Vanguard Charitable Value in Giving Podcast Season 2 Episode 6

Podcast Host:

Rebecca Moffett, President, Vanguard Charitable
 

Podcast Guest:

Elaine Kenig, Director of Communications and Strategy

Rebecca: I’m Rebecca Moffett, President of Vanguard Charitable and the host of our podcast. Joining me today is Elaine Kenig, our Director of Communications and Strategy. Together, we are closing out the second season of our podcast, which focused primarily on what we learned about COVID-19 relief and how donors can maximize their impact.

Elaine: Hi Rebecca. Thanks for having me.

Rebecca: It’s great to have you on the podcast, Elaine! As you may remember, when we launched our first season in April 2020, we wanted to encourage giving during a time of incredible need. Our donors were anxious to give and they wanted to know how to make a difference during the emergence of COVID-19. Since then, we’ve interviewed incredible organizations that have shared their experiences with giving during this time, while providing advice on how donors can make a meaningful impact. Just this season, we’ve spoken to Save the Children, Center for Disaster Philanthropy, Surgo, Capshift, Candid and and even our own Mark Froehlich, Chief Financial Officer at Vanguard Charitable. In today’s episode, we’ll touch on a few key things we’ve learned this season such as the importance of trust and unrestricted giving; how to leverage data to help drive solutions; strategic approaches for maximizing charitable impact; and advice for donors.

Rebecca: Let’s start with the importance of trust and unrestricted giving. Since before the pandemic and accelerating since then, nonprofits have been stressing the importance of flexible donations that nonprofits can direct as they see fit – also known as unrestricted giving. Donors have historically not liked this type of giving as much as earmarking it for specific initiatives, but we know many nonprofits view this as the most important type of granting to help them achieve their missions and serve communities in need. Recently, there’s been a shift -- donors are putting more trust in nonprofits and granting unrestricted dollars.

For instance, Save the Children gives children in the U.S. and around the world a healthy start, the opportunity to learn and protection from harm. When we spoke with Janti Soeripto, President and CEO, about COVID relief, she expressed how donors and supporters have adapted during the pandemic:

Janti Soeripto: I would say one of the good things that we certainly saw with our supporters and funders, out of the pandemic, was that there is all of a sudden more appreciation for that need for flexibility, because all of a sudden, all these plans of course were upended and people went like, oh yeah, no, no, no, no, be flexible, be flexible and figure out what works right, so all of a sudden that could be done.

Rebecca: Another great example is The Center for Disaster Philanthropy, which helps funders, NGOs and other partners mobilize a full range of resources to support communities in need of disaster relief. . Patty McIlreavy, President and CEO, shared:

Patty McIlreavy: If you've identified the right organization that aligns with your values, that aligns with your mission, trust them to know what to do to help in, in the best way possible for those communities by listening to those communities and working with those communities.

Elaine: This matches what we’re seeing, doesn’t it? At Vanguard Charitable, we’re at an all-time high of grants going out for unrestricted purposes. Nearly 50% of all dollars are unrestricted, and that’s been increasing year over year. When donors issue unrestricted grants, they are putting their trust into the nonprofits to use that money as they see fit. Our donors are very strategic in supporting the causes and charities they are most passionate about. By giving those funds unrestricted, they are accelerating how the nonprofit achieves its mission. Jacob Harold, co-founder and EVP of Candid, an organization that has most comprehensive data tools and information about nonprofits, foundations, and grants said:

Jacob Harold: “We want to pick organizations that are the highest performing because we believe that some are truly deserving of that additional attention and resource and celebration. Once we've done that, we have put trust in them. And I think we need to give them the flexibility to use that money as they see fit”

Rebecca: Another key theme we focused on this season was how to maximize your charitable impact. Leveraging available data and resources are great places for donors to find new charities and new ways to give.. I believe that having access to all this wonderful information has increased our donors’ trust in the nonprofits they donate to, while also feeling more confident to give in an unrestricted manner.

Hannah Kemp: “We actually believe that if you're going to address any of the challenges that are happening today in the community whether they're COVID-19, vaccine uptake, maternal health, or really any other health or social problem, we need the most precise data available to understand the solution. To better understand where it's happening, why it's happening, who's affected and how people are different, so that we can devise solutions accordingly.”

Rebecca: You just heard from Hannah Kemp, Vice President for Impact and Growth at Surgo Ventures, a nonprofit organization focused on solving health and social problems with precision. . At the beginning of the pandemic in March 2020, Surgo created a tool called the COVID Community Vulnerability Index, which identifies vulnerable communities by aggregating dozens of indicators such hospital capacity, employment, and access to transportation. The CCVI has been held up by the CDC as a critical resource for federal, state and local response efforts.

Hannah Kemp: The CCVI actually had a major impact on how federal agencies, state governments, private philanthropists have responded. And I can talk all day about different examples, and we'll just give you a few so one is that the CDC actually prioritize two and a half billion dollars in funding towards vulnerable communities. A private sector organization actually the Southern Bank Corp used the CCVI to prioritize $100 million dollars of loans and grants to communities most in need. There were millions of dollars' worth of PPE that were moved to under resourced communities.

Elaine: It’s truly an amazing tool. We partnered with Surgo to leverage the data from the CCVI to help us launch the Nonprofit Aid Visualizer Tool - or NAVi for short. It's a free, interactive web-based mapping tool that's available on the Vanguard Charitable website and allows donors to easily search for and identify nonprofits that are supporting communities that are hit hardest by COVID-19.

Hannah Kemp: Using NAVi you can actually find charities that focus on say providing health care to minority populations. So, I spent just a few minutes on that last night and I actually found a number of really cool community health foundations, community health organizations that are providing free or reduced services to low-income residents and actually specialize in serving minority communities. So, by having this precision data, it linked me as an avid user with a place where I can put my money today, right and I know that it would be reaching vulnerable communities.

Rebecca: We heard a similar response about NAVi from donors, and we even created an updated version of NAVi to help donors find nonprofits providing hunger and homelessness relief. We encourage everyone to check it out!

Speaking of data-driven platforms, Candid is another organization with amazing information about nonprofits that is made available through GuideStar.org. Candid sources this data by reviewing nonprofits’ annual reports and IRS-required 990 tax forms, distilling it for donors so they can make informed decisions about their giving and feel confident in the organizations they support.

Elaine: But one of the challenges with tax forms is that they’re sometimes not always current. Jacob went into more detail that

Jacob Harold: The challenge with this data is that it's a tax form. And I know I wouldn't want my story as a human being told only by my 1040. Just like a nonprofit wouldn't only want their story told by a tax form. It's a great start, but if we stop there, we're only going to get a limited picture of nonprofits. That's why we invite nonprofits to come to our site and share additional information that's more current, but also asking different kinds of questions beyond the financial and governance questions that you would see on a tax forum to questions like, what are you trying to accomplish? How do you think you're going to get there? What's happened so far? What are the metrics that you use to measure your own progress against your mission? We pull all that together and organize it and try and present it in a way that is as useful as possible.

Elaine: The amount of information and data available today is incredible. Donors are now able to be even more thoughtful and strategic in how they maximize their charitable impact.

The possibilities are endless, but the message is clear. By using data to better understand which communities or causes are most in need, donors are able to make a greater impact. As Jacob said, it’s important to pick the causes or issues with your heart and the organization with your head. Having such access to credible information through organizations like Surgo and Candid ensures that donors are confidently – and comfortably – making the biggest impact possible.

Rebecca: The third theme we focused on this season is how donors can maximize their charitable impact with strategic approaches. This includes varying investment options within their donor-advised funds and leveraging recoverable grants.

At Vanguard Charitable, our giving philosophy is anchored in the belief that the less you pay in fees, the more goes to charity. Therefore, our investment options have low investment fees without sacrificing quality. And because our investments are both high-quality and low-cost, our donors are truly able to maximize investment growth to support granting over time. In fact, Vanguard charitable has granted more than $12 billion since we were founded in 1997. It really takes my breath away thinking of all the nonprofits that our donors have supported.

Elaine: I couldn’t agree more that low fees and a long-term investment discipline are key to maximizing your charitable impact. When we spoke with Mark Froehlich, our CFO, about the impact of low fees over time, he said:

Mark Froehlich: “The positive effects of low costs are compounded over time, which helps to maximize the dollars available for granting. Finally, it's important to maintain perspective and long-term discipline once you identify one or more investment options aligned to your goals, it's imperative to remain focused on that strategy and avoid distractions, such as short-term market volatility or news headlines. Not surprisingly, we have observed the majority of our donors maintaining our asset allocations, even during periods of volatility, and this long-term discipline results in greater growth, generating more dollars for grant making over time.”

Rebecca: Another way donors can maximize their charitable dollars is through different investment options. Impact investments have become very popular in philanthropy.

Mark Froehlich: “impact investments have become very popular in philanthropy. In these are investments made into companies, organizations or funds, with the intention to generate social and environmental impact alongside a financial return. Impact Investing is a very broad term, which includes investments with target returns ranging from below market to market rate. An example of a below market rate investment is an interest free loan to a charitable organization, while an example of a market rate investment would be an ESG index fund.”

Elaine: One type of an impact investment is a recoverable grant. It is a grant that works like an interest free loan. The donor has the potential to recover the grant amount when the nonprofit meets or achieves certain objectives, and then reallocate the capital into future social impact projects.

At Vanguard Charitable, we offer donors the ability to leverage recoverable grants through a program from Capshift. For those of you unfamiliar, Capshift is an impact investing platform that empowers philanthropic and financial institutions, along with their clients, to mobilize capital for social and environmental change.

Rebecca, you spoke with Liz Sessler, Chief Operating Officer at Capshift, about how recoverable grants are used. She provided insight into how recoverable grants are best for nonprofits that are looking to realize their charitable impact.

Liz Sessler: We find that nonprofits are most likely to use this in situations where they're starting new programs that have revenue generation potential, or they know other dollars are coming in, and we'll cover more of those later. But they're really unique circumstances. These aren't grants that should go out for general operating expenses or some of the traditional things you use grant dollars for. They really are for unique a kind of growth purposes with nonprofits.

Rebecca: Liz shared a great example of recoverable grants that our donors were able to participate in:

Liz Sessler: “So, one of the most common ways we see people use recoverable grants is to bridge gaps, and that's come up a lot, most recently in the COVID-19 response and recovery efforts. One of the examples that we like to use that I know a number of Vanguard Charitable donors have also participated in is UNICEF USA has a vaccine program right that participates globally, where they're trying to distribute vaccines across the world and get those to people as quickly as possible. And they get grant commitments from some of the largest donors out there, right. They're the big international NGOs that are supporting vaccine distribution, those institutions, like any sort of government, move really slow, but they're very good for the money most of the time. And, donors can offer UNICEF, USA a recoverable grant to bridge that gap. And they're able to immediately put those dollars to work to, you know, save weeks or months, which when we're responding to a crisis matter a ton and get those vaccines in arms faster. So that's one way that we see people use recoverable grants on a pretty regular basis.”

