Conversations From The Frontlines: Real Talk, Real Change
Justice takes many forms, and Liberty Hill’s work is rooted in the belief that justice requires enabling those closest to the problems to speak on them and to help formulate, and implement, the solutions. So, how are activists seeking to make our society more just? And how are those in power responding? This season will feature three sets of paired episodes, six total, each pair featuring an Grass-Roots Leader (an activist/community member) and an Insider (an elected or appointed official or other more establishment figure) who are each working on this issue.
Conversations From The Frontlines: Real Talk, Real Change
Who Controls Change?
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In the Season 5 premiere episode, Glen Galaich, CEO of the Stupski Foundation, challenges longstanding assumptions about power in philanthropy and explores how funders can move beyond traditional models of control to build trust-based partnerships that share power with communities.
Justice takes many forms and many hands. I'm Shane Murphy Goldsmith, President and CEO of Liberty Hill Foundation, and I'd like to welcome you to season five of Conversations from the Front Lines, where we tackle some of the most challenging social justice issues of the day with heart and honesty. This season, we're connecting past to present and future. It's easy to get disheartened about how much further we have left to go in our fight for the society we want to see. But the truth is that so much of our world was inconceivable 50 years ago. We have a lot we're still working on. But it helps me to see our current challenges in the context of the incredible work that's been done before us. Here at Liberty Hill, we focus on change, not charity. So this season, we're gonna hear from the organizers, community leaders, and thought partners who are transforming systems and reimagining what's possible for Los Angeles. Along the way, we'll also understand how our 50-year legacy equips us to make our vision for the future real. This season explores the power of grassroots organizing and why it matters now more than ever. In today's episode, we're gonna take a closer look at the means by which Liberty Hill and our peers partner with and support that organizing. In a word, philanthropy. So let's start with the basics. What is philanthropy? How does it span activities as diverse as simple charity and long-term movement building? What happens when philanthropy stops treating communities as recipients of charity and starts treating them as the architects of change? And how do the beliefs and experiences of donors, philanthropic leaders, and the people who staff and run foundations help or hinder that vital work? Fifty years ago, when Liberty Hill was founded, the idea of funding the people directly impacted by social injustices was unthinkable. Liberty Hill has spent the last five decades proving that people on the front lines with first-hand experience who understand their challenges the most are actually the most qualified to tell us how to make meaningful change. But broadly speaking, the world of philanthropy doesn't always operate with the same approach. So today, I welcomed Glenn Gaelick onto the show to help us understand where philanthropy falls short and how we can expand our impact. Glenn is the CEO of the Stufsky Foundation. He spent more than two decades partnering with philanthropists, policymakers, and community leaders to shift mindsets in philanthropy and advance social change. He's been recognized as one of Time 100's most influential figures in philanthropy. He's the best-selling author of Control, Why Big Giving Falls Short, and he co-hosts the HIT podcast, Break Fake Rules. Welcome, Glenn. Well, thank you so much for doing this with us. It's a pleasure to have you on the show.
SPEAKER_01Likewise, this is fun to be here.
SPEAKER_00So, Glenn, you wrote this book that I'm sure is taking the world by storm called Control. Um, and so we're gonna talk about the the ideas in that book and the ideas that you're running around the country teaching people. So I wanted to start just getting to know you a little bit. Um, would love to hear a little bit about you, how you ended up where you are today. And in particular, in your book, you talk about this kind of conversion story. So we'd love to hear your personal conversion story.
SPEAKER_01Well, first of all, thank you for having me on. It is such an honor to be a part of anything the Liberty Hill Foundation is doing as a result of. I mean, we've done some collaborative stuff in the past, and uh they it gave me an opportunity coming on today to just look over that amazing history of the foundation and what you've done and what, you know, in many ways, uh if there were grades for control, I think you'd have easily an A plus.
SPEAKER_00I mean, I think A plus, really.
SPEAKER_01You know, I appreciate you having me on, but I don't think anyone's learning anything today in this room. But there could be people who are who are listening, and I hope so. That is a very big question you just asked. So I'm gonna try to just take it down to a quick summary, which is I've been in uh what I would call institutional philanthropy for about 25 years. For most of that time, I was in what we used to call donor education. Uh, we now call it philanthropic. Well, we used to also call it philanthropic supporting organizations.
SPEAKER_00Oh, yes, PS.
SPEAKER_01Now we are calling them philanthropic infrastructure organizations. So we are now in the PIO version.
unknownOkay.
SPEAKER_01So for most of my uh existence in this sector, that's what I've been doing. But in the last 10 years, uh I've had the opportunity to head up the Stubski Foundation. We are based in the San Francisco area, uh, and we work in both San Francisco, Oakland, and Hawaii, which has a lot to do with the donor, which is very much the theme of control. The short of it is having worked with literally thousands of donors over that time, I've I came to really, in the early days, really believed wholeheartedly in the idea that when someone creates a foundation uh or um puts their money into a donor-advised fund or whatever they might do, that they really should be passionate about it, focused on it, and we should base what they want to do on what they want to do. Like what is it that interests them? And uh I did that for most of this time, and as I then got into the world of an actual foundation, so I went about 15 years of doing this work and never made a grant. So the first time I made a grant was when I got to the Stubsky Foundation and immediately instituted all the various uh what we what we called historically over the last couple decades strategic philanthropy, all the various strategic philanthropy stuff, what I now refer to as donor-centered strategic philanthropy. So we did all that. I won't I'll cut to the chase and say that we got to a place where it became pretty clear that we needed to go a different direction. The world was speaking loudly that this donor-centered stuff is not really getting the impact or will not get the impact you're really looking for. And so that in a nutshell is the conversion. There were many, many steps to that. Um, but it led, you know, kind of the combination of working with donors for a very long time, running a foundation, a spend out foundation. I kind of had my own moment about seven years ago where I realized we need to do some, we need to change things dramatically if we're really going to benefit, or if the world's really gonna benefit from any of these resources that we're stewarding.
SPEAKER_00So your conversion was from somebody who believed that philanthropy should a donor's philanthropy should exist to pursue their vision and what they want. And the conversion was actually, in order for the donor to have the impact they want, they have to give up that control.
