[00:00:00] Andrew Rafal: And we’re back with another episode of Your Wealth & Beyond and today is actually Giving Tuesday. Today’s show centers around philanthropy and giving and who better to walk us through this than our guest today, Kris Putnam-Walkerly. I had a privilege. I had a great conversation with her. Kris has spent more than 20 years providing advice to family offices, individuals, Fortune 500 companies. She spent time working with some of the largest foundations in helping them create a game plan, a roadmap in giving. When we talk about philanthropy, it doesn’t mean we have to have hundreds of millions of dollars. We’re going to go through today’s show of what all of us can do in our mindset to think about who we should give to, how we can give, and sometimes it’s not just money. It could be our time. Also, we dig into how to teach the younger generation the value of giving. In today’s COVID world, it’s never been more important to figure out ways in how we can help each other and not just today, but thinking in terms of long term and getting away from the scarcity mindset and thinking about abundance, and that’s all things not just in our giving but just in our life.

So, great stuff today. Without further ado, my episode with Kris Putnam-Walkerly.

[INTERVIEW]

[00:01:30] Andrew Rafal: Welcome back to another episode of Your Wealth & Beyond. Kris, welcome to the podcast. We are super excited to have you today.

[00:01:39] Kris Putnam-Walkerly: Thank you so much. I’m excited to be here.

[00:01:41] Andrew Rafal: So, I know you’re in Westlake, Ohio right now. Is that correct?

[00:01:46] Kris Putnam-Walkerly: It is. Near Cleveland, yep.

[00:01:47] Andrew Rafal: Yes. And where I grew up, spent all my formative years, and my sister just sent me a text and I guess you guys got your first snowstorm of the year?

[00:01:57] Kris Putnam-Walkerly: We did. Yeah. It was the first snowstorm of the year and it’s actually like the good kind. So, it’s very beautiful where the snow is on the tree branches and it looks very pretty. My kids got to play in the snow. It was a snow day here.

[00:02:12] Andrew Rafal: What does the snow day even mean in today’s COVID world? Isn’t every day a snow day?

[00:02:18] Kris Putnam-Walkerly: Well, I mean, the parents are still stuck working at home and the kids are having fun running around.

[00:02:23] Andrew Rafal: So, if we hear some kids coming to get you, we know it’s a mom duty. None of the listeners will care. Yeah, it looks like 10 inches of snow so good for you guys.

[00:02:32] Kris Putnam-Walkerly: Yeah. It’s fun.

[00:02:34] Andrew Rafal: So, really excited to have you on today, especially with it today, the day we’re recording this, listeners, is actually Giving Tuesday so it’s kind of a perfect theme for what we’re going to go through. Kris, really your passion over the last 20 plus years is in philanthropy, right, and in helping donors and helping individuals and just helping to spread the word and to provide that guidance. So, before we jump in and talk all things giving and philanthropy like where did this passion for you, where did it come from where you’ve spent the past two decades in this field?

[00:03:11] Kris Putnam-Walkerly: You know, it’s a great question and I’m not entirely sure myself. It’s funny. Since high school, I guess I was sort of interested in giving back and helping other people, and for some reason that I don’t fully know, I was very interested in supporting causes in Latin America and Africa. In college, I became a student activist. I went to Indiana University and when I arrived on campus, there were actually shantytowns. This is back during the anti-apartheid movement and I found that very intriguing as, I guess, for a 17-year-old and became very involved as a student activist and found myself actually organizing a demonstration and/or organizing a group of students from Indiana University to go to Washington DC for a march against, I don’t know what it was exactly for, but it was like against military aid in Central America.

Unexpectedly, I thought I was just there to kind of protest and watch what was going on and I got swept up into a civil disobedience that was going on and got arrested and found myself boarding a police bus and was told to take the first available seat. So, I took the first available seat, totally bewildered, and turned to my right and there was actor Ed Asner from The Mary Tyler Moore Show. I ended up sitting next to Ed Asner for about four hours and got processed to the police station. He asked me the exact same question, “How did you get involved in all of this?” And I really didn’t have a good answer. He was wondering if my parents were activists or why I became interested in nonprofit issues. It was just, I guess, kind of a calling.

[00:05:05] Kris Putnam-Walkerly: But I pursued a career in the nonprofit sector and got a master’s in social work, ended up working at Stanford University, evaluating youth violence prevention programs in California and that was funded by a large foundation, the California Wellness Foundation, and became very intrigued about philanthropy. Really as a funder, if you had nothing else, you have money to give away but if you’re really smart about it and you are thoughtful, turned to experts to advise you, bring in good talented people to help you, and are thoughtful about the kind of intervention, what are the best practices, who are the right nonprofits to support, you can really create a lot of social change. And so, that prompted me to go work at one of the largest foundations at the time and still is in the country, which is the David and Lucile Packard Foundation. That experience really helped solidify my interest in philanthropy and I began consulting at the time for Charles Schwab’s Family Foundation, and then many others. And that’s led to a 20-year career in philanthropy advising.