On that episode, we talked about how recoverable grants are used for three different categories – 1) bridging capital gaps like the UNICEF example, 2) expanding growing programs quickly, and 3) new charitable programs that really push the envelope.

Recoverable grants can be such an important part of how a donor implements their overall philanthropic strategy. While recoverable grants do come with a higher amount of risk than a traditional grant, they provide a potential way for money to come back to the donor for another grant down the road.

Elaine: They really can be a great tool. Liz gave us more information about how donors should evaluate risk:

Liz Sessler: But one thing I also like to highlight for people who are thinking about this is when you make a traditional grant, there is 0% potential for recovery. And so those are your most precious dollars in some ways, right? You are saying I trust this institution immensely to put these dollars to work in perpetuity. With the recoverable grant, you need to be comfortable with the idea that the institution could have those dollars forever. But you have this potential for recovery, and that recovery may not be 100%. Right, but it could be you know that 70% - 80%. And even then, you're getting those dollars back into your donor-advised fund, and you're able to think about what's the next best use of those dollars.

Elaine: Liz shared it is very important that recoverable grants and all grant dollars are allocated more efficiently. This helps nonprofits achieve their mission without increasing their burden or raising their costs.

Rebecca: We also asked guests for any advice they have for philanthropists. We heard a lot of great thoughts, starting with Patty from The Center for Disaster Philanthropy:

Patty McIlreavy: within the disaster industry, plan for the future, you know be strategic. If you're reactive you're likely to not have the response you want, you're likely not to look at a longer vision for recovery. So, you really have to think ahead, find where is that interconnectivity in your strategy for what types of disasters, what geographical areas, what type of programming. And if you plan that in advance you can explain both to yourself, to your board, your stakeholders, to your employees, whoever it may be why we are helping here versus there, or why we're helping more here versus there. There is unlikely to ever be enough to help everywhere, as much as we'd all like it to be there. So that strategy that long view will really help set the stage for helping you make those hard decisions as time goes on and there's resources out there such as our disaster philanthropy playbook which can kind of help you think through what are the components of a disaster from a philanthropic lens and how might that connect with my own work, with my areas.

Elaine: Janti from Save the Children said:

Janti Soeripto I think for everybody of course, funders, philanthropists, find the, the area that you feel certainly passionate, committed to feel that you have value add, you know, alongside your dollars, think about what other things do I have in my asset base in the broadest possible sense right, partners collaborators, skillsets, capabilities in my organization, company, whatever, and then commit to an area. Try to hone in on a couple of things where you want to shift the needle, and then commit multi year.

Rebecca: When we spoke with Jacob at Candid, he shared:

Jacob Harold: If I had to bring it down to a single word for nonprofits to look for, it would be clarity. That the nonprofit is articulating in a clear way, a goal, and a way of getting there. If I had to pick a second word, it would be humility, that nonprofits are showing that they may not have all the answers, but they are willing to learn and change and get feedback from their constituents or their partners or the world around them. And that tension between clarity and humility is where learning happens. And if you see an organization that has been brave enough to be clear about their approach, and humble enough to be willing to continue to listen and learn, then that's a really good sign.

Elaine: And Liz Sessler of Capshift told us:

Liz Sessler: if you are involved in philanthropy today, you're going to see more and more ways to get involved. And I would say please don't get intimidated. There are tons of resources out there to help you. And the long-term objective here for so many organizations and people, I think, is to create that better world for future generations for all of us. And the fact that we have more tools to do that just gives us tons of creativity and opportunity for change.

Elaine: This is all great food for thought for new donors and those rethinking their giving strategy. With newfound access to critical data and information, it is even easier to confidently identify and support a meaningful cause and make a true impact. Modern philanthropy is driven by both strategic thinking and passion – the best of both worlds!

Rebecca: We’ll end with a note of thanks – to our donors and all of our listeners eager to learn more about charitable giving. Together, we can make a lasting and significant impact on the world around us!

Thanks, Elaine for joining me today. It was a pleasure taking a look back at our prior episodes together.

For more information about Vanguard Charitable and NAVi, please visit vanguard charitable.org.

Be sure to subscribe to the Value of Giving Podcast for Season 3 coming later this year.

Thank you.

Vanguard Charitable Value in Giving Podcast Season 2 Episode 5

Podcast Host:

Rebecca Moffett, President, Vanguard Charitable
 

Podcast Guest:

Jacob Harold, Executive Vice President at Candid

Rebecca Moffett: I’m Rebecca Moffett, president of Vanguard Charitable and your host of our podcast The Value of Giving. Welcome to the third part of our maximizing your charitable impact miniseries. Last episode we spoke with Liz Sessler, Chief Operating Officer at CapShift about how you can maximize your charitable impact with creative giving vehicles such as recoverable grants. 

Today, we’re discussing different approaches to evaluating charitable organizations. With all of the available resources about nonprofits, what should donors look for? Today, we’ll discuss how donors can determine which resources are best for them, and how to evaluate whether a nonprofit aligns with their own charitable purpose and goals. Joining me is Jacob Harold, executive vice president at Candid and former president of GuideStar. 

In 2019, Foundation Center and GuideStar joined forces to become Candid, a 501 C3 nonprofit organization. Through research, collaboration and training, Candid connects people who want to change the world to the resources they need to do it. Candid’s data tools, nonprofits, foundations, and grants are the most comprehensive in the world. Jacob, welcome. 

Harold: Rebecca, it is great to be in conversation with you and to be wrestling with this tough, but essential topic for donors today.

Moffett: Well, we are just thrilled to have you here, so thank you so much for giving us your time today. Let’s start Jacob by helping our listeners understand exactly what Candid does, and its overall mission.

Harold: Sure, so Candid’s mission is to get you the information you need to do good. And when we formed Candid in 2019 with the merger of GuideStar and Foundations Center and we wrestled for a long time with figuring out how do we distill it into just a handful of words. But it does turn out that it’s not a simple thing to get people the information they need to do good and that’s what we’ll be talking about today. 

We’ve had some success the are about 24 million visitors to our web tools each year. So, there are a lot of folks who are tapping into the resources that we put together. And then importantly, we have partnerships with platforms across the sector, including Vanguard Charitable, and we can talk about that a bit today as well. So, we have multiple strategies, we think we’ve made great progress, but we still have a ways to go and this is the kind of puzzle that one doesn’t solve immediately. But you continue to work on over the years and try and get better and better.

Moffett: Jacob, that’s really helpful. What types of information about nonprofits are out there?

Harold: I’ll even zoom back a little bit and talk about different types of information that are relevant for doing good in the world. There’s information about the issue, say homelessness. What are the homelessness rates in different communities? There’s information about the interventions. What do you do to address a social problem? Then there’s information about organizations, who’s actually doing those interventions? And then there’s information about resources where is money going to support these organizations to do this thing to try address this social problem? But to focus in on our bread and butter - organizational information. Especially, as it plays out for individual donors. This information is spread throughout the sector or in databases in file cabinets, in people’s minds, and so a lot of our challenges to bring it all together. But I will mention two particularly important sources of information. There are others that we can talk about as well. The first are the tax forms that nonprofits are required to file with the IRS in the US. The Form 990, which is a remarkable document full of data about nonprofits. It varies by organizational size, there are some challenges with it, which we can talk about, but it provides a fundamental foundation for understanding nonprofits and the bulk of the data that we have comes from these forms that we collected over the decades and which we have often gone through the painful process of hand keying in forms that are provided as paper files, also organizing the data that we’re able to get digitally, coding it, creating tools to make it searchable, etc, etc. Trying to turn this giant stack of tax forms into meaning that actually can be useful to folks. 

The challenge with this data is that it’s a tax form. And I know I wouldn’t want my story as a human being told only by my 1040. Just like a nonprofit wouldn’t only want their story told by a tax form. It’s a great start, but if we stop there, we’re only going to get a limited picture of nonprofits. That’s why we invite nonprofits to come to our site and share additional information that’s more current, but also asking different kinds of questions beyond the financial and governance questions that you would see on a tax forum to questions like, what are you trying to accomplish? How do you think you’re going to get there? What’s happened so far? What are the metrics that you use to measure your own progress against your mission? We pull all that together and organize it and try and present it in a way that is as useful as possible.

Moffett: Jacob, that is an incredible amount of work to pull all of that information together. And I will say I remember that the days of working with Candid when I remember that the full team was double keying that information into the system. The organization has come an incredible way to digitizing that information for donors you, so thank you for doing that. Help me understand what are some of the biggest challenges that you have with getting nonprofits to provide that information? 

Harold: If we start with that first layer that comes from the tax forums. I’ve already mentioned that it’s very valuable but limited as one would expect from a regulatory document. Another challenge is that it tends to be out of date, and nonprofit will fill out their tax return the following year, then there’s delays at the side of the IRS delays in the process, etc, etc. It can be a couple years out of date. That doesn’t mean it’s not valuable. A lot of nonprofits have relatively stable finances and stable governance. And so, looking at their structure a couple years ago, it’s still quite valuable for a donor. But we are all always looking for and we’re getting used to having really current data. So, one important aspect of getting nonprofits to share data with us is just that it’s more recent. But then there’s also the question of, what are you really trying to accomplish? And it turns out, most nonprofits can answer that question in a general sense, but the process of having to type it down and enter it into a public database forces, nonprofit staff to get aligned with each other. Staff to get aligned with the board. And I can’t say how many times I’ve been out in the field talking to a group of nonprofits, and someone will come up to me afterwards and they’ll say, the process of filling that profile was really hard for us. It took us longer than we expected. We didn’t have the answers we thought we had. But it ended up being incredibly valuable, because it created this alignment and clarity. So, you know, we do hear from nonprofits, this sort of sense of it’s not exactly frustration, but it’s an acknowledgment that’s harder than I thought it would be, but it’s usually followed up with, but it ended up being really useful. And I think this is a lesson about the nonprofit sector and giving in general, which is that we all can have an impulse to want to do good. We all can have a general sense of how to do that. But we’re not often forced to be as clear about our logic, as maybe would be good. Maybe would help us be more effective. And one of the benefits of this process that we put in place is we hope it’s a compassionate and welcoming way to force nonprofits to bring that kind of clarity and alignment. And then to share that with the world on their own terms. And one thing that’s been really important for us is we’re not telling nonprofits how to explain their own story. We’re not telling them what metrics to measure. We are saying, look for us as Candid to be able to tell your story, you’re going to have to be clearer about some of these basic things. What are you trying to accomplish? How are you going to get there? What’s happened so far? What do you measure? So this is a place where we’re kind of proud to have created this work because we think it’s actually quite valuable for nonprofits, and we’ve heard many, many times from them that, that they agree.

Moffett: I can attest that the completion of the profile absolutely creates such a wonderful internal dialogue, as you’re thinking through how to answer the questions. The word choice in order to best describe your story. We have found incredible value in that process every year so I can absolutely attest that it is work, but it is incredibly valuable work. What types of information should donors look for when they’re searching for an organization that aligns with their charitable purpose?