SPEAKER_01That's it in a nutshell. That is it. But the the fancier way I think of saying it, at least that's how I t what I tell myself, is it's really moving from a place of private stewardship with public assets into a place of public stewardship with public assets. And that's a loaded statement. So I think there are thousands of people who are working in institutional philanthropy. So that means you know, tax shelters essentially that have been institutionalized into something we call foundations. The people that initially give money that becomes a foundation, if they tell you they're doing it for charitable reasons, they're lying. Most people do it strictly for tax reasons. And when they're being really honest, I just spoke to a very wealthy donor just on Friday, and she stopped me as we were leaving and she said, You know, that part in the book where you say, you know, if you say you're doing it for charitable reasons, you're lying. She's like, I have to tell you, that was a moment of honesty for me. That's true. When we originally set up our foundation, we were guided by an estate planner and an accountant, and we did it really to reduce our tax obligation. That's why we did it. We then realized we had it, and we then started wanting to be better about it and being more you know effective and how we in the fact that we're going to have to give this money away. And so uh that's a very honest assessment, and that is what most why most people have a foundation if they have one. The key point is it's not their foundation. Once you create a foundation, you are essentially putting and putting your money, some maybe one, maybe ten donations into it just from one donor. It is a it's private only in the sense that one donor made a donation to it. It's still as public a foundation as any foundation. It is something that we as the American people are investing in by giving this enormous tax subsidy. It can be as high as 70% uh of a tax benefit to a wealthy individual. So they're getting this huge benefit putting it into the foundation. But that's not enough. They want to take the tax benefit, they then write the bylaws, the bylaws put them in position as chair of the board, the kids get thrown on as board members, their good friend Bob comes on, he's the lawyer who's worked with them for 40 years, he's gonna come on the board. And that group is gonna make up a critical set of decision makers who we are counting on as public stewards because it's not their money and it's majority American money. It's money that was heading toward the U.S. Treasury, and it made a quick left turn into their treasury, or right turn, depending on whoever it may be, correct.
SPEAKER_00But wait a minute. So you just said something really important. You said it's not their money. Now, you know, Liberty Hill Foundation had we have donor advice funds, we have giving circles, we also receive individual donations from people. Um, and I think pretty much everybody who signs their name on a check would say, Well, it's my money. In fact, I've said that about our donors. Well, it's it is their money. One of the things that's interesting about your book is that, I mean, lots of people are critical of philanthropy, right? Lots of people are critical of the way donors control their funds, but you come at it from a place of having deeply invested and deeply believed in that. And and I I feel like the way you write the book is you clearly care deeply about the donor that you work for and and you care deeply about the idea that folks want to generously, you know, give their wealth away and have it make an impact. Talk a little bit about how did you sort of go from the place of, okay, it's your money, let me help you spend it according to your vision, to actually it's not your money. And if you want it to be used effectively, you have to release control.
SPEAKER_01The co-founders of the Stubski Foundation were Larry and Joyce Stubski. So Larry had already passed away in 2013 when I came on board in 2015. So my primary um relationship for the first six years of my time at Stubski was with Joyce. And that's who you're referring to when you say we had a close and deep relationship, and we did. That said, we did what most foundations do, especially when the live the donors are alive and on the board. Uh, we did what made sense to Joyce. So if you go to our website, you'll see we have four issue areas. Those four issue areas were the things that Joyce cared about. She didn't go out to the broader community of San Francisco and say, what's most pressing to communities in San Francisco, we want to be responsive. She said, What's important to Joyce? I want to do that. She then, you know, said, I care about one issue area more than another. And so we had we decided, you know, the percentages of output based on Joyce's percentages. We are a spendout foundation because Joyce had decided that she wanted to be around to see all the money distributed. And so on and so on. So that that as you know, opposed to what I was already hinting at earlier, which would be, you know, another way to do it would be to say, hey, we see a world out there that has needs. Why don't we find out from in some way? I mean, no, no process is perfect, so I'm not gonna like lay out for you a perfect process, but you know, can you bring together or should we have brought together some important community leaders and said, hey, what's what's really important in San Francisco right now? We have this much capital to work with. We're unusually positioned vis-a-vis other foundations, and that we're gonna move all of it. We're gonna move all of it as soon as we can. We're not gonna just move 5% annually. So what should we do? And kind of do that. And then once you once you do that process, you start to also build relationships and you hear about solutions that are coming from people who are living in these situations, not necessarily Joyce, who had a pretty privileged life. She was living in places that were far away from where from the community she cared about. She did very much care about you know, Bayview in San Francisco and Oakland in Alameda, and she cared about native Hawaiians and what they were dealing with in Hawaii, but at the same time, she was telling them to some degree, you know, not not to come off too harshly here, but she was telling them what she thinks they should be concerned about, according to Joyce. So that is the control factor. The question is, just simply put, are you going to the public and saying, We're stewarding public assets here? What to you would be the most effective thing that we could do right now with those assets and we will move them to you as effectively as we can and take and we'll and we'll take off from there. And that's just not how philanthropy is done. And why do I think that works? Because we have seen time and again that when people who are living in certain conditions or living in a certain place, no matter how marginalized or unmarginalized they are, they have ideas, they have experiences from where they exist that they can then put in place if they've got the resources to do it. That's the one thing that's missing most of the time, the resources to do it. So the more I start thinking about these things, the more I see how we're operating, I start to realize we could come up really short here if we continue going about business the way we are.
SPEAKER_00And so you've kind of diagnosed this problem as the mindset of control. And that's really interesting too, because so many books and articles about philanthropy are kind of are more about the practices and often offer a set of practices that you can adopt to accomplish something in a different way. But you really you you kind of reluctantly put some practices in your in your book, but but really you're talking about a mindset of control. So help us better understand, you know, what is this mindset? What does it look like? You gave just gave one really good example, which is that sort of initial decision about what you want to fund. And but beyond that, what you know, what is this mindset of control? How do you see it manifest in philanthropy?
SPEAKER_01It's the operating system on which uh institutional philanthropy is built, and for the most part, all philanthropy to some degree, right? I mean, in the in the United States this year, we just got the latest report. We're gonna do you know over $600 billion in philanthropy this year.
SPEAKER_00Say that again?