[00:06:24] Andrew Rafal: Wow. So, Asner was, I’m sure, as affable as possible, huh? Just put you at ease and you guys just had that four-hour conversation. That must have been…

[00:06:35] Kris Putnam-Walkerly: He asked me a lot of questions and I answered. It’s funny. I was entirely unprepared for this. I was not expecting to participate in any kind of civil disobedience, and this was like, before cell phones. This was 19, I don’t know, 1989. So, I had like no cash on me so we got processed in the police department, I guess, and we had to pay $50, $30, something to be able to get out and I had no money. So, he loaned me whatever that amount of money was, which was very kind, but I insisted on paying him back. So, honestly, I insisted that I had to write down his address so I could mail him the $40, $50, which, of course, he did not need and then I put it in the pocket of my coat and by the time I got back or got back home and tried to pull it out, the piece of paper was missing, and I lost his address. I had no way of figuring out his address.

But I knew after getting arrested and released, he was headed to meet with another nonprofit organization that he supported. So, I actually called the organization and managed to convince them that I could mail a check to Ed Asner to that nonprofit and hopes that they would give it to him. And I did. I don’t remember if it ever got cashed. I have no idea but I did make the effort.

[00:07:59] Andrew Rafal: I love it. That is great. It’s something that for him, all the people that he comes across, he probably remembers that and he’s like, I’m sure he didn’t cash the check but good for you. I love it. So, we hear this word philanthropy and for a lot of people and listeners to this show, they’re business owners, some are retirees, but a lot of them aren’t the ultra-high net worth, the billionaire. So, a lot of people hear that word philanthropy and they get scared, “Oh, I don’t have enough money to give.” So, let’s break that down and say with philanthropy like what does it mean beyond money. Money and what time, right? So, let’s break that down for the 99% of us that don’t have hundreds of millions of dollars and like, “Where can we start? And how does it work? And how do we not, in a sense, be afraid of giving?”

[00:08:49] Kris Putnam-Walkerly: Yeah. That’s a great question and I think the word philanthropist, people assume you’re talking about ultra-wealthy people, the Jeff Bezoses of the world. But really philanthropist defines, we are all philanthropists. I think it’s anyone who really cares about humanity and people who give not only of their financial resources, which could be modest, but also give of their time and their talent, and even their connections. One of the biggest challenges nonprofits experienced during the beginning of the pandemic was literally how do you apply for a PPP loan and a lot of nonprofit organizations don’t have any kind of relationship with a banker. They might have an account and an 800 number to call but not a relationship with an actual person.

And so, just as one simple example being able to make an introduction to your banker to the nonprofit leader, if you’re supporting a nonprofit or on the board of a nonprofit, simply helping that nonprofit executive director have a conversation with someone in a leadership position in a bank about how do I apply and what does this mean, is actually tremendously helpful and costs nothing. So, I think we can all think about bringing our whole selves to giving, and what do we have? Taking money off the table entirely, what else do we have to offer? That could be talent. It could be experience. You might be knowledgeable in how to scale up a business so you can help a nonprofit think about how they could scale what they do, for example. There are all different kinds of ways I think we can be very helpful in giving back.

[00:10:41] Andrew Rafal: Yeah. That’s so true. Actually, we’re in Arizona. I had on the director of an organization here called Local First Arizona, and it was created about 15 years ago to help local businesses thrive, small businesses, and it was interesting to hear what they’d been doing over the last six, seven months. It has been that giving the guidance to these and we’re talking small businesses, one, two, three people that are just barely making ends meet themselves. What they did is they pivoted and they helped with the PPP and they then raise money and provided these like micro-grants to give one business owner maybe $3,000 that would help them make sure their family’s fed. So, just to see in that kind of for them, they took from what their mission was and then they evolved it real quickly. In a pandemic, I guess, that’s what you got to do, right? You got to be on your feet, whether you are an organization like that or you want to be able to give time and money. So, those are critical pieces where we are right now, which is halfway through this pandemic.

[00:11:43] Kris Putnam-Walkerly: You say halfway as if we know when the end date is.

[00:11:46] Andrew Rafal: Right. I’m pulling up my crystal ball here and I’ve bought a lottery ticket too so, yes, of course. So, when we think about like when you teach individuals and family offices and so forth, I want to give to X, Y, and Z like where does it come from, first, of how do you lead them down the path of all these different places they can give, money and time? How do you make it where the individual can pick one that it has that purpose when there are so many out there?

[00:12:23] Kris Putnam-Walkerly: Yeah. That is a challenge because many donors feel overwhelmed because there’s no lack of needs in the world and there’s no lack of good organizations to support and so it can be overwhelming. Actually, I have a whole chapter in my book, Delusional Altruism, that’s about feeling overwhelmed and how being overwhelmed holds donors back and prevents them from having the impact that they want. So, I advise them to ask a few questions. I think too often, donors start with being transactional like issuing a check or figuring out which nonprofit to support, or setting up a donor-advised fund. What I think they need to do instead is think about being transformational, and really start with asking some key questions. One of those questions is why?