Harold: So, I mean, this is the billion dollar or maybe the trillion-dollar question and there is no simple answers, but I’ll offer a few frameworks and ways of thinking that maybe can help donors. If I had to bring it down to a single word for nonprofits to look for, it would be clarity. That the nonprofit is articulating in a clear way, a goal, and a way of getting there. If I had to pick a second word, it would be humility, that nonprofits are showing that they may not have all the answers, but they are willing to learn and change and get feedback from their constituents or their partners or the world around them. 

And that tension between clarity and humility is where learning happens. And if you see an organization that has been brave enough to be clear about their approach, and humble enough to be willing to continue to listen and learn, then that’s a really good sign. So that’s where I would start, but we can back up even more from that and think about how do we get the sense of alignment? And there are some questions that a donor can ask that are not questions about quality. They’re just questions about is this what I want to do? So let me explain. For example, if you are in Chicago, and you really care about the city of Chicago, you may want to narrow your search geographically. That is a common approach. It’s not necessary. I would argue that a human life in you know in Topeka or in Dallas, is equal just as much to one in in Chicago, but if a donor feels particular connection to a place that has a very legitimate filter. The filter of issue area is another one that I think is very legitimate. We’ve at times said, “pick an issue with your heart and pick an organization with your head.” We can talk later about how there are those who say actually, you can pick issues with your head too, and that there are rational ways to decide should I work on climate change or homelessness? But I do not blame donors who say look, this is just what I care about, this is the place that I care about. So, I think starting with that, that sense of filtering is important. There are other types of filters that can be valuable as well. A filter like size some donors are just more attracted to a small community-based organization. And they might argue, and I think fairly, that organizations closer to the problem. It’s going to be better positioned to create lasting change. Other donors are going to say I want the big organization that has history and economies of scale and systems that allow it to create impact at a whole other level. Both of those are I think quite legitimate. So, you might want to filter by size. Some donors want to filter by age. They’re looking for the new organization that is fresh and has a new approach. Others are looking for the venerable organization that’s been around for a long time. Now on all of these different axes that we’ve talked about, it’s not necessarily a question of quality. It’s really a question of preference. You know, what do you as a donor want to do? So, I would start with that, and then you can move on to these questions of quality. And we talked about one proxy for that is clarity, and you can make a judgement. Is this profile of this organization that we can see on Candid, or through the Vanguard Charitable interface or through a number of other interfaces? Does it show to me this is an organization that’s clear about how they’re going to achieve good in the world? And another proxy that we find very valuable is transparency. That those organizations that are willing to share more information in general, I think that’s correlated with their effectiveness. It indicates a sense of confidence in an approach. Also a willingness to share and be open and that you’ve that this organization has gone through the process of articulating what it is that it’s trying to do. And for that reason, we at Candid have a series of transparency seals that about 80,000 nonprofits have achieved one of these. There are different levels: bronze, silver, gold, platinum, and as you move up that chain you get more and more information. So, we would argue that those organizations have been willing to share and have achieved one of these seals, but that’s a good starting place. That’s no guarantee that it’s a high-quality organization, but it is another useful filter that we find many donors using and many platforms, many foundations as well require at least one of these transparency seals as an indication that an organization is willing to say out loud what they’re trying to do, and sees themselves as part of a broader community where that kind of sharing of information can help make us all better. 

Moffett: I love that. And I think it’s important for donors to know too that I believe that Candid also provides nonprofits with a seal image that they can also include on their website and of course, it’s their choice of whether they want to include that seal and so if it’s not on there doesn’t mean that they don’t have that seal, but it could be another place that you can go to, to find what seal a nonprofit might have with Candid.

Harold: That’s right. And that’s totally free to nonprofits. Both to provide this information and if they earn a seal to share it as much as they want to.

Moffett: Let’s say going back to your earlier context that geography is a piece of information that you can filter by. So a donor knows the geography that they’d like to have an impact in and they are specifically interested in cause area of homelessness. What are some data points that they should consider when they are evaluating the impact of that organization?

Harold: I won’t mention the specific chapter but there’s a chapter of Habitat for Humanity that has a particularly good profile, and it’s a platinum level profile. It has the financial data the governance data, but also has descriptions of their strategies, and some very interesting metrics. And I want to flag some of the kinds of metrics you might see for an organization like Habitat, which is, you know, one of many different approaches for addressing different challenges around housing. You know, from homelessness, to a whole variety of other dimensions of the housing crisis. And this particular Habitat chapter had one metric that really stuck out for me, which was it wasn’t just how many folks have we housed? It was how many folks have we housed, who are still in that home two years later? And that can seem like a subtle difference, but to me, it was quite a powerful indication that this chapter was thinking holistically about the experience of the families that they were building houses for was providing support beyond just walls and a roof was thinking long-term and had engaged in a process of really thinking about what does long-term success look like in our community look like? So, when I see a Habitat chapter where their metrics are, how many volunteers do we have? That’s good. That’s something. How many houses that we built? That’s better. But when you have that sense of not only do we build the house, but here’s the lasting impact, that to me is what I look for, and that to me indicates, you got an organization that really has their act together. And you know, not every organization that has their act together will have necessarily shared all those metrics. But you know, those that do I think a donor can feel a higher level of confidence that these dollars are going to be spent well in a way that has impact down the road.

Moffett: Jacob, one message that I’m hearing from everything that we’re talking about is that this process is going to take time and that is a good thing. It is a good thing, for donors to take the time to understand these organizations to dive in and sit with the various stories that they are describing about themselves, so that they can connect with some of these data points. You were able to review this profile and something stuck out to you and you were able to really connect so much more with the story of that particular chapter. I would love it if donors could take from this conversation that spending some time getting to know these nonprofits and sitting with these stories will help them to truly understand how they’re giving to that organization can maximize the impact that that organization can have.

Harold: So, I think that’s absolutely right and I’ll add two nuances. The first is that it’s important, but it’s also really interesting. I mean, these are fundamental human questions about how do we serve our fellow humans, and how do we do that well? And that if a donor cares about politics or history or art or sociology or psychology, the work of trying to identify a high performing nonprofit is fundamentally quite interesting. With that said, I will also add, donors should not put the burden on themselves that they’re going to get it right from the beginning, and that the most important thing is to just get started. 

For example, a donor that, you know, maybe has given to 10 organizations most years for the last several years. You could give to those exact same 10 organizations this year, but this year, take the time to look at their profiles and take the time to say, oh, this one I’ve been giving to is actually really more impressive. I want to way more of my dollars towards them. Or this one actually doesn’t really seem like they have their act together. I’m going to send them a little note or I’m going to just, you know, reduce my gift to them, so that I can rebalance my portfolio over to this organization that seems to be so extraordinary. And then you know, the next year you can rebalance, and then the year after you might find new ones. This is hard enough that one thing we want to make sure we don’t do is sort of overwhelm donors with the expectation of perfection from the beginning because multibillion dollar foundations from The Bill Gates Foundation to Ford to Hewlett where I used to work, they don’t get it all get it right all the time either with a staff in the hundreds, full of PhDs and practitioners, there still has to be a process of learning. The most important thing is to get started with at least you know, some lens of excellence that you’re applying to, to the organizations that you’re giving your money to. I will add to this another dynamic that I think is important, which is we want to pick organizations that are the highest performing because we believe that some are truly deserving of that additional attention and resource and celebration. Once we’ve done that, we have put trust in them. And I think we need to give them the flexibility to use that money as they see fit. I would argue in general, there are exceptions, that once you’ve decided to give to an organization, you should not put additional constraints on them. If you don’t trust them with your money, enough to give them the freedom to use it, then you probably shouldn’t give them money at all. For that reason, you know, we strongly suggest where possible to not put those restrictions on and it gets to this balance of trust, of looking for those organizations that truly deserve trust and then giving it to them.

Moffett: Well Jacob, I believe that our donors are absolutely listening to you. I was just reflecting on some data from this calendar year, and we are at an all-time high of grant going for unrestricted purposes. Nearly 50% of all dollars are completely unrestricted to the organizations that has been increasing year over year. And I think shows exactly what you just said that they are putting the full trust in the organization to apply those dollars where they see fit. And I believe that having access to all this wonderful information has helped our donors to reach that milestone of continuing to increase their giving in an unrestricted manner. 

Harold: We’ve heard similar trajectories from other partners. Hopefully that’s a signal that this information that is flowing around is making a difference not just in the choices, but even in the sort of moral emotional relationship between donor and recipient. So that gives me hope about the long-term health of the field as a whole.

Moffett: Absolutely, the one other thing I thought I would add is I loved your comment about it’s important to get started. And the wonderful role that Candid plays and getting started is in making it easy to get started. And so, as a Vanguard Charitable donor, we provide access to the Candid nonprofit directory within the donor experience, and that provides our donors with such incredible easy filters to get started. And I just think that that’s an important thing to note that while it does take time to get to know these organizations, it doesn’t take a lot of time to get started. And you have provided an interface that we’re able to provide to our donors that really helps to efficiently kick off that process.

Harold: And we see that as so much more powerful when it is integrated to the transactional experience, where the learning and information gathering experience is sort of part of one experience with the actual, I’m going to click the button and send this grant. That’s so much more powerful than what you know, other donors will go to GuideStar over here and then you know, then they’ll go over to you know, their bank and over here are the nonprofit’s website and it’s just a more disjointed experience. So, this is potentially I think, one of the real powers of a donor advised fund model is integrating information into the transactional experience. You know, we still all have work to do to continue to make that easier, more meaningful, and more comprehensive, but it is to me, you know, again, a sign of hope that we’re moving in the right direction as a field.

Moffett: Jacob what are some tips that you can provide to philanthropists who are looking to make an impact now in in the future, but they just don’t know where to start?

Harold: The key is to get started with something and so you know, to offer a couple of ideas, you know, a donor could go to Guidestar.org, which is Candid’s primary tool or data on nonprofits and use that to, to just filter by geography by issue area by size, to begin to get that subset that felt a little bit more manageable. You could also look at tools like NAVi, the nonprofit aid visualizer, that Vanguard Charitable put together, that’s NaVi.VanguardCharitable.org, which is issue specific, it’s not yet comprehensive to all issues, but looks at a number of key issues and provides new ways of visualizing this sort of experience. So, you can start with those. There are two ways you can look at it, you can just filter down to a subset, according to some of these dimensions that are important to you. The other thing you can do is just look at the organizations you’ve given to before and see what information is available. And then, you know, take your one as a learning year and then your two can be a rebalancing year.

Moffett: I love that and I know that I am biased, but I’m so grateful that you brought up the nonprofit aid visualizer for those who are listening, it is a free tool, and it is on our website for everyone to use. It is a great starting place. It has a wonderful experience. The latest version is focused on hunger and homelessness for those listeners who are interested in that cause area and it provides a number of different filters and can absolutely start you on this research journey to understanding a bit more about some of these organizations, so thanks for raising that. 

