasingly concentrated and interwoven power systems comes putsch, silent takeover, gilded lies backed by force, or Tyranny.

My question is this: Can we replant Jay's insights back into their native soil, that of the theory and practice of a just society? Can we ask what it would take not just for some disproportionately wealthy families to flourish, but what it would take for all families to flourish, whether they wear shirtsleeves or ermine?

If the goal is widespread human flourishing, up and down the social hierarchy, and if philanthropy, and personal leadership, and public service, are among the levers, and if social investing or mission aligned investing, and local organizing, and political action of informed citizens are among the levers, then we finally have a topic comprehensive enough to offer potential solutions.

With Catherine Austin Fitts I am trading ideas on mission investing, centered on not only giving but also on economic returns, and also on spiritual and humane social capital widely dispersed. I have learned from Jay how to help families last as economic and social forces for generations, "lest they go from shirtsleeves to shirtsleeves in three generations." (Becoming in the process much like you or me, as horrifying as that might seem to our dynastic clients.) From Catherine, I am a learning how ordinary people can prosper, even when their efforts are sabotaged by those in high places (be they dynasts or parvenus) who have every advantage, including wealth, political power, secrecy and sometime access to illicit force, and who may act as parasites, or tapeworms, upon or within the body politic, flourishing at our expense.

Of course, it matters whether the "dynasty" an advisor seeks to preserve is a restaurant owning family in Smallville, a farm in Nebraska, a locally owned bank in Canton, or a multi-billion dollar family firm with tentacles in think tanks, media, politics and the like. If we are to build and preserve thriving dynasties, I hope they are small, local, and community-spirited. To that effort I lend, and Catherine, I believe, would lend a willing hand.  And in fact while that (the world of small town entrepreneurial families)  is not Jay's world, it is the world of most wealth advisors and attorneys who read his work.  Philanthropy embedded in community, responsive to ethical, humane, spiritual and democratic traditions, in which families give back to help others flourish as they have flourished; well, that is part of the good life in a just society. That is maybe how Aristotle translates in a Constitutional Republic in which we all have an equal right to the pursuit of happiness, or human flourishing, in our families great and small, whether in pinstripes or work-shirts.  It would also be  interesting to hear from Bill Schambra on such themes. 

Mapping The Philanthropic Ecosystem

The Ecosystem of Philanthropy

Who is part of your "better world" ecosystem? That is, if you want to create for yourself and those you love a better life in a better world, what other "players" impinge on you, for good or ill? And how might you, then, uplift both your own actions and the overall ecosystem so that a better world is possible? That is the line of thought that I have been pursuing within an informal network over the last several years. I will organize for my own use these observations under key names in my ecosystem.

Tracy Gary

Key actors in her vision are donor, advisor, and nonprofit. Key indicator of success is the number of dollars raised. Key driver of dollars raised is donor training to help the donor manage the planning process with advisors towards a more inspired, but also prudent result. As donors are trained to ask for philanthropic plans that very request will motivate more advisors to provide such plans.  Training for advisors would then be well-received, since tied to a practical result, that of meeting a real demand. Also, a key actor is the next generation, the children of the donor. If money goes to charity it might come at the expense of taxes first, but at some point it will come at the expense of inheritance. Hence, children must be raised and mentored in their roles as carriers on of a giving tradition. Nonprofits on this model become the convener of the appropriate training and conversation and network.

Tracy and I will present this vision to Advisors in Philanthropy at their Annual Conference next week. The following week I will present a version of it to Southeastern Council of Foundations.  We do have some early success stories. A number of other professionals have expressed interest in this way uplifting the philanthropic ecosystem.

Catherine Austin Fitts

A former investment banker, and former assistant director of HUD, Catherine seems to have stumbled upon the dark side of money and become for awhile an "enemy of the state," as she puts it with a smile, suffering the tribulations of Job, as a lesson in civics for herself and others. She is not keen on philanthropy, because she has seen where money, in certain cases, comes from, with whom it consorts behind the scenes, and how brutally those who control so much of the world's money and power behave when their insider games are outed or challenged. She has seen philanthropy used as cover or cleanser for the reputations of people who should probably be in jail for financial fraud, extortion, drug running, betrayal of the public trust, mere graft, or high crimes and misdemeanors. She also sees that philanthropy will be tolerated as a cleanser as long as it remains both upbeat and ineffectual. Philanthrocapitalism is also safe because it does not challenge, in fact personifies the hegemonic game.