So, simply asking if you’re an individual or a couple or a family or a business owner, asking why do I want to give? Why do I kind of exist as a donor or a funder? Then asking questions like what? What causes are meaningful to me? What kind of impact do I want to have in my community? What kind of philanthropist do I want to be? What kinds of life experiences have I had, that when I reflect back on my life have caused me to become the person I am? And so, asking those why and what questions, first, I think they aren’t necessarily easy ones to answer but I think it’s worth spending a little time upfront to figure that out because your answers can be wildly different. So, maybe your why, I mean, one of the examples I give in my book is the Lippman Kanfer Family Foundation.

[00:14:27] Kris Putnam-Walkerly: The Lippman Kanfer family is the family that owns GOJO Industries, which are the makers of PURELL, and they’re a very philanthropic family and they asked themselves why. Why would we want to exist as a philanthropic family? And they concluded that it was to kind of build a family culture of philanthropy. That was kind of the why of their foundation. And so, their philanthropy is really focused around the family and family culture and so consequently, the way they chose to kind of operationalize that is every three years, they as a family pick a new issue or cause that they all want to focus on and they spend time learning about that issue. I believe right now it’s climate change and they learn about the issue together and then they identify a few organizations they want to support, and they fund those organizations.

And they learn from the experience of those organizations and what they did, and they learn about giving. Then after three years, they stop that, and they move on to a different issue, but it’s really, they’ve kind of built their philanthropy around why they want to exist. Other funders might feel like, “I’ve never expected to have so much money in my lifetime and I want to give back to my community in ways that I was helped, and whatever. I was mentored by someone so I want to support mentoring programs.” And so, I really think starting with yourself and figuring out what’s important to you is really the way to go. That’s what I advise my clients.

[00:16:08] Andrew Rafal: In that example you gave, I think there’s a couple of key points to that. One of the questions I was going to ask you, which I guess this hits on is how do we teach the younger generation about giving, about why it’s important? So, you take a family that, and what’s the name of the family that owns PURELL?

[00:16:27] Kris Putnam-Walkerly: Lippman Kanfer.

[00:16:29] Andrew Rafal: Lippman Kanfer, so you got this family culture, which indicator, which is so important, multiple generations, and then bringing everybody together where it’s like we’re not just set it and forget it but every three years, let’s find a different one, let’s dig in, let’s build new relationships so it doesn’t get kind of, in a sense, when you do the same thing over and over again, and it ultimately means the family might just give away from wanting to put their full heart into it. So, that is a great thing. Again, it doesn’t have to be a family office. It doesn’t have to be someone as billions of dollars like that family. You can do that with your own family. Whether it’s Giving Tuesday like today or holiday season but, ultimately, work with teaching your kids, teenagers, even younger, and helping them to understand the value and the importance of picking a cause that’s meaningful, and then ways to do it.

I think from the sample, what I try to do with my daughter is it’s not just about the money. It’s about what else. What kind of time that we can put in and letting her see some of the things that are out there that maybe she doesn’t see in the little bubble that she lives in.

[00:17:40] Kris Putnam-Walkerly: Absolutely. There really is no age too young to start. I mean, obviously, you have to be developmentally appropriate but I have 10-year-old twins and when they were even much younger, just helping them, I mean, I think helping them learn how to share with each other, which is, of course, an important skill but that’s an important aspect I think of kind of growing a philanthropist, helping your kids to recognize and see the world from other people’s vantage points. When there’s the new kid in school, in their class, I always make a point of saying, “Hey, imagine if you were the new kid, how would you feel?” and they say, “Well, I’d probably be a little scared,” and I say, “Yeah. So, maybe make an effort to reach out to them and introduce yourself and play with them during recess, so they don’t feel so alone.” So, I think all those things and, of course, as you get older, they can volunteer and they can donate their own money. You know, there are lots of different ways to engage families.

Even engage in the next generation isn’t necessarily just the younger people. I mean, there’s a lot of donors who’re in their 90s, and sort of the kids are in their 60s, and they’re trying to figure out how do I engage the kids and the philanthropy that I’ve been leading my whole life? So, it’s a challenge that a lot of families experience and there’s no one right or wrong way but I do think that keeping the communication open and allowing people to bring their own life experiences into the giving, into the family philanthropy is really important.

[00:19:19] Andrew Rafal: Yeah. And it also helps to give that purpose, especially if you’ve made it where monetarily, you’re set for life. It’s like, “Okay. What’s my purpose now?” and falling into this world and doing it right, I can imagine can give them some of that purpose that they might not have. If they look and say, well, whether they developed and built the company or the wealth for the family or let’s say they’re that second or third generation, it’s like, well, that wealth has already been built. What can I do to make my mark? So, you mentioned a little bit earlier your book from and I believe it came out right around March or so, Delusional Altruism?

[00:19:55] Kris Putnam-Walkerly: Yes.

[00:19:57] Andrew Rafal: So, love that name. It kind of reminds me of conscious capitalism. Have you ever heard that term before?

[00:20:02] Kris Putnam-Walkerly: Yeah. I know that book.

[00:20:05] Andrew Rafal: So, let’s talk to listeners that haven’t read the book, haven’t heard the term. What is delusional altruism? And try to say that seven times is very difficult but what is it?