SPEAKER_01$600 billion. Right. Now, of that $600 billion, $100 billion will come from foundations. Some additional $100 billion, I think it's it's not it's not clear in the data, so you know, don't hold me to this, but I think there's about another hundred billion that's coming in from individual donors outside of their foundations. By that I mean wealthy, high giving, big giving individual donors. The remaining $400 billion is coming from small donors. And half of over half of that, uh three-fourths of that is going to religion, usually to religious institutions. And the remaining 100 billion is going to what you would call social change causes of all different types, or social causes of all different types. So we're talking about, you know, one third, let's call it one-third of the slice of the full US philanthropic pie. Of that, most of it will be given by an individual who has their own thoughts and agenda and they're making some kind of a gift. That is just important context. The the when it comes to the big givers, though, the ones that I'm focusing on, people who are giving at least a million dollars annually, that operating system goes back to you know the early or the late 1800s when Carnegie was writing about the gospel of wealth. And he was basically laying out the argument that we make every day about why individuals get these enormous tax breaks to give. Because what's if we go back to our pie chart, that imaginary pie chart I just drew, that pie chart, two-thirds of the people giving in the pie chart get very little, if any, tax benefit from their giving. They give because they want to give and they want to do it for philanthropic reasons, they don't care about the tax back. The other two th the other third, the very wealthy, you're not getting a penny unless they see something back the other way. And that goes back to the Carnegie story, which is that in his case, he said, you know, there are people in our world who just simply operate effectively in these in the economic system we have. These people are smarter, sharper about how to do this type of work. They're going to amass enormous wealth. And so they are obligated in his mind to give back to the dumb people, the ones that can't operate well in this system. And so, you know, there is this patrimonial, patriarchal viewpoint that he holds that he's gonna like, you know, give to the to the poor who haven't done it like he's done it. But at least he came to that conclusion. He has a lot of very, very wealthy players today who are arguing the opposite. You have guys like Mark Andreessen and Peter Thiel who are arguing we amass this wealth because we're doing such amazing things for the world. That's basically our philanthropy. Like we build these big technology systems, you all benefit for it. So, hey, you're welcome, and don't expect anything back because you know you people don't deserve it. We've we've given you all we're gonna give you. Um, so at least Carnegie came to that place and that viewpoint of very wealthy individuals that we then want to cherish and honor through the way they give. We're gonna we're gonna give them tax breaks, we're going to center things on them, we're gonna hope that they do things to the benefit of all of us. That breeds, in my opinion, a mindset of control. It says we are granting control to you to do it the way you want. And, you know, once someone says that, or once you get that opportunity, I mean, it's who knows how it's gonna go. And then you have to think about who it is that's getting that opportunity. These are people that have fancy investment teams, they have lots of people managing their lives, taking care of their every situation, and they want to do the same thing with their giving, you know, and they bring those same players in to give. So it's very controlling that way. And, you know, we're so we are all supposed to kind of genuflect and say, hey, thank you so much for giving anything. But what we're missing in that is that they are they are getting an enormous tax benefit. So what I will say is just one quick little disclaimer. I have less of an issue of someone giving privately. You know, if they're not getting a tax benefit, I don't think it's up to me necessarily. There are plenty of good arguments, plenty of arguments out there. And I think um Edgar Villanueva makes a great one. Like how you made the money matters and how and what you do with it after that. I think that's that's true. I don't kind of I don't go down that road. I think he's got it covered. So I'm not I'm not gonna come back and restate his argument. Only to say that I think if you're giving privately, I think it's less of an issue about what kind of say the public has over your giving than it is when we're giving a massive amount of tax money over and saying you give it for us. I think it's just a completely different.
SPEAKER_00Well, that's what makes it public money.
SPEAKER_01Exactly. And and if you're gonna act with a mindset of control, you I'm arguing try to push yourself to get over to the community side. Uh this is not a book that's saying right or wrong necessarily, although I think my I or I give my orientation pretty clearly. But I am and I'm also not saying zero to sixty, because some of the things we talk about in the book might be really challenging for some families to get their head around. I'm asking for people to like think about the control as a spectrum and how can you move along that spectrum.
SPEAKER_00So the mindset of control. I mean, when you think about it, that's pretty deeply American, right? Like the idea that we're going to that we can and should control everything and put it within our control and then put it to use for our own gain. You know, that seems quite deeply American. Um, and I think about the, you know, it's it's not just philanthropy where we see this, right? I, you know, spent a lot of time organizing people who are receiving welfare. And um, and I spent as much time with the welfare caseworkers as with the people. receiving welfare and the caseworkers, you know, in the welfare department would often, I mean, the welfare people who receive welfare will often say that they act like it's their money and like you're you're like, you know, dragging it out, you know, like kicking and screaming trying to get their money out of them. So we see that in the welfare system, we see that um, you know, in all kinds of systems where if I have something, no matter how I got it, you know, welfare where it's not literally the welfare workers' money. And in most cases in philanthropy, I mean, except if it's a family foundation where the donor is the one, you know, making the decisions and talking to the grantees, it's it's almost never the person's money who's who's sitting there wielding that power. And yet it seems to come with a territory that people think if the money, if I get to decide where the money goes, then I must, I must have some inherently, you know, I must, I must know better.
SPEAKER_01I am always happy to do a critical assessment of America, but I think what we're talking about is humans, really generally speaking. And I think when you look at the not to get into a bigger con broader conversation here, but when you know when I put on my political scientist hat, which I rarely do anymore, but if you look at the broad history of humanity, this idea that that that you're going to have a public that has some kind of say in the distribution of resources is just a tiny sliver of the broader story of humanity. What you typically see is wealth concentrated in the hands of very few people not and what typically comes with wealth is power. Not always but mostly and they wield it and they want to control it and they don't want anyone to mess with it. And then they tell stories to themselves. They write mythologies about why they get to do that. You know, in America it's been white supremacy. In other places there's other arguments, whatever it is. There's some case that somebody with power and wealth makes it says I am a superior player and I'm going to control it. And in many ways what we're talking about you know we write this narrative about those with the most power and write something as if there's something special there. This idea that there's going to be distributed resources based on some kind of democracy is just a tiny tiny I mean humans have just been dominating in different forms in all ways. So I do think this is a it's a challenging question for us. It's a challenging request to say hey we're grant we are saying to you not only if if you make this donation to this foundation that so happens to be in your name, we're gonna also put in you know 50 to 70% of that money and we're gonna trust you because there's something unique about you in a way it is counter American in in at least in what we what we say we want to be or what we've always been trying not to be trying to yeah aspiring to be different.