You might think, then, that while Tracy is liberal that Catherine is a revolutionary Marxist taking her cue from Che. In fact she is a Christian Conservative taking her cue from Adam Smith and Jesus Christ, which makes her a dangerous mind. She is not asking capitalism to give way to socialism. She is demanding that capitalism live up to its own founding ideals: financial transparency, honest  book keeping, the rule of law, and the prosecution of criminals regardless of their wealth, rank, philanthropy, connections, or access to armed force, or criminal networks.

Catherine urges us to create a better, more financially intimate world, by withdrawing wealth from the rigged and gamed financial markets and reinvesting in places governed by the rule of law, maybe New Zealand, or maybe your home town, or among a circle of friends who have farms, small businesses, or a local bank.  As an investment banker she thinks bigger than that too, asking who will own the water supply, for example, in your town? Who will commandeer the food supply? Might we not form investment pools that would allow local decision makers to steward such resources for the good of the town, rather than, say, Nestles?

You can see that this is not your idea of "philanthropy," but the actors named by Catherine (the drug dealers, the slum lords, the corrupt governmental officials gaming the sub-prime mess, the investment bankers bringing for profit prisons to market, the private bankers who own the Fed, the governors owning prison stocks and passing "three strikes you're out" laws, the shadowy actors trading drugs for arms and arms for hostages,  the corrupt accountants of both business and government, the blackmailers and hit squads operating here and abroad to silence those who out the dirty game) are part of the same ecosystem in which philanthropy goes about its upbeat work.  Some capitalist like Boverton Beaver who has made billions out of buying companies in, say, the liquor business, gambling stocks, the porn business, or armaments, or in for profit prisons, might call himself a Double Bottom Line Social Investor and might start a double bottom line bakery employing at low wages the convicts on parole from the prison he owns up the hill from the ghetto, blighted by the drug lord whose Harvard educated son sits with Boverton on the board of the local hospital, or the home town newspaper, or serves on a Blue Ribbon Commission studying urban poverty.  That philanthrocapitalist might then endow a business school, or a chair in social venture capitalism, or might fund a DC Think Tank on Engaged Philanthropy, or on Pro-Market Public Policy, or might hire out the writing of any number of white papers and scholarly studies on metrics for double bottom line firms.  All this might then be applauded by leading philanthropy bloggers who, in their business life, consult to the banks and the brokerage houses with their captive philanthropy departments catering to private wealth from sources both light and dark, or who make their living managing Boverton's money. So the world closes back on itself in an ecosystem in which the herbivores, the carnivores, and the hominids thrive and prosper - up to a point, though that punctuated equilibrium is far from optimal from the standpoint of human flourishing. 

H. Peter Karoff, Amy Kass, Bill Schambra, and others Devoted to the Liberal Arts

What other actors? What are we leaving out? How about the teachers, writers, artists, prophets, and thinkers who are the masters of our spiritual, intellectual, ethical, and cultural traditions? (If you are not familiar with such figures you might think instead of Star Wars or Marvel Comics or Grand Theft Auto or the Matrix; those may be close enough to wisdom, if that is all you have and you don't know the difference.) If our better world is to be guided by what T. E. Hulme called "the best that has been thought and said," then we must listen to voices of the graces, or the holy spirit, or the muses,  or the voice that speaks out of the thunder, or the still voice we have been ignoring, or whatever one wishes to call that voice that rises in us when we are obedient to what is greater than ourselves, what is most alive and life-giving in our traditions. I could go on at great length on this point. Eloquence trumps power. The pen is mightier than the sword. Love conquers all. And the dead shall rise into eternal life, dead or not, as they live on within the tradition they would not betray, even at the cost of their own life, the ultimate gift.  As different as are the three figures mentioned above they share an almost helpless love for the life of the mind and of the spirit. When they discuss giving, it is within the shadow of Mt Ararat  within eyeshot of the ruined garden. I am not implying that they would get crossways with worldly wealth or power. We catch more flies with honey than with vinegar.

Phil to Thee

Well, you can see that the company I keep makes my head ache and buzz.  What I come down to is this: Whatever is the correct map of the ecosystem in which we live, whatever actors you see, or think you see, whichever you name, or fear to name, whatever your personal resources, you cannot blink the questions:

1. What kind of person do you want to be?
2. In what kind of world?

As you meditate on those questions, you will need your own vision of success, and a realistic model of your current situation - whether upbeat or dark or chiaroscuro. Given that vision of a better life in a better world, and given your assessment of what you are up against, you will have to make your own decisions, in the light of the traditions that speak to you and through you, as to how you will deploy your money, your time, your attention, your life energy, and your love within a risk profile that includes your assessment of the probability of success or failure under conditions you can barely discern. Each of us can see only a little.