[00:20:15] Kris Putnam-Walkerly: I know. It’s funny, as I was working on the book, I tried to come up with alternative titles. I love the title of the book but I was working with a writing coach, and he said, “You really don’t want – your book title should have very few syllables,” and so delusional altruism does not pass that test. But anyway…

[00:20:34] Andrew Rafal: But it was great. I like it. It’s great.

[00:20:37] Kris Putnam-Walkerly: Yeah. Delusional Altruism, so essentially, I’ve been advising and coaching and consulting with donors and high net-worth families for 20 years and I recognize that, for the most part, they’re genuinely trying to make a difference, change the world, have an impact but they’re often getting in their own way. Too often, they’re holding on to misguided beliefs and practices that aren’t actually serving them well, and often the case is holding them back or slowing them down. Many times, they don’t even realize this is happening. And so, that was the term delusional. It doesn’t mean crazy. It just means kind of misguided and I wrote the book to help funders recognize how that happens, when it happens. So, the first half of the book is seven different manifestations of delusional altruism and the second half of the book is what they can do differently, how to have a more transformational impact on whatever issue or cause or community that you care about. But to do that, by transforming yourself as a donor and changing how you give because I believe that the ways in which we give actually make a difference in the impact we have.

[00:21:57] Andrew Rafal: So, you talk in the book about so going on that point, the scarcity mindset, and this is where philanthropists can get in trouble. So, let’s dig in a little bit on that. What does that mean to have a scarcity mindset? And how can we overcome it?

[00:22:12] Kris Putnam-Walkerly: Yeah. So, it’s funny, most people don’t equate scarcity with wealth. And so, you think that the wealthy philanthropist must experience an abundance mindset because they have an abundance of wealth. But in fact, I think most have this scarcity mindset and I think it’s the thing that really holds back funders the most. It’s the most like self-imposed restraint that philanthropists and donors create for themselves. It’s really this belief that maintaining a Spartan operation in your philanthropy and with the nonprofits that you’re supporting somehow equates to delivering greater value for the communities that you’re serving. So, this happens and things like this belief that nonprofit overhead is bad and you only want to support organizations where $0.99 of every dollar goes to help people and only $0.01 or 1%, or whatever it is, goes to the actual nonprofit organization for their fundraising and their administration and whatnot.

And that sounds noble, but actually, I think it’s delusional because if you have a nonprofit organization, if you believe in a cause, pick your cause, ending homelessness, early childhood education, making sure kids are reading by third grade, whatever, and you believe in the cause and the issue and you find a nonprofit organization that’s doing really good work and they’re really making a difference and making strides. Well, what you want that nonprofit to be as well-equipped and strong as possible, wouldn’t you want them to have top talent, a great board of directors, the ability to evaluate their effectiveness and make course corrections and improvements, a great fundraising operation so they can raise money effectively regardless of the crises that are upon us, excellent financial management systems, a good communication strategy to get the word out, outreach.

[00:24:19] Kris Putnam-Walkerly: All of these things are really important. Of course, you want all that because you want them to be as strong as they can be so they could have the impact that you want them to have. But too often as donors, we take the opposite. We take the scarcity mindset that says, “Oh, no, no, no, they’re supposed to do all this great work with like no money, with no overhead, with staff that are poorly paid, without a strategic plan, without the technology they need, without any kind of professional development or coaching, without a very good Board of Directors.” We like to hamstring them through either refusing to support that kind of overhead or believing it’s bad or insisting on low salaries or only getting grants for like one year at a time when what they’re trying to do requires a multi-year investment.

It’s really a disservice and it’s a disservice to the nonprofit sector because they make up, I don’t know, something like 10% to 13% of the workforce. They’re doing really important work. As the funder, your mission might be ending homelessness, but chances are, you’re not the one running the shelter, right? So, you really rely on these nonprofits to fulfill your mission as a funder and we really need them to be as successful and strong as they can be. And so, I think really investing in the capacity and the talent of these organizations is really important. That’s just one example but I think also another example is just sometimes donors feel like you’re too small to make a difference and that’s kind of that scarcity mindset. It doesn’t have anything to do with money, necessarily, but it has to do with this belief that, well, I’m so small, like we only give, I don’t know, $5,000 a year or $500 a year, whatever it might be, right? So how could I possibly make a difference?”

[00:26:13] Kris Putnam-Walkerly: Whereas an abundance mindset says, “Well, this issue is a big issue and it’s going to require a lot of effort but I bet I could pull my money, combine my efforts and resources with other funders and, collectively, we can have a bigger impact.” And so, rather than kind of keeping yourself small and only having a kind of making a small dent in the situation, you embrace abundance and really you think big and think beyond your own grant budget, if you will, and how you can have a greater impact.

[00:26:48] Andrew Rafal: Yeah. You brought up a good point because a lot of times when we’re here sitting with clients, that’s one thing we hear a lot of is when we’re talking about where they’re giving money, that is so many times they bring it up and they say that only 70% is going to X but when you frame it that way and say, “Well, yeah, they have to have infrastructure, they have to have employees, they have to have X, Y, and Z,” it’s impossible to run an organization at, I mean, listen, if anybody can run an organization at a 90% profit margin, that would be fantastic but it doesn’t exist. So, if you were to look at some of the top places where we can give in foundations and charities, I mean, what is a normal like a 60%, 70%, is that something where they’re doing good but also have the right infrastructure in place?