SPEAKER_00Yeah. So it when you talk about the mindset of control it it strikes me that well you well you mentioned earlier that the often you know these are high net worth people so they've they've benefited from the economic system. They've, you know, whether it's through inheritance or they've they've you know figured out how to work the system so that they can be successful and earn lots of money. And I and I wonder how that then in addition to the sort of the mindset of control in terms of you know what they fund and how they fund it, it's it's probably comes with a kind of unquestioned allegiance to the systems as they are and you know the idea that that I do you know I like you said with Carnegie it's like well more people should, you know, there should be fewer barriers to succeeding the way I have. And so I, you know, it I wonder if it leads to a type of of giving as decentralized and uncoordinated as it is that sort of aggregates up to really maintaining the status quo because the people making the decisions, why would they question the status quo beyond tweaking at the edges where the people fall through the cracks and so on. But what what why would they question the fun the system fundamentally? And I wonder how how that narrows the or you know dulls the impact philanthropy can have it's a great question.
SPEAKER_01So I'm gonna go back to your point earlier you were saying well the donor's money is the donor's money even at the Liberty Hill Foundation. And I'm gonna say no I'm gonna say that a donor when they you said they cut the check at that point it is their money but once they hand it over to the Liberty Hill Foundation it's Liberty Hill's stewardship at that point. Those donors are unique because they've said I want to do something to address the systemic failures of our society so I'm going to move this capital that could be sitting in a hedge fund inside my foundation instead over to Liberty Hill and let them do something to address systemic problems. But you are right I think I haven't done the study on this it's just an observation that most of the philanthropy you see left and right but even more right is really an investment in the status quo. I mean the right is very outfront about it. Like everything we've ever loved about America needs to stay in place and we are going to give everything we can for that the left has more of an interest in progress and progressive issues but even then there's a limit to what I think progressive donors are willing to do. Will they question the economic system? Will they question the impacts of the economic system? Will they encourage uh change in how the political system works? Will they encourage change in how our social and and cultural institutions operate not really like I I don't want this to come off the wrong way but I just wonder like if we if we really played free market with arts and culture for example what would happen to opera and symphony I'm guessing probably don't probably not have it. But if donors wealthy donors make sure that we do now good bad I don't know but if we really you know for people for a country that believes so strongly in the free market there are certain things that very wealthy people who have benefited from that free market will put their hand on the scale for I don't know why I don't know what the benefit is of having the symphony for wealthy people but they they're keeping it around. Again not a judgment and not a statement on that but just a reality which leads me to my next piece which I think is really you're you're getting into a zone that is to me again keeping judgment out just just a just a just a reflection just seeing something out there. We have a major concern in the United States about political financing we have a commission the Federal Election Commission that is there to make sure for better or for worse mostly worse that they're monitoring how these dollars are being distributed who's distributing them and what's being done with those dollars when they are distributed that system will be uh the amount of money that will come through the election system on the federal level starting January 1st 2028 to nine and then through I'm sorry from seven and to eight so we're gonna do that two-year run that's our next federal cycle we're just coming to the end of one right now we're gonna go into another one that one coming up that's gonna have the presidency a third of the Senate and the House is going to run about $15 billion over two years to get that done. I know it sounds like a lot each year if you just split that up in two halves right you got $7.5 million in 27 you got $7.5 billion I mean in 28. That's what's going to be spent in that same time Shane institutional foundations are going to do $100 billion in 2027 and do a hundred billion in 2028. Wow they're gonna move money to directly to public policy which I don't think we think about enough as the work we do. When we think of public policy and I've been having these great conversations with the dean of the Goldman School of Public Policy at Berkeley and he was the one who came to me and he said have you ever thought about the fact that when you work at a foundation you are doing direct public policy I'm like no I mean we fund public policy like no no no no no you're not funding government I'm not talking about funding government I'm talking about directly making public policy from where you sit at the foundation if you are funding a hospital you are directly engaging in public health policy. If you are funding an arts program you are directly engaging in public policy you are you are making a choice on behalf of the American people about what arts and culture we get you're making a choice about what services are going to be available at a hospital whether one is even going to exist potentially in that geographic location you are making the same decisions about education you're making them about reproductive rights. The list goes on so when you think about we are crazy focused on the elections and public policy that'll come out of government at $7 billion a year. Just take that up tenfold and you've got the amount of money coming in annually from philanthropy guess what doesn't exist you know this there is no such thing called the Federal Philanthropy commission there is no the IRS is the only watchdog and they are highly politicized and doing whatever the different whims of the political environment wants. You know if right winger is in power they're gonna make sure all the left wing radicals are taken care of left wing is in power they're gonna make sure the right wing is dealt with so it's it's and even then they don't really you know I don't even know if anyone reads the audit we do for the state of California. So it is it is a very unaccountable highly influential sector and it it does it does make me wonder like what levels of control are we paying attention to out there?
SPEAKER_00So we've got a highly influential unaccountable undemocratic system for lack of a better word giving away hundreds of billions of dollars far more than folks are contributing to elections. Now that sounds similar to the crisis that we're in in this country, right? We have a very powerful and influential set of folks who are unaccountable and who are making decisions for our nation, for the world and and really dismantling democracy. And a lot of the conversations you know I've been having with other foundation CEOs is about the idea that philanthropy was not designed to address the challenges that we're seeing now. And I think we're seeing so many new foundation CEOs come into that role and they're sort you know even if they've been in philanthropy most of their careers, it's still being the CEO is a completely different thing. And here we are with just you know democracy crumbling and they're sitting on you know hundreds of millions of dollars or more and starting to really question why is it that I'm sitting on so much money and yet I can't seem to move it in a way that feels like it's really gonna get to the heart of the crisis in our democracy and in our economy right now. And and I wonder if it's not only I mean is it is it it's got to be more than a coincidence. And I wonder if it's actually causally related that if that much more money is few is coming out of philanthropy to to to influence our nation and it's the money's being earned and disseminated in an entirely undemocratic way I mean how could it possibly do untangle that so that it could give the resources out in a way that strengthens democracy and equity?