Best Practices within a Learning Community

As we find our way, across this landscape, let us share what we see, share what we learn, mapping our terrain, and sharing the paths that lead out of the dark wood into the light. As you address the two questions above (and they cannot be evaded for the evasion itself is an answer), consider sharing what works and does not work so that we can collectively do better than we could alone. I am trying to take that approach here sharing my notes on what I am learning, and hope you will share as well, whether through a note to me, or on your own blog, or however you wish.  Perhaps if we live in truth, and speak what we know, and look out for each other, we  not only ameliorate specific ills,  and prosper in our own lives, but also uplift the overall ecosystem of which our efforts individually are but a tiny part. 

Philanthropy from Closely Held Businesses: Refining Oil From Shale

Mining Shale for Oil

Imagine for a moment that a company produces oil by mining shale, heating it, and extracting crude, which is then refined. Such a company might say it is in the oil business, as might a drilling company, or a refinery, or a company that ships gasoline. Likewise, when we say we "work in philanthropy," we may be talking about the distribution of highly refined charitable grants and gifts (via Rockefeller Foundation, Ford, Hewlett, or a community foundation). Or, we might talking about drilling operations tapped into vast domes of liquid money (Wachovia, UBS, Bank of America, Merrill). Or, we might be talking about a mining company that pulls rock out of the earth, crushes it, and move it to the cracking plant. The kind of philanthropy work that I do on the job, inside the life insurance bidnis, is like the shale mining company. Our clients are not philanthropists in spats, like Daddy Warbucks. They are up from nothing entrepreneurs in shirtsleeves and workshirts. They own stockyards, farms, car dealerships, diesel engine rebuilding firms, fast food franchises, junkyards, architectural firms, building supply companies, electrical contractors, nursing homes, medical supply stores, beer distributorships, home building companies, lumberyards, catfish farms, restaurants, strip malls: the infrastructure of Main Street. Some went to college; others did not. Most are small town conservatives, baptized and buried in the same church. They may be in Rotary, or the Chamber of Commerce. They are happy when their kids stay in town, rather than go off the some fancy college and never come back. Their median net worth, as clients of our firm, is $10 - 15 million of which, maybe, 5% at most is liquid. The rest is sunk into the bricks, mortar, land and equipment. Shale, nothing but shale!

Existential Choice for the Small Business Owner

Nothing but shale, but the shale bears oil.

Once or twice in a lifetime the owner of a closely held business has what amounts to an existential decision, or gut check: What to do with the lumberyard at death or retirement? Sell to outsiders? Insiders? Children? If the lumberyard is worth $15 million, and $5 million will go to estate taxes, where will the cash come from to pay the tax collector? The IRS does not want lumber, they want cash. Can the business survive the hit? Will outsiders pay a fair price at death when the lumberyard is struggling without its founder, when banks are calling credit lines, when customers are going elswhere, and when the IRS is demanding an auction of assets? Beyond that, even if the full $15 million is realized, how much should go to each kid (one works in the firm, the other does not)? Do the parents believe in Welfare for the Rich? Do they want the children to be so wealthy they can live a life of aristocratic leisure, or of rampant consumption, get involved with drugs or some other ill? If the $5 million now going to the government could be redirected to local nonprofits, would that be an improvement? Would it make sense to scant the outright inheritance and give the kids a philanthropic inheritance, one they can control, but cannot spend on themselves? If $5 million or more will go to charity, would it be more fun to start giving the money away now, rather than when the founder is dead? Would it make sense to start now and involve the kids and grandkids, so they learn the family values shoulder to shoulder with parents active together in the community? What will the founder do when and if he or she cashes out? Play golf? Hunt? Fish? Sit on the porch and watch the world go by? Or get active in a new realm as a civic leader and so-called philanthropist?

Out of these existential conversations (Who are you? Who do you want to be? What does your family stand for in this community? How do you want to be remembered? What kind of family values do you want to pass on? What kind of world do you want to leave?) comes a set of decisions about that full $15 million. Handled as financial decisions only, the net result will be lower taxes through various arcane planning tools, life insurance to pay taxes, and maximum money to kids. Given an appropriately open-ended conversation about vision, the likelihood is that $5 million or more will go to charity, now, later or at death, and that more may go if the parents do not want to see the kids rich and idle.