[00:27:39] Kris Putnam-Walkerly: I don’t put any hard and fast kind of rules around overhead because it really depends on what you’re trying to accomplish and what it really takes to make that investment. And so, sometimes like if you’re trying to change, I don’t know, population-wide behavior and you need to invest in like massive communications campaigns to get people to completely shift their behaviors from let’s say doing something unhealthy to doing something healthy, or what you’re trying to do really requires legislative change to shift policies, then that requires a very different level of investment than like a tutoring program. And so, I think that one of the fallacies is kind of insisting on like a one-size-fits-all overhead and even really focusing on that as a benchmark. I mean, obviously, we don’t want people to abscond with the donations and run off to the Bahamas but really, it’s not happening very often.

So, I think if you’re seeing the results of what the organization is doing, if you’re concerned, then have a conversation with the executive director to understand the costs that are involved, and really recognizing what is the full cost of actually delivering on this mission of actually creating the impact that you want to see over time and what does it actually take to get there? And just like a business, I mean, I think oftentimes, and this just happened to me. My family, my grandparents started this foundation, a very small charitable fund, and the cousins are all involved and making distributions every year. On an email correspondence, one of my cousins said, “I think we should support this organization,” and he pointed out and they only have like 2% goes to overhead or something like that. I guess it’s just a knee-jerk response.

[00:29:36] Kris Putnam-Walkerly: He runs a business and I bet he runs a business on more than 2% overhead, right? Like he asked to invest in staff development, staff retention, product development, research and development, all these things and that requires investment. I think sometimes we kind of, we are very smart people and very smart business owners, and then somehow that smarts kind of gets tossed out the window when it comes to giving, and we somehow expect these nonprofits to magically do all of this really hard work like ending poverty and getting kids to read on a shoestring and I think we just need to reframe our thinking.

[00:30:21] Andrew Rafal: That’s excellent points there. Now, in the beginning of the podcast, you’d mentioned you got your start or one of your first experiences was at the David and Lucile Packard Foundation. If you think back to those years working, I mean, what are some of the biggest takeaways that you learn working for such a large endowment and the good work that you were doing and the work that it continues on? Like a couple of takeaways that you took to help you position yourself to where you are today?

[00:30:51] Kris Putnam-Walkerly: Yeah. That’s a great question. For those listeners that don’t know, this is the Family Foundation of Dave Packard of HP and still is one of the largest in the country. And so, a couple of things I learned. One is it’s a very strategic foundation so they have a lot of clarity on kind of what they want to accomplish and how they want to accomplish it, and then they think about, “Well, who are the best organizations in the country doing this work, and let’s have conversations with them and figure out how we can support them.” I always really appreciated that perspective because I think it’s an abundance mindset. Again, you don’t have to have a lot of money to have that mindset of like who’s the best and that’s who we want to partner with.

Years later, when I was consulting with Charles Schwab’s Family Foundation, they wanted to support substance abuse treatment issues and part of my role as a consultant was to learn about the different options they had. We had that same mindset but again, without spending any money, it was who are the best experts in the country, and in that case, it was Youth Substance Abuse Treatment, and let’s make sure our strategy is informed by them. So, that just took a little bit of research, and like an hour phone conversation on my part with a particular expert out of the University of Pennsylvania, who was extraordinarily helpful. So, it’s that mindset of kind of what’s the best-in-class and how do we make sure that we’re supporting that? I think also they did a lot of work partnering with the government and recognizing in whatever issue you’re working on, there are lots of different systems at play. And so, for example, one of the issues we were working on at the time was the Children’s Health Insurance Program.

[00:32:51] Kris Putnam-Walkerly: This was we have Medicaid and Medicaid for kids but for families that aren’t quite that poor but are still poor enough that they can’t afford health insurance, the Children’s Health Insurance Program was created as a national program but administered at the state level. Quickly, states really had no idea the best way to go about implementing this new health insurance program. And so, they funded an organization, I believe it was the Center for Budget and Policy Priorities, to basically train the health department or state department, I guess, it would have been health departments to make sure that the way that the states were implementing this national health insurance program was the best that it can be. And so again, I think a lot of funders aren’t kind of thinking that big and thinking, “Well, how do we really take something that already exists, this new federal aid?” but really ensure that it’s as successful as it can be that it’s reaching the right people, that the application processes are easy, that the applications in Spanish and not just in English. That it’s actually accomplishing what it sets out to accomplish and that’s a great resource. It’s a great use of philanthropic resource is to really leverage other funding to make it as effective as it can be.

[00:34:15] Andrew Rafal: Great. It looks like they gave away a grant, 333 million last year. So, fantastic stuff that they’re doing and kind of under the radar, which I know a lot of these larger organizations are. So, let’s talk about COVID. The pandemic, the crises that we’re in, what are you seeing with the finger on the pulse more so than us in regards to nonprofits and the normal giving that you’ve seen in the last five years? Has it dried up? Or are you still seeing that consistent money flow in and what does it mean? What’s the outlook for charities, organizations, foundations, nonprofits, things of that nature, like what do you think 2021 is going to bring?