SPEAKER_01That's the big question. I don't you know I think there are a lot of factors involved in in the mindset of control. I think there are a lot of factors that who ultimately has control, what is imp what do they prioritize in their life and in their philanthropy who is influencing them most profoundly and I think if you take all three of those and maybe more we could probably come up with a a list of a a set of groupings and categories for all of that you will find the the uh you know some high percentage of the variables that will explain why money's not moving. I've had conversations with some of our large foundation CEOs and oftentimes they will you know most blame their board. Like you know I've done the best I can the best I've can I you know I can and you know we we we had a camp you know we we were able to move one percent more and we've encouraged others to do the same and but that's pretty good you know that's about as good as I can do with my board or my bylaws. That's another one the bylaws prevent them from doing more. And I do think to your point earlier about the systems that exist and the status quo and who's ultimately making decisions about it, they're running these foundations like businesses. Right. And that to me is where you know I talk about this in the book to some extent that you know a lot of the reason why we need to have foundations and why we need to have philanthropy is because there is this you know really important concept that drives American capitalism and it's called return on investment. And how you get a return on investment is you've got to make sure that the cost of making something or the cost of delivering something or the cost of extracting something is as low as possible so that you can get as much return on what you're putting in. And oddly enough that same mindset which I think is highly destructive you know it means that labor has to be kept cheap. It means that how we approach the earth has to be very cheap from extraction and other forms. I mean all forms of extraction ideally for a capitalist economy to run most efficiently needs to be really cheap. And we have to be able to then get the return we're looking for whatever that is in the case of philanthropy we want the return to be over five percent annually because we're going to give away the bare freaking minimum of what the government requires we're not the world can be burning but we're gonna make sure we only give 5% because that's what the government requires and you have to wonder like if we didn't have that 5% that came in in 69 would people be giving anything right now? I don't even know if the foundations would even be moving money at all. So there's this minimum that they're gonna give and they have to earn above that and that is the business of institutional philanthropy right the business is we have to get a return high enough to keep going forever or this other concept came into our lives and when I started in philanthropy this idea of the social return on investment. So here the idea is that you're going to move money to something and you're gonna see some kind of social return which is to me immeasurable and impossible to define and that's why people finally gave up on it. But what's surrounding all of this is the idea just put simply that these are businesses we're running here and they're not all all these things are which I try to remind myself all the time when I'm at work, when I'm staring in the mirror Joyce and Larry Stubsky wanted to get a tax benefit. So they used an instrument that allowed them to get the tax benefit and we've institutionalized it into this thing that's supposedly like a business that gives out money perpetually forever. It doesn't like all that was supposed to happen was that the money was supposed to go to people that needed it. That's it. That's the simplest thing that was supposed to happen here. Whether it is to people that need it or to intermediaries perhaps that are that really are close to the ground that can do that for them. In my opinion it was never meant to sit in these monoliths that are going to live forever these businesses that are driving forward with the same branding strategies the same messaging and advertising and everything that goes on in something that is designed to extract and return an investment it's just weird. It's very irrational to me it's pretty irrational but we live it as if it's completely rational in fact some foundations literally have in their bylaws that they have to maintain purchasing power annually what does that even mean in a social context like who are you purchasing um what are you talking about? But they are in bylaws they say it is like the law of this organization and the state in which we were formed that we will maintain annual purchasing power which has been defined as maintaining the capital forever.
SPEAKER_00And that we call perpetuity which is one of your favorite perpetuities yes so let's talk about perpetuity over humanity. This is another one that I think you know in endowments in general and perpetuity in particular I think is becoming you know folks in philanthropy are beginning to question this in a way I haven't seen before and I think it is I mean it's partially I my sense is it's partially the you know the cr the democratic crisis we find ourselves in and it's partially that we've got so many new folks coming into these roles who are just like had never paid attention to the 95%. They had always been focused on the 5%. And um so I I am seeing folks start to question it and and what strikes me I mean so first of all Liberty Health Foundation we do have an endowment it's about six million dollars whereas our annual budget is a about thirty two million dollars so the the endowment gives us about $300,000 a year.
SPEAKER_01Which means that's how you do it folks. That's how you do it if anyone is listening at a major foundation that's how you do it. Yes well that's it's having to earn our money does keep us humble and accountable to some degree.
SPEAKER_00So I don't have these these issues myself but I hear a lot about them from other foundation CEOs. And um when they talk about perpetuity I always think but what about the perpetuity of the communities we're supporting? You know what about turning resources over to the control of communities and community members so that they can go on in perpetuity so that the the things that that are going to benefit them can go on in perpetuity versus literally the investment, you know, the corpus of the endowment going on in perpetuity. So in some ways I wonder whether we can use that concept that's so uh for those who are listening who are not you know inside institutional philanthropy may not be as aware of this but the idea that you're talking about Glenn that you know the corpus has to be maintained and grow forever and ever is you know really does seem to dictate most if not all of the decisions that foundations make. So I so part of me wonders whether we can use this notion of perpetuity that folks are so wedded to to help them see that the perpetuity of the corpus or you know the perpetuity of communities is at least as important as perpetuity of a corpus.
SPEAKER_01I would hope so. I mean I don't know maybe not in America but that's see that's being rational Shane careful.
SPEAKER_00We're talking about institutional philanthropy yeah sorry uh I went off the deep end there. But um but yeah you're really saying actually that you know let's let's actually question the notion of perpetuity and and what you're pointing out is it's perpetuity kind of versus humanity as if you know that in some ways the two are mutually exclusive. So can you talk a little bit more about you know you've talked a bit about sort of the critique critique of of perpetuity and I wonder what what it looks like to choose humanity over perpetuity.
SPEAKER_01You said it very, very well um and I'll just use the line that we use at Stepsky which is why is it more important for us to hold on to this money than the organizations doing the work on the front lines.
SPEAKER_00There you go.