No Fundraisers in the Shale Fields

Now, the above is my daily world of work with advisors and their clients all over the country. I meet no or few fundraisers in that world of Main Street closely held operating businesses. (The owner has no money to give, except a trickle; the real wealth is all tied up in the business, as is the owner's time and attention.) I meet no philanthropoids (grant making mavens), among the shale fields, and I have had poor luck getting those whose money is refined to even talk to these Main Street clients. Community foundations seem to relate best to refined money. They don't cultivate or even meet the Muslim guy from Pakistan with a high school education and twelve liquor stores in inner city Dallas, though he may be worth $15 million and may be a giver in his own right. With so much of the intergenerational wealth wave tied up in the oil rich shale, in the small businesses that populate Main Street, we are missing an historic opportunity. Stakeholders include fundraisers, and anyone who cares about philanthropy, small business, family values, and civic renewal.

Why We All Have A Stake in the Business Owner's Fatal Choice

Our clients have much to forgive me for. I am a liberal pointy-head. I do not watch football. I am not just a Yankee; I am a damn Yankee (being a Yankee who came South and stayed). Although I can quote the Gospels, I am evasive about whether or not I have been born again. What makes it work is that I admire these Main Street clients and want to see them thrive. Their contribution to civic renewal - taking risks, putting their savings into new ventures, creating jobs, passing on values like hard work and faith in God and country, setting an example of leadership, and sometimes doing grassroots philanthropy - is inspiring. Pull them out of the mix, and what you have left is big box retailers, big global firms, big philanthropy, and big government. You have college educated people making $65,000 a year who know better than the bumpkin worth $15 million. Without Main Street, you have top down management from the hub cities, and theories of social change, policy wonks, and sweeping legislation. You have metrics andmanagement and bossing about by desk-bound experts who deal wholsale on a national and global stage via spreadsheets and statistics. All that is fine by way of engineering from above. But keeping Main Street America thriving from the grassroots up is a project worthy of the attention of anyone who loves this country.

Civic Renewal: Top Down or Bottom Up?

We don't need to make decisions for these local civic leaders, or act as if we were wise and they are in need of enlightenment. We don't need to lecture them. We don't need flip charts or Powerpoints. We need to ask good questions and listen. We need to put them in a position where they can make informed, visionary,choices, in the light of their values and their faith, about their life, their business, their family, their money, and their community. Given the right time and place to think it through, these local leaders, will do what is right. Or they will do many different things, by their own lights, by their conception of the good. And that is open society, America the Beautiful.

Advisors Flunk the Existential, Vision Conversation

Most advisors (I can speak with authority on this, for I have trained literally thousands of Main Street financial people in the rudiments of their trade in drab training rooms all over this country for 25 years) do not have these larger conversations about vision and civics. The larger conversation is about Who, What, Where, When, and Why? Who the family is, what it wants to accomplish for self, family and society, where (in what community they want to have an impact), when (now, later, or at death, or for generations to come), and why (under what value system, what sense of moral obligation, what religious or spirtual or public-spirited tradition, from what sense of gratitude)? That conversation takes place under the aspect of love, death, and eternity. The How is the last bit. But the how of it all (the tools and techniques of finance, estate planning, business planning, and tax-driven philanthropy) absorbs the full attention of most advisors.

A Call to Conveners

To unlock the oil in the shale, to release the energies of Main Street wealth, we need a place where these Main Street, down home, civic dialogues can be convened, prior to the client turning the vision over to advisors for implementation. The result will be happier families, more money to philanthropy, and communities that do better because these small businesses thrive and survive, providing not only jobs and philanthroy, but civic leadership, and moral purpose. Is anyone interested in organizing such events? Or attending? (I can see the first hand going up already. An investment banker from Goldman, or a hedge fund private equity investor. Yes, the new thing in this Main Street world is the rollup of Main Street by Wall Street. Nestles is buying the farms all on up the mountain, so they can capture the water supply. The big banks are buying the little ones. The money and the children are all moving away. These too are issues to be discussed in these convenings, as the parents make their fatal choices.)