[00:35:00] Kris Putnam-Walkerly: Well, I think it varies. I’ll just say that. I think in many ways there’s never been more giving in the history of giving than in this past year. There’s been tremendous increases in funding on a lot of fronts, and one of them is around donor-advised funds. There’s certainly been an increase in both the creation of donor-advised funds, the funding of them, and the grant money that’s flowing out of them. Donor-advised funds for your listeners are basically a way to think about them as charitable checking accounts. So, it’s a way that you can set up a fund through somebody like a fidelity charitable or Schwab charitable or your local community foundation, or many nonprofits have them. And so, you donate to the fund, you currently get a tax deduction, and then you can use that to grant money out to other nonprofit organizations over time.

And so, there’s been a huge uptick in the funding that’s going up, that’s being allocated from these donor-advised funds this year. There’s been, I think, the latest I saw was at about $16 billion allocated around the world and that can’t possibly account for all the small donations as well but it’s really been a tremendous amount of donations. What also has changed is the speed in which money is flowing. So, often with any foundation, there’s kind of a lot of processes, applications. We only give money away twice a year when our board can meet, all these things that kind of slow down the distribution of the funds. But funders really stepped up to the plate, a lot of them to respond to the pandemic. Many of my clients allocated money without hesitation, without even the nonprofit having to ask for it.

[00:37:02] Kris Putnam-Walkerly: They just called the food bank and said, “There’s a $10,000 check waiting for you, whenever you have time to pick it up. Use it however you want,” and that’s really remarkable. So, there’s been a lot of change in how people are giving and making it easier for the nonprofits to receive the funds. Of course, there’s also a lot of challenges, especially for different kinds of organizations like arts organizations, who have been relying on ticket sales, and people coming in the building in order to be able to thrive and succeed. And so, I think a lot of them are having a tremendous challenge and the challenge will continue. It’s going to be hard to get people to come into a theater for a long time, I think. And so, again, a great use of philanthropy is to help sustain those organizations during this time even when they’re closed, and a lot of these nonprofits are really pivoting and transforming themselves and adapting and being agile.

So, the Providence Ballet Company in Providence, Rhode Island, for example, immediately did a virtual gala online and raised, I believe, $50,000 early in maybe June. They’ve been doing performances in parking lots. They have a production of The Nutcracker happening outdoors. They’ve really kind of pivoted and tried to figure out different ways that they can continue to be relevant and continue to be in front of their audiences, and in doing so continuing to raise money, but it really varies. Each nonprofit is having a different experience. I will say, though, that my perspective is that the stronger nonprofit was heading into this crisis, the more easily they’re able to navigate through it or even innovate during it, and the stronger they’re going to be heading out of the crisis.

[00:39:03] Kris Putnam-Walkerly: And I think that’s true for businesses as well as nonprofit organizations. That really speaks to the value of investing, as I talked before about those that infrastructure, the systems. The nonprofits that did have great financial management were the ones that could get their data together and get their reports together so that they could apply for a PPP loan quickly. For many of them that made all the difference in the world.

[00:39:28] Andrew Rafal: Yeah. I think one of the big differences in this crisis versus ’07 to ’09 and even beyond that where we had the great recession is that that was kind of a methodical pullback across the board, and many, many wealthy were hit hard and it was just this constant of when is it going to turn? When is it going to turn? The interesting thing here, and you mentioned is certain businesses, certain nonprofits, like you mentioned have been able to weather it and the wealthy have survived this and a lot of it is because of the stimulus and the Fed came in and helped to prop up a market that was teetering in March and April to provide that confidence. We’re seeing obviously on the stock side, equities back to where they were and then some and it’s not just technology leading that. It’s across the board. So, that’s helpful in the sense that those that do give are the ones that probably do have more in the market.

So, we’ve seen not a big pullback in real estate prices yet. We’ve seen, obviously, equities and bonds both perform well this year. So, I know that’s probably helpful too, right, in the scope of this period versus what you saw in the trenches in ’08. ’09.

[00:40:43] Kris Putnam-Walkerly: Absolutely. That’s a whole different ball game because I think people have the confidence that they have the resources to give back their assets. Typically, if you have a private foundation, you give away about 5% of your assets, at least, or more every year. And so, 5% of less is less, right? And so, if your assets tank, then you don’t have as much to give. And so, that’s been one positive thing throughout all of this is because the markets are doing so well, that the assets invested in those markets are doing well. And so, funders can continue to donate and also have the confidence of where their money is, and that safety.

[00:41:32] Andrew Rafal: You talked about donor-advised funds. So, I just want to touch on that real quick for some of the listeners. I don’t know if with the Tax Cuts and Jobs Act, one thing that happened is they raised the standard deduction, they doubled it for individuals and married filing jointly. So, one area that we were afraid of is that, okay, well, if they’ve raised the standard deduction and not to get too technical here, listeners, but if you were donating to a charity and itemizing, that donation would be able to be written off. Well, if a standard deduction was what you were using, one fear was, well, now people won’t give. Before we jump in a little bit deeper on the donor-advised funds, just so the listeners have a better education on that, have we seen that since ‘18? Again, we’re talking not the ultra-wealthy, but has the studies shown that there’s been less giving because people are not getting the deduction in their charity that they normally did?