SPEAKER_01I mean that is that's a question I think I think every board meeting at every foundation should start with that question. And that everyone should go around the room and explain why it's more important to warehouse it in a hedge fund than to move it to organizations that need it desperately all the time not just in a crisis. It does it we don't need to have a crisis to move the money. Then the next question becomes why wouldn't you do I mean why if are if you've got a mission at your foundation I'm sure you want to do something for somebody somewhere why would you do it at five percent ever and if you were running your business and you you said look at we we've we're we're here to re get as large a return as possible on our investment but most of the time we're only going to do that at 5% you wouldn't have investors you wouldn't have staff you wouldn't have you salespeople I don't know you wouldn't have anything you wouldn't you wouldn't have people working in the warehouse. Nobody would want to be a part of this dead organization. And so I don't understand why we force that upon the nonprofit sector we call partners and we call heroes. We give them the I mean it it's all when you really stop and think about it and I that's all in many ways Shane the point of this book was just to ask people to stop and reflect because I believe really strongly in trust based philanthropy. I believe that Dimple Abenchandani is right that there's a new era of philanthropy forth I believe that Vulley is telling folks really important things about how to do fund Raising and otherwise in a more equitable way. I think all of that is possible if one thing is tackled first, and that is this control factor, getting past some of these irrationalities that prevent donors from doing the things that they really say they want to do, and I believe they do. So just one in particular is how can you look at 100% of a resource, a charitable resource, and say all we're ever going to give away is 5% of that annually. And the rest of it we're going to put in private equity, stocks, debt, real estate speculation, and hedge funds. And some will keep in cash. I mean, most foundations are so committed to that stuff that when a crisis hits, they literally cannot get out of it fast enough to address the crisis. Private equity never takes its clause out of you. If you put your money in a private equity account, that's their money pretty much. They're going to give it back to you when they want to. They're going to give you the dividends when they get them, and they're going to keep the principal for as long as they want to. So if you come back to them and say, by the way, I don't know if you noticed, but um the entire state of California is going into the sea. We're going to try to help mitigate that. Can we get some money to help with that? And we need to get our money back for that. They're going to say, well, you know, actually, that's our money now, pretty much. I mean, we'll give it back to you. It's true, it is yours still. But that's the type of stuff we've gotten ourselves into because we're putting perpetuity over humanity. I don't understand it. The only thing I can tell you, having been there, having been in that mindset, is that I never chose to understand it. I just said it is what it is. It just is what it is. The money is there to deal with things in the future. And my question back to anyone who's bought into this perpetuity thing, which by the way is 99.9% of the people that work at foundations, my question back is like, okay, so what are you going to do in the future that you're doing differently today? Meaning you're doing very little to help most situations today based on your corpus. You're doing as little as you can. So should we expect that in the future you'll continue to do as little as you can? Because that to me is a problem.
SPEAKER_00So we're talking a lot about some of these inherent contradictions. That's how I would describe it within philanthropy. And one of them, as we've talked about, is that that the folks making these decisions is that these are the high net worth donor class. And generally the resources are meant to help, you know, low-income people, people on the margins of society. Um so that that there's you know very different class interests there. And that causes many contradictions. Um, one of which, though, is what you're talking about in terms of investing the endowment. Because I mean, you particularly call out real estate speculation, which is an interesting one because I don't know if Los Angeles would exist without real estate speculation. I mean, it's it's in it is entirely what fuels the local economy. And at the same time, of course, there's, you know, so much of the work Liberty Hill funds is actually about trying to stem the tide of the result of speculation, which is ever increasing costs of land and property and folks can't afford to live here. So I'm curious, you know, how do how do you kind of think about that class struggle that is basically in play? And it and it so when when foundations are deciding to invest their endowments, it's you know, I think one way to rationalize it is, well, okay, we're we're taking dirty money and using it for good, you know, maybe it came came out of real estate speculation or the corpus is growing due to real estate speculation, but we are, you know, out there spending it for good. But you know, if if one of the primary drivers of inequality, for example, in Los Angeles is real estate speculation, and that's you know, foundations, whether they question it or not, whether they think about it or not, are deeply invested in and benefiting from that system. I mean, how do you, how do you I don't even know I've gotten myself all tangled up. I mean, where do you even start to have the conversation about, you know, what sh what are good and you know, what are investments that align with your mission and what are investments that don't align with your mission? And and if folks, you know, fundamentally are benefiting from that system, what you know, what would cause them to question it? And who's to say that real estate speculation is bad?
SPEAKER_01I think the data shows that real estate speculation is pretty bad. I think it does. And when you when you're looking at it from a social perspective, right? Like if you're trying when you you just hit a couple of the key points, right? Cost of housing is extremely high, in part because, not certainly exclusively because, but in part because people can buy up lots and lots and lots of real estate and take it off the market and it forces up the price of everything that's on the market. But what also happens, you know, there's a really great um piece that was done on More Perfect Union on YouTube. They have a story in there about a team of people that investigate private equity firms, and they do it specifically to look at where pension funds are invested and what the impact of them being being invested in private equity looks like. And so they tell this story. Uh, I don't I don't want to be wrong about this, so I'm just gonna say I'm not sure whether the pension fund and the people who end up suffering as a result of this private equity team not team, the private equity firm are connected. I don't know if these were pensioners who are inside the product. But it basically this pension fund was investing in private equity that had bought up mobile home parks in very very poor neighborhoods. And the private equity team, which is what private equity firms do, they come in, they suck out all the equity, and they leave behind a bankrupted product. And that is what happened here. So you end up seeing people getting kicked out of their mobile homes because the price of their mobile home is skyrocketed to deal with the creditors and the debt done by the private equity that was paid for by the pensions. So that story is told all over the country. Um, I was just listening to something today about youth sports, and apparently, private equity is going to get into youth sports. And you can be sure that when they get into youth sports, we're gonna see a lot of youth sports camps and otherwise going out of business and kids not having anything to do over the summer. That is how the private equity model operates, and that's just one way that foundations invest. So I'm not saying they're all that way. Again, I generalize, I know I do that, but there's a there's a pretty good amount of research that shows that when you're messing around and things, again, that are focused on high ROI to get your 5% or more, you are risking. This is where I think the biggest risk in the foundation sector exists. We talk a lot about risk on the grant side. I don't think there's any such thing. But on the investment side, we talk about, we don't talk about the true risk, which is the harm we do with our investments. And there is no spectrum or toteboard out there that says how much harm you're doing to give away money at a low rate every year for good. Like what's the benefit harm measure out there? And I firmly believe, having seen it firsthand at Stubsky, and I talk about this in control, um, that we were invested in things that were doing harm. And we weren't accounting for that. I mean, we don't, we're not an impact measuring foundation. I don't really think you can do that. I know a lot of people have spent a lot of money, time, there are a lot of jobs out there right now measuring the impact of the foundation. I don't think that's even possible. But if you if when you do it, I don't think any impact evaluator ever takes into consideration the har the risk and the of harm that's going on within their investments. So the question you asked was, well, how do you what should you do about that? In my opinion, foundations just should not be in the for-profit business, period, in my opinion. And I think they should just be out. Just use the money. There are so many ways to keep your principal for very long periods of time. And you can do that on mission. You can do PRIs, for example, or uh, you know, program-related investments that are fully tied into your mission in a way that you'll get your principal back. If you want to be a little extractive, you can take two, three percent back on that if you want to. A lot of you know, community lending entities will will do that with you. Most of them do. We did a whole bunch of PRIs for no interest, we just needed the principal back to pay salaries later, and the impact was incredible on some of these PRIs. If we had kept them in private equity, we sold off all of our private equity on the secondary market and we moved it into PRIs.