Philanthropy as Liberal Art, Management Science, Virtue, Existential Choice

When you study philosophy, are you learning about it, or practicing the art of philosophy? Is it knowledge you learn, mostly, or know how? When you study ethics, is it a body of knowledge, or a set of habits and skills, a way of life? When you study literature, do you become a scholar or a poet? If you study medicine, is it to be an expert only, or to heal?  Philanthropy is like that too. Other analogies might be vocational agriculture, pastoral care, the art of therapy, or the art of war. Philanthropic pratice is a liberal art as well as a financial, managerial, and legal science. The seed of that art, its inner dynamism, is sown, perhaps, in a child before the age of reason, at the age when we imagine that we will be firemen, great generals, acclaimed athletic heros, saints, or dream that if we concentrate hard we can levitate. If the seeds of love and heroic aspiration have not been sown in a child's heart, no amount of book learning as a grad student will awaken that talent. But without learning, love is blind and heroic aspiration comes to naught.

The hardest of all is the late stage onset of philanthropic aspiration. At age 50, 60, or 70, the high achiever in some hard-headed, even ruthless field, turns, almost out of character, to something more. Hard at that age when the long buried seed begins to germinate, forcing its way through the stony ground. Where do such people go, when the urge to give becomes intolerable?  Giving becomes then what used to be called an "existentioal choice," determing the identity, shaping a life by shaping its ending. To create a space for such conversations - does anyone know of such a space?

The Professional Education of Advisors in Philanthropy (Notes for Donors and Nonprofit Leaders Working With Advisors and Around Them)

Educating Advisors in Philanthropy

We have been asking the general question, "What education is appropriate for those engaged in philanthropy?" We could ask the more limited question, "What education is most appropriate to those who advise clients about philanthropy?" One answer is the syllabus for the American College's Chartered Advisor in Philanthropy. (I hold that designation.) If you check out the course work you will find that it consists mostly of tax, legal, and financial training, with some attention to marketing. Other topics are treated in passing, but there is nothing on informed grant-making. And, there is nothing on what you might call vision, values, ideals. There is no taxonomy of the nonprofit sector. There is little on civil society, or the value of the nonprofit sector. There is nothing drawn from the moral, philosophical, and religious traditions of giving. If philanthropy belongs in "the Ideal School of Arts and Sciences," this curriculum is almost exclusively from the sciences - money, law, tools and techniques, strategies and tactics.

Vision and Priorities: The Donor/Client's Responsibility

To prospective donors and clients I would say: Recognize that ends in view, the purposes served, the vision and goals - the wisdom - of your financial, estate, and philanthropic plans is your non-delegable responsibility. You can bring in advisors for help on tools and techniques, on tactics and strategies, and on effective grant-making, for that matter, but the ends in view, the balance among priorities, only you can set that direction. "Cultivating wisdom, or large-mindedness, is not my job," so most advisors would assert. Most fundraisers would say the same. Most grant making or foundation consultants would agree that they serve the client's stated agenda, rather than conveying or cultivating wisdom and virtue. ("That would be presumptuous," they might say. "I don't want to impose my values." "One person's wisdom is another's folly; it is a free country; the client gives us the ends in view, and we apply the needed strategies.")

Cultivating our Humanity - Whose?

So, whose calling is it to "cultivate our humanity," in Seneca's phrase? Yours as a donor, parent, citizen, spiritual being. Yours as a nonprofit leader. Perhaps we each can cultivate our humanity, beginning with our own, including spouse and heirs, and then the communities to which the family belongs, contributes, and amongst whom it dwells or worships. In that effort we are not just client and advisor, or donor and nonprofit fundraiser, but fellow human beings and fellow citizens. Even those without wealth are able to give of time and love and energy.

Are Life Coaches the Answer?

I have heard it suggested that the wisdom consulting role (the role of Morals Tutor to America's Wealthiest Families, as I wryly put it) is best filled by a Life Coach. I can see that emerging as an answer. (Tracy Gary suggests it as does Jerry Chasen, both of whose judgment I deeply respect.) But here is a caution. We can very neatly for rhetorical purposes separate the conversation of ends from the conversation of means. We can say, for the conversation of ends, talk to a) your Rabbi b) your Life Coach c) your therapist. For the conversation of means, we could say, talk to your tax, legal, and financial advisors, plus a consultant on grant-making. But in truth the conversations go in circles and zigzags.