To close us out today, I would be really interested in long term trends that you see with data and information resources with philanthropy.

Harold: So, you know, I’ll mention one that is you know, very live for us right now Candid, which is the use of machine learning and web scraping to get more current data. I earlier mentioned the two sort two primary sources of data for us are the tax files, tax documents, the nonprofit’s file and the self report information they provide. There is a third, which is we have built algorithms that overnight, each night read about 100,000 newspaper articles and pull out the approximately 1,000, a little bit more that are about the social sector, and then pull from that very, very up to date data. Now it’s not comprehensive, but it does allow us to catch that big grant or that big executive transition or that big merger that may have happened and immediately and automatically get that into our database. 

And then similarly to use all the data we have historically, as what’s called a training set to train an algorithm to recognize, oh, this is a grant about hunger, homelessness or this is an advocacy approach. This is a general operating support grant and be able to code that so it’s easier to find. So, you know, these sorts of technologies, they have to be responsibly used. We have to think through some of the implications of relying on past data to analyze and make sense of new information. It does offer us the possibility of bringing in data from more sources much faster in a much richer way. And I hope that this can really enrich the experience of donors, we think about the last couple of years when we’ve had issues like Coronavirus come out of nowhere. We’ve had issues like racial equity that have been with us for many decades, but rose to a new level of prominence. That kind of immediacy is important for philanthropy right now, and if we’re relying only on documents that are a couple of years old, we’re not going be able to capture that. To me, it, it offers the hope and again, just the hope that as a field, we’re going to be able to evolve our approach in a way that will kind of catch up to the rapid pace of society right now. I’ll put the flip side on that though, which is we also have to recognize that a lot of the challenges we face are truly long term. A challenge like structural racism. A challenge like climate change, these are multi decade challenges that we we aren’t going to solve in one year. And that’s another lesson for donors is not to expect that their check however big it may be, is not going to solve the problem. But their check may be a meaningful step in the right direction, and that if we are serious about building a better world, we’ve got to play a long game. That long game requires us again to have the clarity of where we want to get and the humility to evolve and learn along the way.

Moffett: Jacob, thank you so much for your time today. I learned so much from you every time we have a conversation, and I am so grateful for that. For more information, visit Candid.org, Candid has been an incredible partner to not only Vanguard Charitable, but to so many philanthropists who are looking to maximize their impact and their website provides a wealth of information. Be sure to subscribe to the value of giving podcast. Next time, we’ll talk about what’s happening with the tax and the regulatory environment. Thank you very much.

Vanguard Charitable Value in Giving Podcast Season 2 Episode 4

Podcast Host:

Rebecca Moffett, President, Vanguard Charitable
 

Podcast Guest:

Liz Sessler, Chief Operating Officer at CapShift

Rebecca Moffett: I'm Rebecca Moffett, your host of Vanguard Charitable’s podcast the value in giving. Welcome to the second part of our maximizing your charitable impact miniseries. In the last episode, we spoke with Mark Froelich, Chief Financial Officer at Vanguard Charitable, about aligning your donor-advised fund investment options with your charitable values, including ESG and impact investing.

In today's episode, we are discussing how you can maximize your charitable impact with creative giving vehicles such as recoverable brands. Recoverable grants are strategic philanthropic tools donors can use for impact investing through their donor-advised fund. They are a little different than regular charitable grants in that grantors hope to get their money back to recycle the capital into future social impact projects.

And joining me today is Liz Sessler, Chief Operating Officer at CapShift. CapShift provides an impact investing platform to empower philanthropic and financial institutions and their clients to use the capital for social and environmental change. Vanguard Charitable has a recoverable grant program of CapShift. We are so excited to offer our donors this new offering. Liz, welcome.

Liz Sessler: Thanks for having me, Rebecca. We're really excited to have this conversation today.

Moffett: As are we. Let's start today by helping our listeners understand what a recoverable grant is. I know I gave a very high-level definition in my introduction, but let's really break it down and why they are a useful tool in helping donors increase their impact.

Sessler: A recoverable grant is exactly what it says it is. It's a grant that has the potential to be recovered when certain circumstances are met. So first and foremost, we're looking for a nonprofit to achieve its charitable objectives. And the second component is the nonprofit needs to be in a financial place where it can recover the grant to the donor. We find that nonprofits are most likely to use this in situations where they're starting new programs that have revenue generation potential, or they know other dollars are coming in, and we'll cover more of those later. But they're really unique circumstances. These aren't grants that should go out for general operating expenses or some of the traditional things you use grant dollars for. They really are for unique a kind of growth purposes with nonprofits.

Moffett: That's really interesting. It sounds like this could be a really creative way for a donor to think about their holistic granting strategy through a donor-advised fund and think about where are the dollars that they would like to be unrestricted, right and go out for those general operating purposes. But then, where are the other ways that they wouldn't want to use this much more, maybe targeted and creative way of having an impact?

Sessler: So, one of the most common ways we see people use recoverable grants is to bridge gaps, and that's come up a lot, most recently in the COVID-19 response and recovery efforts. One of the examples that we like to use that I know a number of Vanguard Charitable donors have also participated in is UNICEF USA has a vaccine program right that participates globally, where they're trying to distribute vaccines across the world and get those to people as quickly as possible. And they get grant commitments from some of the largest donors out there, right. They're the big international NGOs that are supporting vaccine distribution, those institutions, like any sort of government, move really slow, but they're very good for the money most of the time. And, donors can offer UNICEF, USA a recoverable grant to bridge that gap. And they're able to immediately put those dollars to work to, you know, save weeks or months, which when we're responding to a crisis matter a ton and get those vaccines in arms faster. So that's one way that we see people use recoverable grants on a pretty regular basis. Another is to grow programs quickly. And that really means an organization has the potential to continue to raise unrestricted grant dollars and funds them into that program, but maybe it's going take a little bit longer because a potential donor can maybe give unrestricted with no expectation of recovery, something really small, and then if they have the potential to recover in the event that something is successful, they may be able to give a little bit more. And one example that we also see donors participate in is, you know, with a nonprofit that a lot of people give unrestricted gifts to, Habitat for Humanity. Many of us are familiar. They have local affiliates; they're building homes for homeowners.  In the long term takes a lot of money to buy a piece of property and to build a home. So, if Habitat for Humanity has to fundraise in unrestricted dollars, individual grants to do that, they can only go so far. And then they can also go to the traditional market, and they can secure a mortgage for each of those properties, and they can hold, but that tends to have higher interest rates than maybe what they want to pass along to their donors who are struggling to get, you know, to their clientele who are struggling to get on their feet initially. What they do is they go to their donors, and they ask for recoverable grants in order to fund that program. What each individual habitat affiliate is able to do is go to big Habitat for Humanity International and ask for a mortgage.

What Habitat International does is accept those recoverable grants, they're going to have no interest component to them, and they're able to lend those dollars out to the individual affiliates and then recover the grants to the individual donors when those individual affiliates are able to repay them. That also means, if for some reason, an affiliate or homeowner was in trouble, that grant may repay later, it may never be recovered, or it may be recovered at 70% - 80%. All of these things allow habitat to really aggressively pursue their mission – get more families in homes really quickly without taking on the interest burden of the private market, and still give donors a way to participate without asking them for just unrestricted dollars when they know there's potential to recover.

Moffett: That is the most fascinating example with UNICEF, USA who has an incredible vaccine program, and we've had an opportunity to really sit down with them and dive into that. And I know that a number of our donors have engaged in the recoverable grant there, but in both of your examples, you have given such purpose to why somebody would think about using this type of granting as a part of their strategy, and they're both so unique. Is there any other way that a donor would consider using a recoverable grant?

Sessler: Absolutely. So there's one more way that we see people use recoverable grants on a pretty regular basis, and I think this is becoming more and more popular with nonprofits as we see them getting more creative more involved in - I'm going to staple technology and areas of research and development and that's really to expand charitable goals. And the last example that I might tap into is with an organization called Social Finance. Social finance may be unlike UNICEF and habitat as a little bit of a younger organization, but they're really pushing the envelope and how we think about financing social problems, and they have a student-centric financing model. And so this is for people pursuing, let's say, additional technical skills. So something like computer programming or becoming a registered nurse assistant. They're able to tap into social finances, and rather than taking on debt like you would with student loans, they're taking on the promise of potential salary earnings. And so what Social Finance does, they take in those recoverable grant dollars, and then they lend them out to students to go pay for their education. And rather than putting an interest rate on that with the students, they say, you're going to put in, let's say, 10% of the education cost at the same time we put in our capital, and then over a period of time, you'll repay us a percentage of your earnings. And they do that in a very equitable way. Right? They guarantee the student a minimum salary before they ever have to repay anything. So if your education doesn't result in increased earnings, you're never going to pay back those dollars because you made this investment and it didn't pay off. We're trying to raise everybody up, right? That's the real philanthropic mission here. And so the donor has the potential assuming that these careers that you know, we're seeing trends are making more and more money has the potential to recover dollars if those students repay and if they didn't, they made a donation to an organization that's testing out these models to see if they may be viable long term and more traditional areas, but also they're helping people get an education that likely will pay off at some point in time, even if it doesn't pay off immediately. And this is just really creative; it's cutting edge. People should be prepared to kind of be involved in something that's a little bit riskier from a philanthropic perspective, but that's part of what philanthropic dollars are set up to do right is to see if these things these models work and if they can scale.

Moffett: So, Liz, I love that last point, right that donors need to be prepared that this is new. Can you provide a few tips to philanthropists who are looking to make an impact now and in the future through recoverable grants?

Sessler: So, if I were a philanthropist getting started with recoverable grants, I think the first thing you want to do is really know what impact you're trying to have. I don't think a donor needs to be too focused on getting this perfectly right the first time around. So some of what you want to do is know generally what kind of impact do you want to have. And when you make your first recoverable grant, you're going to have an opportunity to get to know an organization a little bit better because you have this longer-term relationship with them. So a lot of donors experience that.  I give an organization a grant, I get a thank you letter, and then I get a request for another grant with recoverable grants. What you're going to see is that an organization is going to thank you for that recoverable grant, but they're also going to report to you on regular intervals, sometimes that's quarterly most of the time. Sometimes that's going to be annually based on what kind of impact you're achieving. You're going to have lots of opportunities to engage and learn more about how they're doing that, and so you can use those opportunities to become a smarter donor. And that's what we see lots of the donors who participate with Capshift do is it's easy to take maybe a small amount of money, make an initial test and say, "Okay, I want to learn more, and then I can think more robustly about do I want 50% of my philanthropy may be in the short term to be involved in recoverable grants, while I build a theory of change and then I can be really strategic and how I use unrestricted grant capital and recoverable grant capital." And then you know, some people are even talking about investments long term and building that full philosophy of how am I using my philanthropic capital to create the maximum amount of change.