[00:42:27] Kris Putnam-Walkerly: Yeah. There has been a decrease in giving. There was I believe about in 2019, 14% of taxpayers itemized compared to 31% the year before the law was enacted. Yes, there has been somewhat of a decrease in giving, although I don’t have the exact figures.

[00:42:44] Andrew Rafal: And so, that’s where, listeners, the donor-advised fund could allow you in that case, if you’re using the standard deduction where a lot of people will, in a certain year, they’ll double up basically. So, they’ll fund a donor-advised fund, that then, as you indicated, can be used in a sense a checkbook and you can give them multiple different charities at a time that you feel is the best time to give. But in that case, if you did it correctly, and looked at working with your CPA or advisor, you may be able then to have the ability to itemize so that you’re actually getting to deduct putting that money in. So, that’s just something where maybe somebody couldn’t do it all in one year so they save up and do a little bit more in a year, and then take a year off. So, that’s a great, great vehicle there. If it’s something you haven’t heard of, we’ll have a link in the show notes as well. So, you can just learn it and then talk to your advisor to see if it makes sense.

[00:43:38] Kris Putnam-Walkerly: Yeah. That’s a great idea.

[00:43:41] Andrew Rafal: Now, when we look at like destructive frugality, is that similar to what we were thinking about with that scarcity mindset? Is that kind of the same concept there?

[00:43:54] Kris Putnam-Walkerly: Yeah, exactly. So, this notion of being frugal in your giving, I think, actually causes more destruction than impact with your philanthropy. So, it’s really the notion that you think you’re being frugal but the reality is frugality rarely ever leads to social change. I think just, as we know, as business owners we need to invest in our businesses in order to grow and to grow our wealth, and to grow our income and our assets. And so, I think, as donors, we need to think the same way. Nonprofits really need to invest in their own success and we need to support them in doing that so that we can ensure that they’re able to succeed, able to survive crises, but also able to take advantage of opportunities. So, the world is always changing but the change isn’t always bad.

Often there are opportunities that come along that nonprofits need to be able to pivot for the positive, pivot to be able to take advantage of an opportunity. But if they’re operating on a shoestring and the staff are working 70, 80 hours a week, they can’t possibly even lift their heads up to notice that there’s an opportunity in front of them, much less take advantage of it.

[00:45:17] Andrew Rafal: I was reading through one of your blogs and I didn’t even know this that Mackenzie Scott, who is married to Jeff Bezos, she recently donated 1.7 billion to over 100 different nonprofit organizations.

[00:45:34] Kris Putnam-Walkerly: Yes. So, she is, I believe, the richest woman in the United States, the ex-wife of Jeff Bezos and she’s signed to Giving Pledge, which is a pledge that Bill Gates helped create of encouraging billionaires to pledge to give away more than half of their assets in their lifetime. And so, that’s a lot of money when you’re the richest woman in the world. So, one of our first things that she’s done publicly with this is to give away 1.6 billion or 1.7 billion I believe it was to 116 different organizations and she intentionally chose to focus on organizations that are advancing racial equity and racial justice, social justice, LGBTQ issues, and LGBTQ equality and really funding organizations that are led by people of color-led organizations or women-led organizations doing that work, as well as other causes.

Interestingly, she’s doing it entirely through just payments to these nonprofits. There’s no foundation behind her and that she has a lot of advisors helping her identify these organizations. But interestingly, it’s challenging because her money is growing so quickly that she probably – there was one estimate I read that she has to give away about $3 billion or $4 billion a year in order to be able to fulfill her Giving Pledge. So, it’s really interesting. It’s an interesting conundrum but one of the ways she’s doing it is also to make it easy as she’s giving all of these grants are for what’s called General Operating Support. So, it’s basically money to the nonprofit that says, “Hey, nonprofit, we really believe in what you’re doing. Here’s whatever, $100,000, half a million dollars, that you can use however you think is most important. And we trust you to know your community, know what you’re doing, and know the best ways to spend that money.”

[00:47:52] Kris Putnam-Walkerly: That’s really important and we can all do that. We can give $100 away through general operating support, as opposed to saying, “Here’s $100,000, but you can only use it for this program, and you can’t hire personnel. You have to just use it for the program costs and you have to jump through all these hoops and hurdles in order to get the money.” She really made it easy. They didn’t have to apply and they can use the money however they want, which is kind of the holy grail of funding because it allows nonprofits to invest in what’s most important and gives them that cushion to be able to do some of that important work that they need to do and take advantage of opportunities and really get the help that they need at times, especially now during this crisis to navigate it.

[00:48:45] Andrew Rafal: Yes, it sounds like she’s taking the bureaucracy, the red tape out, and keeping her organization clean. When you say she’s giving a payment versus building a foundation, what’s the main difference there? Doesn’t it ultimately become the same thing?