What begins as a conversation about a tactic ("Should I go with a donor advised fund or a foundation?") quickly becomes a conversation about family ("Who will run it when I am gone?") and one about society ("How will my charitable vehicle make the world a better place?") and one about finance ("How much could I afford to contribute? Can it come at the expense of taxes, rather than my kids? What property is the right property to give? Cash? Stock? Closely held stock? Now? Later? At death?"). The conversation swings among such considerations, ricocheting off imponderables. ("Did I tell you that Mary, our daughter is in rehab?" "Are you aware that my husband has terminal cancer?" "Does it matter that my spouse is a nonresident alien?"). So, the Life Coach who cannot in any way respond to the financial and legal and tax items embedded in the questions above may not be able to keep the conversation going. The Life Coach might encourage a vision that is in reality just an empty dream, or even a dangerous delusion, if the Coach has no sense of financial facts and feasibility. The Life Coach may or may not be privy to the financial information, and may or may not be accepted as  a peer at the client's planning table, among advisors each of whom is, candidly, vying for "client control." So, while an interesting adjunct to the team, and perhaps a good person to help the client keep from stalling in the process, a Life Coach may not necessarily be the right catalyst for a feasble overall vision.

Creating an Open Space for Civic Reflection

For those of you who are conveners, or in donor networks, or who work for nonprofits or community foundations, the "hole" at the center of the the philanthropic process, the hole around helping clients articulate high ideals, in the context of wealth, family, and community, represents a missed opportunity. No one person can fill that role. And, all who might try have a "leash," in that each is most likely tied to an institution that allows that advisor only so much slack. ("Well, Jack, you have spent hours with that client/donor. What are you billing? What gifts have you raised? How much product have you sold? etc. When are you going to bring in the check?"). 

To create an open space for donors, or clients to connect with their own wisdom traditions, their own ideals, their inspiration (as Tracy Gary calls it) - that strikes me as a key unmet opportunity in Dallas, and in most places. I am talking to some people here about it, and would be interested in your thoughts. A bibliography would not be hard to create. A book club would be easy enough to convene. Charles Collier's book, Tracy Gary's, H. Peter Karoff's, Bill Somerville's, or those of Amy Kass come to mind. Let's see if we can create a space for civic reflection that is oriented to inspired action in concert with advisors and nonprofits. How do we make a living doing that? I have no answer to that. It seems like volunteer work. For those whose gift is time and talent, and whose "excellence" or virtue is the art and science of cultivating our humanity,  I can't think of a better way to foment a better world, while respecting the moral agency of our leading citizens.

Meeting with Robert Sharpe

I drove two hours today to meet with planned giving guru, Robert Sharpe.  He also drove two hours for the meeting. Over cheese enchiladas in Tyler, TX we discussed for four hours the state of planned giving and major gift planning.  We agreed that donor motivation and education is key. The planned giving officer or major gifts planning person cannot be expected to raise the largest questions of meaning and purpose in a donor's life.  Likewise, most tax, legal, and financial advisors do not carry the conversation about meaning, purpose, obligation, privilege. The gift planners are there to solicit a gift to their institution. The advisors are there to serve the client/donor's aspirations and goals. But it is up to the donor/client/citizen to ask and answer the larger questions of purpose.  "Do I want to found a Dynasty that will last one hundred years, with financial and social benefits for family being the paramount concern?" If the answer is yes, and you have enough money, I can refer you to those who specialize in that effort. If the answer is no, then what will you do with your resources, for the benefit of society as well as for self and family? Charity may start at home, but what do we owe back to other than our kith and kin? What will be the crowning achievement of a life or a family? How we convene such large-minded conversations among our fellow citizens, I do not know. So, I hang out like Diogenes naked in my Dumpster and talk with whomever comes by. Robert met me through Gifthub; I am pleased he did.

Inspired Philanthropy: Collaborating for The Commonweal

Competing or Completing? Beyond Planned Gifts as Transactions

In 2002 Robert Sharpe wrote an interesting article for Trusts & Estates, "Competing or Completing? Balancing the roles of various professionals in planning charitable giving maximizes the benefits for all."  I would like to second the spirit of his piece, while recommending that we as diverse professionals go beyond collaborating on specific "gift transactions" to collaborating on an overall legacy planning process of which the specific gift transaction is but one tactic or strategy. My sense is that such a collaborative process would transform our field for the better, move more money, and make our donor clients much happier and more fulfilled. In the process we advisors and gift planners will do ok too.

When we think of planned gifts as  specific  vehicles, like a donor advised fund, or a charitable remainder trust, offered by both nonprofits and for-profits we might ask, as Robert Sharpe does, whether the two distribution systems are competitors or complements.  Considered in that way, a life insurance agent "selling" a Charitable Remainder Trust payable at death to charity Y is competing with charity X who might have written the CRT payable to them. Likewise, Fidelity might compete with a community foundation for donor advised fund assets.  But let us say that the topic is not promoting a specific gift vehicle, or making a sale, but helping the donor client create an overall plan that is both prudent and inspired. (Prudent means a plan that takes care of the client and the client's family come what may. Inspired means having a positive impact on the community.) How then do the players arrange themselves around that program or process?  A case study may help us get the issues in perspective.