SPEAKER_00Wow.
SPEAKER_01And I can tell you, we are getting much more impact by having that money out and operating on the front lines. So I I I sometimes like I'm breathless when I think, gosh, if you have a $17 billion foundation like Ford, if you could put $2 billion of it out in no interest community-based loans, you could change community's trajectory forever. And I just I just uh I don't think it's that hard. It's again, it's a narrative. It's a narrative in our head that this is how it's done. And you just have to reflect, you gotta ask the question like, is it more important for us to have this money than the organizations working on the ground? Just over and over again ask that question. I think eventually you're gonna crack. It's gonna break open on you. You can't your argument is, well, we're really good at investing private equity. Okay, well, let's talk about how great that is. I mean, you know what I mean? Like the more you start questioning why you should have it, I I think you you're either gonna end up realizing you're highly self-centered and motivated, or you are believing in a system of good that's not actually good. It could be very harmful. I believe that.
SPEAKER_00Yeah, and that starts to get to another point that I want to dig into, which is what you talk, what you call the dream of solidarity. And, you know, I remember very distinctly, and the person who I'm talking about, maybe listening now and maybe remember this moment, it was a you know, a donor to Liberty Hill. I'd been in the role, you know, long enough probably that I should have known better. But um, but I was saying what I often say, which is I love Liberty Hill so much because our donors give against their self-interest. And, you know, having myself grown up poor and pissed off, you know, that's what that's what it looked like to me. And I was like, wow, you guys actually care about the rest of us and you're you're actually willing to turn your resources over to campaigns that are intended to undo the very benefits that you've received. And this donor was like offended. And he said, Well, that's that's not why I give. I give because I want the world to be better for me and my family and my children, and I see that we're all connected and that we we all, you know, like I mean, the be my favorite quotes are about this very premise of, you know, none of all of us are, you know, none of us can be free if any of us are oppressed. But I'm also sort of curious about this notion of solidarity. And I'm I because, you know, you may notice from my line of questioning that I'm I'm very into this notion that there's sort of this this donor class self-interest over here and the self-interest of low-income people over here. And I can I can easily fall into the trap of that sort of like us and them, you know, zero-sum game mentality, and which I think is wrong, but I think it comes from, you know, how I grew up. But how do you see that solidarity? And how do you how do you see how could we start to reframe this so that it's not, you know, this sort of charity of, you know, wealthy people and, you know, or wealthy institutions giving to people who have less, but that really we're all, you know, making the world better for all of us. And and why, you know, how how do we move in that direction? Why would donors who say that, hey, it's my money, why would they, I mean, if you're like, you can't measure impact, you can't decide where the money goes and how it goes, and you, you know, like you're you're you're taking the fun out of philanthropy for these donors, Glenn. Um uh, but perhaps it can be replaced by this notion of solidarity, that that we're all that that none of us can be free when when some of us aren't. So so tell me how how you see that.
SPEAKER_01Yeah, I mean, I look, I think you said it very well. And I think the goal I'm I'm I'll I'm sure this won't sound as eloquent as others who talk about equity and justice, but to me, I think the goal is to get to a place where we are reducing inequity to the point where people can really function to the best of their ability in a society. I think that's what to me, that's what solidarity is. It's reducing uh the amount of uh injustice and the amount of disparity so that we are all functioning to the best of our ability. That doesn't mean you there doesn't have to be heavy-handed totalitarian action there. I do think that can be done through very smart public policy, which we just haven't seen in a while. Uh and I by that I mean the entire definition, which I sort of played around with earlier in this conversation, about foundations engaging in public policy that is achieved is looking to achieve that same outcome. Now, there, like I said, there are people that are far more skilled at talking about equity of all forms, racial, gender, um, and otherwise, than I am. But to me, that that's our mission. I think that's the mission, I would hope, of any community, of any society. Otherwise, it's it's what humanity has been most of the time, which is a society that's built on enriching the most powerful. So that that's that's to me the agenda. You said something really great there. I'll I'm almost I'm gonna definitely go back and take the quote, which is you're taking the fun out of this for donors. If it and I, you know, I have to say that's a really important point from you, and that is my frustration, I think, with donors is if they're and you know, again, I'm generalizing. There are plenty I've known. I like I said, I had a great conversation on Friday with one I deeply admire. Um, and and you have you've got yours that you deeply admire. So there are really people out there really are trying to do the best they can for the benefit of the public. That's all I'm asking for. Part of doing the best you can is a recognition that this is not a hobby, and that's the part that I think is really frustrating when I talk about in my book hours and hours and hours of trying to recruit people into a philanthropic training program. And that I was competing with kitchen remodels and new babies being born and international trips they had to take, or and every time I just sat there thinking, this is a hobby to you. You are stewarding money that's vital for people, it's a hobby for your investment teams, it's a hobby for your accountants, it's not seen with the kind of seriousness that public policy requires. And there's a story in the book about a grandmother who is very proud of the fact that every year she gives the grandchildren $5,000 to give away every year from the foundation. And she's trying to train them to be philanthropic. And, you know, maybe people think a five-year-old is better at giving away money than our legislators, but I'll say I don't think when people talk about having a foundation, a public steward, make giving away money, I don't think they're thinking give it to five-year-olds. And again, it's a great thing she's doing. She is a multi-billionaire. I'm pretty sure she's got some money in the background that she can hand over to the grandkids to give away. But when it comes to the foundation, it's not a hobby. And at the end of the day, that's really what I would like to see the standard raised. That you don't show up four times a year at a board meeting, review a docket of information you know nothing about and have tried to get yourself up to speed on in three to four days, make decisions as to who's going to get that money or not. If you had a whole team of people spend their day in and day out trying to make the best grants possible, you know, reporting to you, and say, you know, that's how I want to do philanthropy. I think if that's how you want to approach it, honestly, the most powerful thing you can do as a public steward is to step away and bring someone in who really wants to be a public steward. And we should honor that when it happens. And it does happen. You know, you hear all the time, family, you hear, I hear grandmothers and grandfathers saying, I just can't get the third generation interested in this stuff. You know what? Awesome. Don't get them interested. Tell them to go do other things. This is serious stuff, and we need to have people on boards that take it seriously about being a public steward. And I think it's fun, actually, when you care. All the things I've said, when they really make sense, when they click to you about, hey, we need to move this money. You know, we're not going to spend our money trying to figure out if we're having impact or not. Let's just move it to the people that do need to know whether they're having impact or not. I think that's fun. I think they would people will have wonderful fun with that. But when it's a hobby, it may not sound that fun.