Moffett: Liz, I'm reflecting a little bit on the last podcast interview that I had with Mark Froelich, who is our CFO, and one thing that is so consistent between these two conversations is that it's really important that the donor starts with understanding what are their high-level goals that they'd like to achieve? And those goals will then help provide such direction for different strategies that they can use to execute on how they can maximize their impact. Within that, we see that from a traditional investment standpoint, you need to understand your goals in order to structure an investment strategy. And now, through this conversation, we're seeing the power of how recoverable grants can be such an important part of how a donor can execute on an overall philanthropic strategy that they have as well. So, note to anybody listening definitely take the time to sit down and determine what are your overall charitable goals because they absolutely will guide so many of these different decisions. One thing I wanted to touch on a little bit, and you've really helped us understand this through your examples, but recoverable grants do come with a higher amount of risk than a traditional grant does. How should donors evaluate risk, and how can Capshift really help here?

Sessler: Sure. I'd like to pause and talk a little bit about the kind of risk when it comes to, you know, there's impact risk, are you going to be able to achieve your charitable objectives. And then there's the financial risk component of will the dollars actually be recovered. With the impact risk, I think what donors need to think about first is those three categories that we talk about. We find that the bridging capital gaps has the least amount of recovery risk, typically, because they tend to be shorter-term opportunities, and there tend to be really strong institutions behind them. You, of course, need to look at the individual opportunity to confirm all of that, but that tends to be the way they're set up. The second category of recoverable grants where we're growing programs quickly, those tend to have a little bit more risk, and you should look at the track record of the institution and whether or not they've stood up revenue-generating programs before whether they've been successful with recoverable grants. And then the third, the expanding charitable programs, those tend to be our highest recovery risk because they are really pushing the envelope. They're doing something new. They're trying out something that nobody's ever done before. And so, it's important to think about those three things from a recovery perspective. Then looking at the impact risk, what we see is that that's very dependent on what the organization is trying to achieve. So, when you think about a UNICEF USA distributing vaccines, they have a long track record of achieving that. You can probably get the same kind of impact with UNICEF with an unrestricted grant, and that's going to give them kind of long-term running power with those dollars, right. It's going to fuel operations, it's going to fuel the vaccine program, and they're going to internally recycle it. You're going to have a very similar impact with the recoverable grant. But you have the ability to recover those dollars with something that's expanding charitable goals. So maybe the social finance example that we use, if successful, the impact potential is tremendous, right assuming that other organizations are able to adopt that. You also have a tremendous risk that it's not successful, right. It's new we may not see those impact objectives achieved at the scale that we're talking about. But we may see impact achieved to individual users, where you have an individual who's very successful in the program able to repay, but nobody else decides to adopt the program.

And so this is where knowing what your theory of change and kind of what you're trying to achieve is really important is. If you're looking to have that impact on individual lives, you can be very comfortable with the impact risk of either of those recoverable grants. If you are potentially looking for that transformational change of the institution or the kind of global level, you may need to be able to take more impact risk in your recoverable grantmaking. And you can apply very similar thinking to traditional grantmaking as well. You know, what are we trying to achieve when we put these dollars out the door?

But one thing I also like to highlight for people who are thinking about this is when you make a recoverable grant, there is 0% potential for recovery. And so those are your most precious dollars in some ways, right? You are saying I trust this institution immensely to put these dollars to work in perpetuity. With the recoverable grant, you need to be comfortable with the idea that the institution could have those dollars forever. But you have this potential for recovery, and that recovery may not be 100%. Right, but it could be you know that 70% - 80%. And even then, you're getting those dollars back into your donor-advised fund, and you're able to think about what's the next best use of those dollars. And so I think so much of this is perspective on what you as a donor are trying to achieve. And the organizations that you're working with. Also, the last thing I'll say on the risk piece is there is a real risk of giving an institution a recoverable grant that only is set up to take in traditional grant funding. And this is the place where Capshift can work with, you know, Vanguard Charitable to think about. Is this an appropriate use of a recoverable grant because we don't want to give nonprofits dollars that actually increase their burden raise their cost. We want to make sure that the grant dollars that are flowing out to nonprofits help them achieve their mission more efficiently and are really positive in terms of how they fuel the mission growth.

Moffett: I love that CapShift can play a role there because I know that that is so important to so many of our donors, ensuring that the dollars that are provided to nonprofits are able to be used simply and efficiently in the models that they have set up. So that's a wonderful role for capture to play for us to end on behalf of our donors. The last question that I have for you here, Liz, is what long-term trends do you see with impact philanthropy?

Sessler: So impact philanthropy, meaning if people think more expansively about how they're using their grant dollars, I think is a trend that's here to stay and will continue to grow and evolve. And a lot of that is coming from, I think, both new sophistication from donors who understand the problems that they're trying to tackle. In more detail because there's access to more information because they're able to go really deep with these organizations. But also increased sophistication among nonprofits is bringing these organizations that are solving huge social problems new creative ideas on how they might use different resources. And overall, as a world, we're feeling a lot of pressure, that there are really big problems out there, that there just aren't enough donor dollars or philanthropic dollars out there to solve those problems. And so we have to be more creative. So, I think if you are involved in philanthropy today, you're going to see more and more ways to get involved. And I would say please don't get intimidated. There are tons of resources out there to help you. And the long-term objective here for so many organizations and people, I think, is to create that better world for future generations for all of us. And the fact that we have more tools to do that just gives us tons of creativity and opportunity for change.

Moffett: But Liz, thank you so much for joining us today. For more information, visit www.vanguardcharitable.org/recoverable or check out capshift.com. Be sure to subscribe to the Value of Giving podcast. Next time we'll talk about how there are different approaches to evaluating charities that align with how you want to make a charitable impact. Thank you so much.

Vanguard Charitable Value in Giving Podcast Season 2 Episode 3 Part 1

Podcast Host:

Rebecca Moffett, President, Vanguard Charitable
 

Podcast Guest:

Mark Froehlich, CFO at Vanguard Charitable

Rebecca Moffett: I'm Rebecca Moffett, your host of Vanguard Charitable podcast The Value in Giving. For the next three episodes, our conversation will focus on how donors can maximize their charitable impact. And today, we're discussing how to align your investments with your charitable  values to maximize impact. joining me for today's conversation is my colleague, Mark Froehlich Chief Financial Officer at Vanguard Charitable. Mark oversees the investment operations for donor advised fund tax.

Mark Froehlich: Thanks, Rebecca for having me on today's podcast.

Moffett: To get started, we are often asked about how a donor can maximize their charitable impact by evaluating different information about the organizations that they're considering getting to as well as through granting mechanism like recoverable grants. However, a donor advised funds investment strategy is another critical way for donors to maximize their charitable impact.

As we dive into the various considerations that donor should make about their investment strategy, it's important to first understand our investment philosophy. And that's truly the basis for the investments that we offer at Vanguard Charitable. Can you share what that investment philosophy is?

Froehlich: I’ll start by saying that while we're not a program or an activity of Vanguard, we are strongly aligned with Vanguard’s time-tested investment philosophy and values here at Vanguard Charitable our investment philosophy includes a commitment to diversification, transparency, and cost effectiveness. To ensure diversification, we offer high quality investment options across a range of asset classes which span the risk spectrum. We provide transparency into these options by sharing information on each investment goal, time horizon risk level and expense ratio, and also by reporting actual returns versus the relevant benchmark. As for cost effectiveness, we ensure that our options have low investment fees without sacrificing quality. And because our investments are both high quality and low cost, our donors are truly able to maximize investment growth to support granting overtime. In fact, Vanguard charitable has granted more than $12 billion since we were founded in 1997. And our investment approach has been key to supporting this impact.

Moffett: Mark, every time I hear that $12 billion number of how much we have granted since inception, I just have to pause because the number is staggering. In the amount of organizations that were able to support with a $12 billion number and the critical missions out there. Really takes your breath away. So thanks for sharing that.

Froehlich: It's truly incredible, it really is.

Moffett: The investment philosophy that you shared is really helpful to understand.  And now I think we need to help our donors understand and our listeners understand how that really foundational philosophy helps to provide the basis for what is included in our investment lineup. So can you provide some information on what do we actually offer that aligns with that investment philosophy?

Froehlich: We offer three different types of investment options. Each option is offered in a pooled structure. And consistent with our investment philosophy, the majority of our pools hold high quality and low cost Vanguard investment funds. The first set of options are called portfolio solutions. These are pre allocated portfolios which are rebalanced daily, and these options are ideal for donors looking to pick a single option which can be maintained over time. The portfolio solutions range and risk level and a popular example is our moderate growth portfolio, which allocates 60% to equities and 40% to bonds. The second category of investments are portfolio builders, donors who wish to create custom allocations across various asset classes may choose from a menu of different portfolio builders, which serve as building blocks to create a custom portfolio. Popular examples include total US stock, total bond and money market. The third category of options are what we call values driven investments. These options allow donors just to align charitable investments with personal values through index funds, which are screened for environmental, social and governance. For simplicity, we use the acronym ESG when describing this type of investment.

Moffett: Mark, this line up I know has been considered very thoughtfully from ensuring that we're providing a range of options all across the risk spectrum that you discussed, and ensuring that the wide ranging needs of our donors can really be met through this offering. Can you help our listeners understand how they can maximize their charitable impact using the offering that you just provided?

Froehlich: There are four key principles we recommend donors consider in order to maximize their charitable impact. These are craft clear goals, remain balanced, minimize cost, and maintain perspective and long- term discipline.

Moffett: Oh, interesting. Okay, so there's these four different elements. I think Mark, we're going to need you to help elaborate a little bit in how these different recommendations can help donors to maximize their impact.

Froehlich: Sure. So first, it's important to craft clear goals. We recommend developing a mission statement to guide each of the decisions a donor makes with their giving for example, your goal might be to provide consistent annual support to a number of favorite charities where you might be planning and saving for a large grant several years in the future. Either way, it will be important to have clear philanthropic goals and there are a number of resources on our website that can assist you in that process.

Moffett: I think another place that donors can probably look right is that their own favorite charitable organizations and understanding some of their own mission statements. It could be a good guiding source or if you're defining your own personal mission statement.

Froehlich: Agreed. That's a great point. The second, it's important to remain balanced. This refers to setting an investment asset allocation, which aligns to your grant making goals considering both risk level and grant making time horizon and then selecting diversified investments within each asset class or portfolio. We make this easy for donors by offering pre allocated portfolio solutions, and we also ensure that all investment options are very well diversified. Third, it's important to minimize cost. As I mentioned, we ensure that all investment options are low cost. And since Vanguard Charitable investment balances are pooled we are able to access even lower institutional investment pricing in what is available to traditional investors. The positive effects of low costs are compounded over time, which helps to maximize the dollars available for granting. Finally, it's important to maintain perspective and long-term discipline once you identify one or more investment options aligned to your goals, it's imperative to remain focused on that strategy and avoid distractions, such as short-term market volatility or news headlines. Not surprisingly, we have observed the majority of our donors maintaining our asset allocations, even during periods of volatility, and this long-term discipline results in greater growth, generating more dollars for grant making over time.