Case Study: Beyond Transactions to Prudent and Inspired Collaboration

Mary and John are worth $10 million, most of it in their closely held business. They are both 55. Both are active in the business and own 100% of the stock. They have two children, Alan and Marcie. Alan is a painter in NYC, barely getting by. He is single. Marcie is married with two children. She is the Comptroller in the family firm.  John and Mary are active in Holy Name Cathedral in Chicago where they live.  They have thought about spending more time working with the Church and less time in the business.  They dream of devoting their lives to working with disadvantaged children, instilling faith and character in children at risk.  Not only would they like to do more volunteering, they wonder if they might fund or endow a program and a facility. A local competitor has been making overtures to the family to sell the business.  Here are the questions on Mary and John's  mind. (These questions have been elicited in part by their lead advisor and in part through their own reflections.)

Questions

• Should we sell, retire, and spend more time on volunteer work with the Church?
• If we do sell at the proffered price will we have enough to live on for the rest of our lives?
• Are we protected against major downside risks (death, disability, falling markets, liability, lawsuits, sickness, long term care needs, property and casualty losses)?
• If we both die tonight, we owe what in estate tax? $3 million?
• Can we reduce estate taxes in favor of the Church?
• If we sell out to the buyer, where does that leave Marcie? Will she be out of a job?
• If we sell to the outsider what will be the capital gains tax?
• Should we find a way to keep the business in the family?
• If so should it go to Marcie? And if so what do we give to her brother, Alan?
• Should we divide our estate half and half for the kids? Or should Marcie get the bulk of it because she has helped us build the business?
• If we let Marcie run the business when we retire, and she pays us some consulting fees so we have money to live on, and she then runs the business into the ground where does that leave us?
• Can we afford to do more for Holy Name today? If we sell? At death?
• How can we structure our affairs so we could do more now, later, and at death for Holy Name, minimize income tax and estate tax, while also taking care of ourselves and our children?
• How can we balance all this?
• Where do we start?
• Who can help us?
• Should we ask Marcie and Alan what they think? (If only they ever agreed about anything!)
• Who should be at the legacy planning table when we sort all this out?

Exercises

1. Check the questions you think need to be answered by someone.  Put a Y by those you can answer all by yourself from your seat at the table.
2. Ask yourself which professionals are needed to do justice to this fact pattern? Attorney, CPA, Financial planner who can do a comprehensive financial plan,  financial product salesperson, planned giving consultant, banker, business valuation expert, other?
3. Is there a logical order as among: goal clarification, fanning philanthropic intent, running financial scenarios, explaining planning concepts (including but not limited to giving opportunities), communicating with children, finalizing the overall plan, implementing products, legal documents, and gifts?
4. Is the logical order the order you employ in your work with donor/clients?

Observations and Suggestions

• Most financial salespeople and most gift planners working for nonprofits "pitch" rather than plan. They lead with a solution before understanding the pertinent context. ("Prescription before diagnosis is malpractice.") We as a field have to get past this package sale mentality for larger client/donors who have complex needs and whose potential gifts merit lots of tender loving care.
• The family above might need a charitable remainder trust, or a foundation, or a donor advised fund, or a charitable lead trust, or an outright gift, or a bequest, but it is way premature to pitch any of those. We have not even finished the fact-finding and goal setting.
• Well over half the challenge in working with complex situations like the one above are the human dilemmas, not the financial conundrums.  The issues in the case above are those of love and money, of fairness, and the push pull between self interest and giving, between playing it safe for self and family, and doing something wonderful for the Church as soon as possible.
• To resolve such dilemmas good planning will run scenarios and quantify the possible consequences of all the permutations and combinations of tools, tactics, and techniques, but in the end the family must wend its own way in this "dark wood" of moral and prudential choices.
• Some family decisions are made with advisors. Others on our knees in prayer, or in the dark of the night, tossing and turning. What is at issue here is the trajectory of many lives.   
• The family needs an open ear. They need someone they can trust, not just to run the numbers, do the legal work, plead for the needs of the Church, sell financial products, or close various aspects of the "case." They need a friend with an open ear, who will listen as they feel their way through this dark wood.
• The trusted advisor, or confidant, can be anyone on the team. But the trusted advisor cannot just be a special pleader. He or she will get paid in one way or another, and will represent this or that position at the table, but the trusted advisor rises above his or her professional specialty and his or her way of getting paid, and earns the right to be the trusted advisor by simply listening, processing the information, and allowing the family to make its own best decisions. The trusted advisor may also slow down the process, involve other needed specialists, or towards the end, gently urge the process to a conclusion.
• The default choice in a case like the one above is for the family to play it safe. They might well say, "Charity starts at home," if the Church is too urgent about philanthropy. Given the parents unresolved dilemmas, given the murk and uncertainty, the most likely outcome is to do not much, or not much right now.
• If properly planned a case like this could well result in a gift to the Church of several million dollars. But the Church won't get it for asking. They won't get it for pleading. And they are not likely to get it by pitching Charitable Trusts in a vacuum. They need to be at the planning table, or within earshot of it, as the whole plan comes together.
  