SPEAKER_00I I agree with you. I love my job. I have fun every single day doing that.
SPEAKER_01Of course. And you're you're very serious about what you think. Oh, yes. It's not a hobby. Or maybe it is, maybe it's both for you. But anyway, you have seriousness about it. And I think that's really important.
SPEAKER_00Yeah. So this is Liberty Hill's 50th anniversary this year. And wow. Yes. Um thank you. Yeah, it's uh it's quite an amazing thing. Um, but it's it's really caused us to reflect a lot on not just the 50 years of our past, but the next 50 years and really thinking about, you know, what do we want to build and what do we want to leave behind. And I've dabbled a little bit in futurism and have become quite enamored. One of the notions of futurism, um, as I've learned it by Trista Harris, is she talks about how we part of the challenge is that we love our problems, right? We fall in love with our problems and we spend all of our time and energy, you know, counting the problems and analyzing the problems and worrying about the problems and saying that the problems are urgent and not nearly enough energy thinking about, okay, what, you know, what is what are the solutions? What and what not just solutions, because that's still about the problem, but really, you know, what is the world we want to create? What is the world we want to live in? And how do we focus more on building that world and a little less on obsessing about the problems? And so I I offer that to you as we begin to wind down our conversation. When you think of the future of this nation and the future of philanthropy, what you know, if you had a magic wand and could just fast forward to 50 years from now, you've everybody read your book, they all obeyed your instructions and they renounced the mindset of control and they adopted the community engagement. You know, what how is the world different? How is philanthropy different? What and paint us a picture of of where we want to go that makes all of the changes you're suggesting worthwhile.
SPEAKER_01I love that question. When you look at the last 50 years and how our economic system is performing, the Rand Corporation, I think, or the Rand Research Entity, I think they're both the same, has come out with a couple of reports over the last few years. The output of our economic system is the following. Since 1975, every year, $2.2 trillion is moved from the working class to the 1%. Accumulated over 50 years, that's $80 trillion, has moved from the working class to the 1%. I believe that is at the heart of all of our problems in this country. So I'd like to think 50 years from now, what a great because we're talking past 50 years, what can we say about 50 years from now? I'd like to think that philanthropy, institutional philanthropy, just to be clear, foundations and our and our uh related organizations out there have uh shifted the narrative and have found a way to contribute to a system that generates $2.2 trillion and transfer from the 1% to the working class. Because currently, the way foundations are set up, we are currently one of the contributors to that transfer of wealth from the two point from the working class to the one percent. We are currently through tax policy, through inflation, and through wage stagnation, foundations are performing like they are because we are engaged in things that are making that, in my opinion, upside down transfer happen. So, in my view, if we can get 50 years from now, even if we've gotten back 50 trillion of it the other way, I think that feels pretty good. That would be a great number. But to think that we are in the situation we're in, $40 trillion in public debt, I don't even know how much in private debt, people living without any potential for homes, people living without much of an opportunity to get ahead in this country, you've got to believe. But you take $80 trillion. Dollars out of people's hands and give it to people in the 1%, I think you've got a problem. And I think we need to fix that. Um, and I think foundations could play a role in that, either by just going away or um turning their assets to a better system, to a future that maybe you've thought about.
SPEAKER_00All right. My last question to you today is uh a call to action. So leave our listeners with uh one thing that uh you would call individual donors to do and one thing that you would call uh private philanthropy, institutional philanthropy to do. What m what must they do now for your vision of 50 years from now to come true?
SPEAKER_01I know this is a this is a pretty flexible term, and I'm not I'm not actually setting up a checklist of things for people to do. We we are working on, we've had a lot of people come back after the book, both in talks and just on email saying, okay, I buy it. Now what, Glenn? You didn't give me anything to do in the book. So I'll throw one thing out. I know this is a very f uh elastic concept, but I I I do you and I have had a conversation today about a lot of irrationalities, in my opinion, that exist within the foundation stri system and the DAF system. I would love to encourage more people to simply reflect on this. Reflect on it and ask yourself how much of this can you change? Can you let go? Can you give up control? Really take it into your body. How does it feel to even think about letting go? And if you are struggling with that, there are lots of places you can go to address it. But the one place I would not encourage you to go is onto the board of a foundation. I think you should step away and you should come to some grip with that. I think there is, or lean in and change your approach, address that mindset and become the public steward we want you to be. So that to me, it's reflection, it's some deep consideration. It's asking why you can't move money to the frontline organizations, why you think it's more important for you to have it in your own hands. That to me is what we all need right now from governance and from foundation staff. And we owe I will work on coming up with some good questions and exercises, and we'll get them out there. But I think you can probably just from this conversation alone, Shane, you've brought up a whole bunch of great topics for people to think about. I think we can come out of this conversation and do some reflecting. And I know, again, it's elastic, it's mushy, it's not like move this to this, do that to that. You can come up with your own path. I don't need to give it to you. Uh, mine was mine, and you can read about it in the book, but mine is not it. And I'm far from perfect, believe me. I don't know if I want anyone to follow my path. But I think we should all take our path.
SPEAKER_00Wonderful. Well, thank you so much for being with me today and for sharing your wisdom with our listeners and our viewers now that we're on video. Truly, thank you for your the podcast that you do, the book that you've written, the work that you do at Stubski, and all of the ways you're trying to influence the sector. I appreciate you.
SPEAKER_01Same, Shane, and thank you so much for having me.
SPEAKER_00Thank you, Glenn Gaelick, and thank you for watching or listening. The show has expanded to video this season. So make sure to find us at Liberty Hill Foundation on YouTube to enjoy the gorgeous visuals we've added. Hit subscribe so you don't miss an episode.