Moffett: We've talked about that donors need to craft really clear goals, they need to remain balanced. They need to have an eye on cost and take a long-term disciplined approach. These four different elements sound really good, and they sound really important conceptually. But I do think we need to probably talk about how this can apply to a real-life example. So let me throw an example out there that I've actually heard about recently, and let's see how this can apply to what you just described. So, let's say that we have a donor that has goals to address hunger and homelessness issues in their local community, ranging from getting food on the tables and the short term to longer term efforts to build sustainable housing. How might they actually apply these principles in order to help them maximize their impact?

Froehlich: This is a great example. And in this case, you've already noted that the donor started by establishing clear charitable goals that happen to both be short term and long term focused. Next, let's assume this donor considers their risk tolerance as well as the need to generate both short term income and long-term growth to achieve their goals. And this leads them to select our growth portfolio, which maintains an 80% allocation to equities and a 20% allocation to bonds. As I've mentioned, the investments are low cost and well diversified and since this portfolio solution is automatically rebalanced daily, our donors are able to maintain this allocation over time, and focus their attention on recommending things which can be issued directly from the portfolio. In sticking with this example, let's assume this donor has recently reached retirement age is now contributing a bit less into their fund each year while looking for larger granting opportunities to fund sustainable housing projects. The donor might use this opportunity to revisit their investment allocation and ultimately decide to exchange into the conservative growth portfolio. This portfolio is 20% equities and 80% bonds, and the donor decides this allocation is more appropriate considering they're anticipating large grants within a short time frame.

Moffett: Okay, that's really interesting. And Mark, what I find so helpful is not only did you provide some different scenarios of the various options that the donor use based on their goals, but you also helped us understand how that might be able to shift or what the different scenarios might be as their contributions might change over the course of their life. So really helpful. Thank you. I do want to just switch gears slightly and dive into the topic of impact investing. It's a term that I just feel like it's being used everywhere. And I often find has several different meanings depending on who I'm in a conversation with. But can you help our listeners understand first, what impact investing means?

Froehlich: Of course, so as you've mentioned, impact investments have become very popular in philanthropy. In these are investments made into companies, organizations or funds, with the intention to generate social and environmental impact alongside a financial return. Impact Investing is a very broad term, which includes investments with target returns ranging from below market to market rate. An example of a below market rate investment is an interest free loan to a charitable organization, while an example of a market rate investment would be an ESG index fund.

Moffett: Okay, thank you for providing that definition. I just think it's helpful since like I said, the term can often be used in a lot of different ways. What is it that we at Vanguard Charitable offer that aligns with this definition of impact investing?

Froehlich: So here at Vanguard Charitable, we've observed a growing demand for investments that provide both on the market rate and financial return, as well as social and environmental impact. Based on this demand, we began offering our values driven investments back in 2018. As I mentioned previously, our values driven investments include ESG index funds, which screen out certain holdings based on environmental, social and governance criteria. For example, our ESG US stock pool excludes stocks of companies in industries such as alcohol, tobacco, weapons, as well as companies that own  fossil fuel reserves. Now, outside of our investment options, another way our donors can increase their impact is through the use of recoverable grants. recoverable grants provide upfront cash to charitable organizations. That anticipate future revenue streams, which the organization may use to refund the grant back into the donor advised fund. I understand you'll be discussing recoverable grants in more detail with our partners and Capshift as part of this podcast series. So I truly encourage our listeners to tune into that episode as well.

Moffett: We absolutely will be diving into that topic and I'm really excited to help our listeners understand the value of power that recoverable brands can have mark in the spirit of transparency. I know that we provide a lot of information about ESGs. On their website, where would be the best place for donors to dive in and find that information.

Froehlich: I would recommend that our donors go to our website, vanguardcharitable.org and visit the investments section. We provide full transparency into all of the details of the options that we offer, including our ESG options.

Moffett: Mark, I want to thank you so much for spending time with us today on this important topic as an organization whose mission is to increase philanthropy and maximize impact over time it's important that we not only continued to evolve our offer so that our donors have the ability to maximize their own charitable impact through their donor advised fund, but that we also spend time on how donors can utilize the many valuable components of our offering today. Understanding how investments can be used to maximize impact is a really important area to spend time on. So, thank you for all of your valuable insights today. For more information about Vanguard Charitable Donor Advised Fund, be sure to check out vanguardcharitable.org. Also, be sure to subscribe to the Value in Giving Podcast.

Next time, we'll continue to talk about maximizing your charitable impact in using creative giving vehicles like recoverable grants. Thank you.

Vanguard Charitable Value In Giving Podcast Season 2 Episode 2 part 2

Podcast Hosts:

Rebecca Moffett, President, Vanguard Charitable

Magda Guillen Swanson, Research and Development Program Manager, Vanguard Charitable

Podcast Guests:

Hannah Kemp, Vice President for Impact and Growth, Surgo Ventures

Rebecca Moffett: I'm Rebecca Moffett, President of Vanguard Charitable and your host of Vanguard Charitable podcast "The Value in Giving." Co-hosting with me today is Magda Guillen Swanson, who manages the research and development program at Vanguard Charitable. Today we are continuing the conversation about what's next in the pandemic and philanthropy and understanding how to strengthen our communities by using data. Listen to our first podcast of this season for the first part of this discussion, in which we explore how donors can make an impact with their giving, especially during the pandemic. 

Joining us for today's conversation is Hannah Kemp, Vice President for Impact and Growth at Surgo Ventures. Surgo Ventures is a nonprofit organization focused on solving health and social problems with precision. It's an organization we partner with on the Nonprofit Aid Visualizer, NAVi for short, which helps donors connect with nonprofits in need that focus on particular issue areas. Hannah, welcome. 

Hannah Kemp: Thank you so much for having me, Rebecca and Magda. So great to be here today.  

Moffett: We are absolutely thrilled to have you and really excited to get into this discussion with you today about all of the critical work that Surgo Ventures has been doing and the impact that you've been having. So, let's dive right in. I've had the pleasure of learning a lot about Surgo Ventures over the past 18 months and I know that your mission is to use all of the tools available from behavioral science, data science, and artificial intelligence to identify solutions that improve and save people's lives. And specifically, let's dig into the data science part of that equation because I think that that's likely an area that our listeners will be potentially less familiar with. 

So, at Surgo Ventures you prioritize what you call a precision approach to solving health and social problems. Can you tell us a little bit more about a precision approach and how you use data to achieve it?  

Kemp: Yes, absolutely. That's a great question, and I'm happy to explain. At Surgo we say we solve health and social problems with precision. That essentially means we're focusing on using data to help us and other decision makers really answer key questions. Who, what, when, where, why? This means we use data to really understand what's happening in a specific community. Why is it happening? And how are the people impacted differently? Rather than solving problems with course, non-customized one size fits all approaches.

We actually believe that if you're going to address any of the challenges that are happening today in the community whether they're COVID-19, vaccine uptake, maternal health, or really any other health or social problem, we need the most precise data available to understand the solution. To better understand where it's happening, why it's happening, who's affected and how people are different, so that we can devise solutions accordingly. We've actually been advocating for this precision approach since our inception, but we've gotten a lot more traction lately because of COVID. So COVID has really shown that this one size fits all approach just doesn't work right. It simply doesn't work right, and we know we've seen in the past year and a half communities need different types of support and services to mitigate the pandemic, people need different interventions to persuade them to take a COVID-19 vaccine. But I could keep going on and on.

Big picture, we have really limited resources, even with trillions of dollars say that we spent on COVID, and we can't solve for everything. Precision data can help us figure out where to focus who to focus on and what to do so that our dollars can have maximum impact.  

Moffett: COVID-19 is likely the biggest public health challenge in our lifetime and in response Surgo introduced a data tool called the COVID-19 Community Vulnerability Index, or CCVI. This tool has been held up by the CDC as a critical resource for federal, state and local response efforts. Can you help us understand a little bit more exactly how the CCVI helps with pandemic response? 

Kemp: Yes, let's rewind back to March 2020. When everything was closing, and we were all hearing reports of overcrowded hospitals in New York and Washington, at Surgo, we looked at COVID and we said you know every community in the US is going to be hit by COVID. But not all in the same way, right? And that different communities were going to be more vulnerable. And so, we put our heads together and developed the COVID Community Vulnerability Index as a tool to help decision makers across the board target vulnerable communities with more informed precise responses. So, the CCVI is actually inspired by a CDC tool called the Social Vulnerability Index. But it actually builds upon it to take additional factors into consideration that come, that are specific to COVID-19. So, things like hospital capacity, or the amount of household, crowding or limited transportation access, right, all things that we know influence a community's vulnerability to COVID. 

And what the CCVI does is it assigns a vulnerability score to every single census tract in America. So, for those of you who not familiar with a census track, it's an area of around 5,000 people. It is hyper, hyper granular. And importantly, it tells you not only how vulnerable a community, meaning a census tracker or a county or even a state is, but it also tells you why they're vulnerable. What are their particular aspects about that community that makes them vulnerable? 

So, in explaining this, right, I earlier said every community is different and communities have been impacted by COVID in different ways. So, if we take just a really specific example, Monroe, Alabama, it is a vulnerable community and that's because it has poverty. And a lot of people with preexisting conditions. This place may suffer more long-lasting economic damage from COVID-19 outbreak as a similar sized community say in Washington, you know, or San Juan County where their residents have stronger economic security and more stable employment, but that Washington County is vulnerable for another reason, which is weak, you know, health system infrastructure, which could cause a breakdown in operations due to the outbreak. 

So, with the CCVI you can really drill down exactly into a specific area into a county to see what are the factors that within the community that are causing it to be vulnerable and really plan services and support. Accordingly, you know, in the communities that are vulnerable because of health system factors, right, we can look at increasing ICU capacity, getting more doctors doing more community health approaches, other ones that are vulnerable due to say high density housing, you know, there we may want to think about okay, how do we roll out at home testing to those areas? Right so that people can more easily identify if they're infected. 

And, you know, the CCVI actually had a major impact on how federal agencies, state governments, private philanthropists have responded. And I can talk all day about different examples, and we'll just give you a few so one is that the CDC actually prioritize two and a half billion dollars in funding towards vulnerable communities. A private sector organization actually the Southern Bank Corp used the CCVI to prioritize $100 million dollars of loans and grants to communities most in need. There were millions of dollars' worth of PPE that were moved to under resourced communities. And of course, which I know we're going to talk about soon, which is our partnership with NAVi, which has helped direct millions of charitable giving directly to vulnerable communities.  

Moffett: I'm in awe about the breadth of impact that the CCVI has had, and I know we're going to talk about NAVi in just a moment, and I'm just so close to the impact that the CCVI has had there, but Hannah I was not aware of all of those decisions. that have been made based on the CCVI. So that's really incredible.  

Kemp: We've been really happy that it's been able to be so useful for policymakers, right when you build a tool in the pandemic. You don't know how it's going to be taken or how it's going to be used. And, you know, again and again and talking with partners at the CDC and state governments, etc. You know, we've heard over and over that it's something that they use to make decisions.  