Competition or Collaboration?

• So, if you represent the Church, as a fundraiser, what is your next move with this family? My sense is that the best move is to presume upon the common bond of religious faith, and the common bond of Holy Name Cathedral, to simply listen. Emerge as trusted advisor, or as confidante, or as an advocate for the fellow parishioner's better angel, the client's best self. Then, convene the team. Stay quietly involved as the team works forward.  Continue to cultivate and to act as sounding board.  As the team plans the options, your role  as  gift planner will come into focus, and you will get your chance to discuss the gift options in the context of the overall plan.
• If you are tax, legal, or financial advisor, what is your next move, if you are first person to whom these clients turn? Will you or won't you contact the Cathedral? Maybe that will depend on how the Cathedral has positioned itself in town and with you. Do you think of their Stewardship Committee as fellow professionals who will assist in a team effort, or do you think of them as special pleaders with a one track mind, or as well meaning people who have no sense of the proper process, and who are always closing for action prematurely?
• Ideally, Holy Name has cultivated the professional community and positioned itself as a caring team member. If so, whoever gets the case going will feel at ease involving the others who need to be at the table to do justice to this family's plan.
• If we all were to operate in this spirit we would do better for our donor/clients and they in turn would do better for their heirs and for the community.

Practical Steps for Nonprofits, Donors, and Advisors

1. Check out the Resources tab at Inspired Philanthropy.
2. Appendices A and B outline a simple process for bringing donors, advisors, and nonprofits together in common purpose.
3. Consider an event or series of events to educate all three groups.
4. Tracy Gary and I have intentionally put this material out there for all to use. We believe in cooperative advantage and in public goods. We don't want to corner the market on philanthropy. We know that others can adapt these materials to their own communities and make them their own. We want that. Out of such experiments, we want to create an informal learning community so we can uplift giving and givers. The spirit is not unlike "Leave a Legacy."
5. Per Tracy, the materials in the Appendices go over well with their intended audience. In her words, "They love it and money is moving."
6. If you do improvise your own approach to the issues discussed above, please share the results with me, either in comments left on the blog or by email, so we can learn together.

Gifted Leaders and Leadership Gifts

This month's giving Carnival, hosted by Christopher Scott, is on leadership and fund-raisng. The question is how the leadership of a nonprofit's CEO affects fund-raising. My perspective is that leadership is critical, but who leads and who follows? If we are talking about major gifts from wealthy people who may or may not serve on the Board, who leads and who follows? CEO? Planned Giving Officer? Donor? Donor's Advisor? The organization must have a direction. For that the CEO and Board are responsible. But for major gifts to materialize what is needed is a meeting of the minds, a mission match, as Tracy Gary calls it, between the organization and the key donors. To elicit the donor's collaboration, engagement, or leadership, in concert with his or her advisors, seems to me to be the key. Servant leadership all around.

Jerry Chasen's The Advisors Project

I met Jerry Chasen, JD at a "Summit" of philanthropic advisors organized by Steve Johnson of The Philanthropic Initiative and Albert Ruesga then leading New Ventures in Philanthropy. Jerry, like many of us there, has been working ever since on getting other advisors more active in philanthropic planning. To that end Jerry has started a pro bono project, The Advisors Project. As an advisor or nonprofit leader, or for that matter as a donor, you can register at his site and download some excellent free materials that will make it easier for the advisor, the client, and the nonprofit leaders to converge. The materials include a values-based client "fact finder," some photographs that will get a person thinking about what matters most, some flash cards on personal values, and flash cards on social causes. Jerry is speaking around the country to advisors. I will be hearing him in Dallas when he speaks for Dallas Foundation on January 25. The man and the materials are an excellent resource to the field.