[00:49:00] Kris Putnam-Walkerly: Well, I don’t exactly know how the money is being dispersed, but my understanding is it’s like wire transfers out of an account.

[00:49:08] Andrew Rafal: Got it.

[00:49:09] Kris Putnam-Walkerly: As opposed to creating a private foundation, which is a 501(c)(3) organization with staff and all this stuff around it, which isn’t a bad thing to do. It’s just kind of remarkable that she’s able to kind of keep it…

[00:49:24] Andrew Rafal: Lean and mean, yeah, like she probably doesn’t have a lot of employees and she’s just basically working towards what she thinks is going to be important organizations. I’m sure out of those 116, they’re not all going to use it to what she would probably say is how she wants to use it, but the majority will and she’ll obviously be able to pivot. But that’s crazy, $3 billion to $4 billion a year. Good for her. As I have like 17 Amazon packages come to the office today so I feel like then I’m helping.

[00:49:52] Kris Putnam-Walkerly: It felt like going to something good.

[00:49:53] Andrew Rafal: Yeah.

[00:49:55] Kris Putnam-Walkerly: I mean, you can’t do that just as a person. I mean, she does have, just to clarify, like you need help. So, she did have advisors, maybe consultants who helped her literally kind of do due diligence on these nonprofit organizations to make sure that they met certain standards or whatever their criteria were. So, developing the criteria and figuring out the process and the mechanism, how you’re going to communicate it, doing that due diligence, notifying the nonprofits, like all that stuff, take some labor, take some resources but, yeah, she managed to do it very differently, which is impressive.

[00:50:35] Andrew Rafal: Awesome. So, I know we’ve covered quite a bit today. Is there anything you want to leave the listeners as we come to an end on this Giving Tuesday that would be beneficial for them?

[00:50:47] Kris Putnam-Walkerly: A couple of things. One is just recognize that we’re all philanthropists and we all have the ability to give. If you get a copy of Delusional Altruism and you look at some of the questions that I encourage you to ask, really think about what is your why. Why do you want to give and what kind of impact you want to have? And if you get clarity on those questions early, then I think it’ll really guide your giving and you’re getting a much more impactful and enjoyable experience. The second thing I like to share is I think so many of us right now are feeling so, you know, like the future is uncertain. We don’t really know what’s going to happen. How long will COVID last? It can feel very paralyzing. And so, I wrote this guide that your listeners might want to download. It’s called 8 Things Every Philanthropist Can Do To Change The World Even When The World Keeps Changing. You can go to 8Things.org and download it.

It’s free and it’s a brief guide of practical tips but it’s really designed to help people and I think it helps all of us, business owners, funders, nonprofit leaders to think about, yeah, the world is uncertain and things are always changing but actually, that is normal. There is no new normal coming around the pike but what we all need to do is kind of plan ahead. We can still create a plan. We can plan in 2021. We can plan in the year ahead and think about what are we trying to accomplish as business owners, as funders? Where are we today? And what are the most important things we need to do to get from where we are today to where we want to be, and really build in agility and being adaptive into that process and recognize that, yeah, we can create a plan, but things are going to change so let’s be prepared for that and block out time so we can check-in and see what’s working, what’s not working, and how we can pivot.

[00:52:48] Kris Putnam-Walkerly: Because it’s really important, I think, especially now, when we’re all working from home and things are a little bit unclear, it’s hard to focus and it’s hard to know what you should be focusing on. I think having a plan that you can count on that you can align your team around, that you can focus your efforts on is very helpful, and then having the confidence that you can adapt and change as you need to. So, again, it’s a great resource for anyone that wants to check it out. Again, 8 Things Every Philanthropist Can Do To Change The World Even When The World Keeps Changing and it’s a free download at 8Things.org.

[00:53:26] Andrew Rafal: 8Things.org. Listeners, it’ll be in the show notes as well. Think of it like a roadmap and those of you that have a financial plan for your individual side or for business, it’s the same aspect. It’s creating a roadmap to help make sure that you understand all the different pieces that can be put together to ensure that you’re going to stand course, you’re going to stay true to yourself, having a plan helps you weather all these storms. So, great, great stuff there. I love the fact we’re big into marketing and putting out good content at my firm that I own, Bayntree, and you’re doing a great job there and through your blogs and different white papers and different guides that you have. So, there’s going to be a wealth of information in the show notes for each of you to go on and download and learn a little bit more and obviously contact Kris if there’s going to be some ability there to provide some further guidance. So, Kris, I really appreciate it, my listeners do, I know, taking some time away in the snowy Cleveland day.

Luckily, I was talking to a friend who lives on the east side. He said they haven’t had power since 10 o’clock in the morning. So, I’m glad you guys on the west side have that power because I guess we could have done it on the cell phone. But no, this was great. So, I appreciate the time you gave us today.

[00:54:39] Kris Putnam-Walkerly: Absolutely. Thank you for having me on the show.

[00:54:41] Andrew Rafal: All right, everybody, and stay tuned for another episode of Your Wealth & Beyond later this month. Happy planning and Giving Tuesday. Thanks, everybody. We’ll talk to you real soon.

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