Moffett: Because the components of the pandemic cannot be solved in a one size fits all manner. 

Kemp: Absolutely. I would say one thing that may be to add though, is that is a kind of a round how the pandemic has spotlighted equity right and then any inequities that exist in the US. COVID has had a really disproportionate impact on communities that are disadvantaged by race, ethnicity, comorbidity etc. And in talking about the CCVI it was actually one of the reasons why we built it was to identify the community's most negatively impacted by their response but also to bring equity right to the COVID response.  Communities are vulnerable for different reasons, but when we look kind of when we pull out a little bit vulnerable communities have experienced way worse impacts of the pandemic. So you know, seeing higher death, lower testing rates, lower vaccine rates, higher unemployment claims. I think all of that really kind of goes to the point of okay, if we're going to mitigate these things we need to be and if we're going to mitigate, you know, inequity and act on inequity, we need better data and precision data.  

Magda Guillen Swanson: So, Hannah hearing you describe this kind of blind spot in our understanding that the precision data approach that Surgo is adopting, really was designed to fill it's interesting to hear you talk about it in those terms, because we were similarly seeing a phenomenon that was happening in parallel among our donors early on in the pandemic. And what we heard from them was, you know, they wanted to give locally, and they wanted to give to the hardest hit areas, with their philanthropy, but it was really difficult to understand where those intersections were and what were the communities that were most vulnerable to the outbreak.

And that became an issue that just seemed to compound with each passing day and each passing week and each passing month, because there were so many multiple interwoven effects of the pandemic and, you know, just sort of became more complex as time went by. So, early on, you know, we did reach out to Surgo to ask if you would be willing to partner with us to leverage the data from the CCVI to help us launch the Nonprofit Aid Visualizer Tool or NAVi for short, you know, for any listeners that may not be familiar with NAVi. It's a free interactive web-based mapping tool that's available on the Vanguard Charitable website and allows donors to easily search for and identify nonprofits that are supporting communities that are hit hardest by COVID-19. Since its launch we've seen donors use NAVi to search for nonprofits that they've not supported in the past. So, knowing that, what advice do you have for NAVi users, and you know, most of us not behavioral or data scientists, right? We're not in the weeds with this every every day. What are the best ways to use datasets like the CCDI to make decisions about giving?

Kemp: I think NAVi combined with the CCVI is a fantastic example of how we can make precision data easy to use in charitable giving no hero science or data science expertise needed. So, the CCVI is a tool that tells you not only which communities are vulnerable, but also why they're vulnerable. So, by combining the CCVI and NAVi, we actually have a roadmap for giving during a pandemic. So just an example. I was actually playing around on the tool last night; say you're living in Florida, and you wanted to focus your giving there. There are a number of vulnerable areas in Florida. One of them is Polk County, which is actually one of the most vulnerable places in Florida. And in fact, in the US, and in Polk County, vulnerability is driven by a few key factors, the health care system, population density and minority status. So, using NAVi you can actually find charities that focus on say providing health care to minority populations. So, I spent just a few minutes on that last night and I actually found a number of really cool community health foundations, community health organizations that are providing free or reduced services to low-income residents and actually specialize in serving minority communities. So, by having this precision data, it linked me as an avid user with a place where I can put my money today, right and I know that it would be reaching vulnerable communities.

I think we heard the same thing that you did, right that so many people wanted to do something right and they didn't know where to start. But this combination gives people I think, an easy solution, right? It makes it easy to combine really granular level of data on the issue right on COVID vulnerability with a solution, a local organization, we're working in that particular area. I myself am not a data scientist and I was able to use the tool very, very easy and I actually found it a very intuitive to use.  

Swanson: It's great to hear Hannah. We definitely designed it with the everyday donor in mind and it's great to hear people are still finding value and finding new organizations to support and then bringing in this lens of the vulnerability index to really make decisions right? Because any donor would love to support every single great organization out there, but that's not what most donors are in the position to do, and they have to make some trade off decisions about which communities to support and which organizations to support. So glad to hear you found it useful. 

I'm going to go back to the equity question that I had queued up earlier and maybe we'll just munge this with the earlier response. So, the pandemic alongside you know, many other tragic events that occurred, you know, overlaid that during that time period. It really brought to light a lot of deep social and economic and racial inequities in every community across the country. How can we think about using precision data sets like the kinds that Surgo Ventures is investing in to help philanthropists better focus on issues of equity with their giving?

Kemp: Yes, I mean, I think to say to start out, I would say it's important to focus on equitable philanthropy because simply it is the right thing to do. You know, we have an obligation to help curb racial and health, ethnic health disparities, whether that's for this pandemic or in the future. At Surgo Ventures equity is really at the forefront of our thinking, you know, when we built the CCVI, early on in the pandemic, we wanted it to be a tool, which we can use not only to bring precision to the response, but to bring equity to the response. So, I'll just give you a simple example to highlight that. So, about a year ago, there was a lot of news in the media, how we didn't have enough test sites in this country. And so, we use the CCVI and we did an analysis on access to test sites in vulnerable rural communities. And when we did that, we found that black residents were twice as likely to live in a vulnerable rural community that didn't have a test site, then the general population and we could identify which counties in the US they were. And so, with this piece of precision data, we actually were able to call attention to this inequity and get organizations, policymakers, philanthropists to act. And actually because of this insight, for example, the Gates Foundation invested $15 million dollars in improving access to rural test sites, in rural predominantly black communities. In this particular example, right, precision data actually helped philanthropy know where to act on an inequity and what to do you know, zooming out a little bit, what if we have the same type of precision data for other types of inequities that our country is facing? Housing, mental health, maternal health, right?

Precision data from my point of view actually has a big role to play in a world beyond COVID. I think that philanthropists can better focus on equities, both by investing in the creation of precision data, tell people to know people, policy makers and the government, to know where and how to focus their investments to improve equity but also use precision data to guide what they invest in. 

Inequities in this country right are vast and precision data isn't a silver bullet. But like much as you mentioned earlier, we have limited resources, right, investors, donors have limited resources. And so precision data can tell us where we should be investing in to reduce inequities that are most needed. So, and I think I think this partnership, you know, between Surgo and Vanguard is only the beginning of what I hope becomes a greater focus on using precision data to guide more equitable giving.  

Moffett: So, Hannah, as you know, at Vanguard Charitable, Magda and I get the pleasure of working with donors who care so deeply about every cause across the entire nonprofit sector. And it's really one of the beauties of Vanguard Charitable to see so much giving go to a variety of causes. 

Can you help us understand a little bit what role you see precision data playing? both now and in the future in helping donors to maximize their impact on these causes that they care the most about? 

Kemp: Yes, I mean today, right. We talked about examples of how we can use precision data to alleviate the most immediate crisis at hand which is the COVID 19. pandemic, and especially the communities who are being ravaged by the Delta variant. But I think there's a role for using precision data in the future and in areas beyond COVID. You were so right, Rebecca, there are so many areas that donors can be excited about and want of their money in and I'm just going to talk about one example, which is maternal and child health in the US. So, the US has one of the highest rates of maternal mortality of any high-income country, and children born in the US are actually twice as likely to die before their first birthday then a child in France or Japan as a new mom, right? That hurts my heart. 

And as a donor, right, I could be really passionate about helping mothers and babies in the US, right? Where do I invest my resources? What should I do, where should I focus within the huge area, that we would have the most impact? And so, this is another area that Surgo is actually working on. In partnership with the Bill and Melinda Gates Foundation, which actually built the first ever tool to identify where in the country mothers are the most vulnerable, and why they're vulnerable. The tool is called the Maternal Vulnerability Index. And it brings together a broad set of individual and structural drivers of vulnerability things from socioeconomic status, the actual physical environment, race, and it actually provides the most complete hyper-local data about what makes the US, a women in the US a mothers in the US, the most vulnerable to poor pregnancy related outcomes than we ever have before and I think importantly incorporates equity so we know that black mothers are two to four times more likely to die from a pregnancy related cause in the US. With the tool we can identify which areas of the country have the biggest gap between say white and black mothers. And surprisingly enough, the answer to that is Wisconsin, which I wouldn't have guessed but black mothers in Wisconsin are three times more likely to live in a vulnerable county than white mothers. Kind of stepping back, I'm an investor who's really excited about supporting maternal, you know maternal health and child health and reducing the gap between white and black mothers. The Maternal Vulnerability Index actually gives me a roadmap but okay, which counties in the US are most vulnerable? Why are they most vulnerable? And what specific things should I be investing in to reduce that vulnerability?

I think we need more tools like this Maternal Vulnerability Index for like the CCVI to help donors to really pinpoint where their investments are most needed. I mean those can be tools in areas that donors are passionate about education, climate change, right, but having more precision data to help people make informed investment decisions, right. It's something that I think is making progress and we can do more on and I think Surgo and NAVi is a really great start towards that.  

Swanson: Hannah, I feel like we've just started to scratch the surface of all the great work that's happening over at Surgo Ventures right now, but what questions are you focused on answering next? 

Kemp: So, the Maternal Vulnerability Index I mentioned is launching in October. We're really excited about that. We're working on a lot of different areas, but another one is using precision data to help America get vaccinated for COVID-19. So, we did the largest ever survey on Americans on their attitudes, barriers, and beliefs around COVID-19 vaccination and now we're actually working with these insights into action. We're using precision data and behavioral science to help healthcare workers have better conversations with people who are vaccine hesitant. We've actually launched a vaccine ambassador program which equips regular people with behavioral science tools to help them convince their friends and family to get vaccinated. 

But we're also looking beyond COVID and how we can use precision data to illuminate some of the inequities that COVID has really laid there. 

Another area is mental health. Mental health, I think there's growing recognition in the US that we're not doing enough on mental health, but we need a roadmap of where to prioritize our limited resources, right? Which communities are most in need of mental health services? Where is access the most challenging? What types of services do people need and how is that actually different for different types of people? How can we be more equitable with provision of services? I think this is one area where we're really exploring how precision data can help us prioritize our investments in mental health in the future. 

Moffett: Thank you for joining us for today's Value in Giving episode. To see Surgo Data in action and try out NAVi, please visit vanguardcharitable.org/navi. We hope you'll join us for our next episode, where we'll dig into how to measure your charitable impact. It will be a multi part series that discusses trends and strategies for using different giving vehicles in impact. Investing to support nonprofits in bring relief to communities. 

Janti Soeripto: Thanks for having us.

Patty McIlreavy: Thank you for having us.

Vanguard Charitable Value In Giving Podcast Season 2 Episode 1 part 1

Podcast Hosts:

Jane Greenfield, Former President of Vanguard Charitable

Podcast Guests:

Janti Soeripto, President and CEO, Save the Children US

Patty McIlreavy, President and CEO, Center for Disaster Philanthropy

Jane Greenfield: Hello, I'm Jane Greenfield, your host of Vanguard Charitable's podcast, The Value in Giving. Today, we're excited to kick off season two of our podcast. Our first season in 2020 went deep on COVID-19. We looked at the greatest areas of community need, how nonprofits were affected and how donors could help. Now, we're more than 18 months into the pandemic and fighting new COVID variants, and we recognize that COVID wasn't the only disaster that required our support. In today's first episode of season two, we're focusing on what's next in disaster relief, and more specifically, how donors can continue to make an impact. Joining me for this discussion is Patty McIlreavy from the Center for Disaster Philanthropy or CDP as we call it. And Janti Soeripto from Save the Children. Let me start by giving a little bit of background on my guests. Janti Soeripto has served as president and CEO of Save the children since January 1st of 2020, having previously served as president and COO of Save the Children US, and prior to that, as Deputy CEO of Save the Children International. Save the children is an organization that gives children in the US and around the world, a healthy start, the opportunity to learn and protection from harm. The global Save the Children movement serves over 134 million children in over 120 countries, including the US. Patty McIlreavy is President and CEO of CDP, bringing with her over 25 years of experience in humanitarian relief and post-conflict development, 17 of which were an overseas post, primarily in Africa and in the Middle East. The CDP is an organization that works with funders, NGOs and other partners to mobilize a full range of resources that strengthen the ability of communities to withstand disasters and recover equitably when they occur. Welcome Patty and Janti, so glad to have you here today. 

Janti Soeripto: Thank you for having us.

Jane Greenfield:So glad to have you. It's great. We have a fair amount to discuss. I actually really only have a few questions for you. I will admit in advance, they're kind of big, open-ended questions so bear with me. But I'd actually love if both of you would answer each question because, I think you bring different perspectives to the table. Patty you look at disasters from a grantor's perspective and Janti you live with communities on the ground as you respond to disasters with a specific focus on children so if you can both weigh in, I'll ask my very large questions, and then I'm just hoping it's a dialogue from there. Sound, okay?

Patty McIlreavy: Sounds good. 

Jane Greenfield: All right, all right. So, my first question is, what has been the biggest impact of the pandemic, and perhaps the biggest learnings from the pandemic? Patty, why don't we start with you?

Patty McIlreavy: Thanks for having me here. The biggest learning from the pandemic, you know from CDP's perspective is that everyone's been impacted. In the past we've always talked about the fact that everyone is a disaster philanthropist and it's really been more a kind of catchphrase that we've used to try to encourage people to recognize that disasters are an Achilles heel to the programming, they may have, that it so creates so many vulnerabilities for populations, but the pandemic has demonstrated for everyone, you know, what it means to actually be affected by a disaster that you have no control over. And you know, you could call it an experiential equalizer, though of course everyone's experience is very different, of how this disaster has touched their lives, their families, their communities, their countries. And for us at CDP we try and use that to kind of remind people that no matter what your programs, are no matter where your goals are in terms of helping, there's something that can come almost out of nowhere, and change your entire life and the solution is not one thing. it's not, oh I need, I need a mask, or I need PPE, or I need vaccines because everyone's impacted so differently. Some people, you know, they just, they're struggling with education aspects for their children, and other people it's childcare, and beyond that, it's economics or rent or there's so many ways this has rolled out. And, our hope is that once this pandemic is passed, that everyone will remember that and bring that into their empathy in the future for how to help and how to be considerate and thinking of others who will be continued to be, who will continue to be impacted by disasters because unfortunately, disasters don't go anywhere, they do come but if you're lucky, you're not one of the people who is in the path of a disaster when it arrives. 

Jane Greenfield:  So, Patty that's interesting, you're saying you know, for the first time we've all been impacted. So, I know when I've given for disaster relief in the past, I try to put myself in the shoes of the people who have been impacted and it's very hard to do that. And it's particularly hard to really understand that important message of the solution is more than just one thing, so I agree, I think that's an important thing to bring forward. Janti, what's your perspective on this question of what the biggest impact and perhaps biggest learnings have been from the pandemic? 

Janti Soeripto: Just to build on what Patty already said right, I think increased empathy and we've seen that also in our own supporter base. There is the sense of, you know it's hitting all of us, it's also the children in my own immediate community who are struggling with, you know, online classrooms or even, you know, poor connectivity and teachers struggling to understand in our in our own schools understand how to make sure they continue to support their learners, I think, so that's a good thing and I do hope that that remains or that lingering memory of that impact remains with our supporters and everybody else. I do think it's also given much more visibility about existing inequalities that were there and also made it so that people who already had these inequalities or were already subject to some of these inequalities were quickly hit harder. So, if you live in a poor community with already poor connectivity, it's even harder to maintain any semblance of learning for your children, right, it's not that you can roll out your, your iPad and your zoom and your Google classrooms and off you go. Even that in and of itself is also hard, so I think the fact that 30 million people were already food insecure in the United States before the pandemic and the fact that when schools closed, children all of a sudden lost their one nutritious meal a day, all of a sudden made people sit up and take notice of that fact. So, I think that those existing inequalities exist, you know that they're there and that they were made more visible for people is also something that we hope will remain and will make people think that wasn't a great situation to be in so this building back should actually be building forward right as we now say because what we have wasn't necessarily what we want to have back anyway. So that, I think for us as a humanitarian organization on the ground, responding to immediate needs as well as to longer term, long term development issues, we're training for this as humanitarians right you always have to be adapted, disaster can come from any corner at any moment as Patty says, but to do it globally, all at the same time, not just the remote working, that was a relatively easy thing to do but also to figure out, okay, we cannot run a classroom, we cannot train community healthcare workers face to face. How are we going to do it, often in a context where there's low resource where there is, you know low connectivity, how do we adapt our programs so that having to turn on a dime, literally, in a lot of these countries, has really forced us to be, you know, evermore innovative and creative, to say what can we still do with fidelity and with quality, and what other things can we come up with, right? So in the end if you then switch to training your community health care workers by mobile means, all of a sudden you find that you were able to reach many more than you originally had planned for to do in person, so that's a benefit, of course, the downside is, can we be as in-depth as we'd like to be, we'd like to support it also with some in-person training over time but I think there were real sort of pros and cons to having to adapt our programs. 

Jane Greenfield: Janti, you said a few things in there that I want to underline. Very, very insightful. First, the fact that this brought visibility into existing inequalities and yes, we all know that the world is not equal, but I think it exacerbated that inequality that we know existed and I know a lot of our donors, really had a tremendous amount, not only of empathy but of it, a need to take action to help those at most risk. The other thing that's really interesting is this concept of the need to build forward. I think, you know, often the headlines can drive some of our empathy, they can drive our interest in giving in the moment for sure and that's very positive, but in the aftermath of disasters, there's such a need to learn from them and build forward so that we're not as vulnerable in the future. And, you know, the fact that we've had multiple disasters. I mean COVID was big, COVID is big, it remains big, but during all this time in 2020 and 2021, if I listed all the disasters, I think I would take up the entire podcast, it's been incredible. So, you know, this needs to deal with the disasters in the moment, build forward. And to your point, you know, turn on a dime, things are changing every day. It's just a lot for people who want to make a difference to think about, right? So, all this is going on. We work with donors who desperately want to make an impact, they really want to do something good in the world, but there's so much to focus on there's so much to think about. So that's going to lead me into my second question, second big question, which is based on all of this, what's your advice for philanthropists who want to maximize their impact as they give. Patty, do you want to start us off again?
 
 Patty McIlreavy: That's such a great question. It actually comes up all the time in our conversations at CDP with philanthropists because they, it is difficult and I would say as, within the disaster industry, plan for the future, you know be strategic. If you're reactive you're likely to not have the response you want, you're likely not to look at a longer vision for recovery. So, you really have to think ahead, find where is that interconnectivity in your strategy for what types of disasters, what geographical areas, what type of programming. And if you plan that in advance you can explain both to yourself, to your board, your stakeholders, to your employees, whoever it may be why we are helping here versus there, or why we're helping more here versus there. There is unlikely to ever be enough to help everywhere, as much as we'd all like it to be there. So that strategy that long view will really help set the stage for helping you make those hard decisions as time goes on and there's resources out there such as our disaster philanthropy playbook which can kind of help you think through what are the components of a disaster from a philanthropic lens and how might that connect with my own work, with my areas. The other thing of course because you know you can't do everything, collaborate! Identify who those partners will be either in philanthropy or in philanthropy serving organizations, but also with organizations such as Janti's. You know what, what are those preexisting relationships you can have so right out of the gate, you know as soon as you hear it on the news that something has happened, you know exactly who to call. You're already talking to those collaborators, you're already finding, is this a place we should be, we've had this strategy, we've made these decisions, these are our determinants. Are we go or not? Right? And that and what does that look like and those are really, really important things to examine, because that clarity is so important. I think the third thing I would say, and it really touches on Janti's points before is, recognize that addressing root causes and the other programs you do, addressing those structural inequities and inequalities that exist, they can go a long way towards mitigating disaster and helping communities be more prepared. And so, don't only be reactive, or you know proactive about what you may do when a disaster strikes, be proactive about what you could do to help communities not have that disaster impact them as greatly as it could. And there's a lot that you can do within there, may already be that you're doing it, you just don't necessarily recognize it. And if you can bring it out and amplify it, and possibly invest in it further, it'll be that much more valuable, if a disaster does come, that you know to connect those pieces so that that's just, you know, those are three things I would really say is, you know, recognize, take that long view in the interconnectivity, be proactive in your strategy, look at collaborators and identify them and, you know, work with them in advance. And three, look at what you're doing already to help with what systems are that, you know, address the root causes of vulnerabilities, and what you can do proactively to help communities from actually being impacted at all from a disaster that may be coming. 

Jane Greenfield: That's great Patty and very actionable. Thank you for this. Janti, your thoughts on this?

Janti Soeripto: Yeah, it might be a little boring because I think I'm going to sort of almost copy all of Patty’s points there, I think because you know, because they're really great points and I agree right. I think for everybody of course, funders, philanthropists, find the, the area that you feel certainly passionate, committed to feel that you have value add, you know, alongside your dollars, think about what other things do I have in my asset base in the broadest possible sense right, partners collaborators, skillsets, capabilities in my organization, company, whatever, and then commit to an area. Try to hone in on a couple of things where you want to shift the needle, and then commit multi year. Change does not happen overnight. I know it's incredibly tempting to say, I want to have this school build so that girls can stay in school, but if you do not work with organizations who then agree that the government will pay teacher salaries over the coming years, it's going to be a pretty empty useless school, right? And getting governments to fund and budget, to work with the Ministry of Finance to budget the teacher salaries in? Not very sexy, not very media photogenic, but super important and critical to really get systemic and sustainable change going right and the two have to work hand in hand so multi-year commitment to a topic of your interest and passion and choice that’d be great. Drive for transparency and accountability-- and I say, you know, for organizations like ours and for organizations like Patty's as well, right, if we say what we promise, make sure that we are reporting on it and that we're also transparent about our failures right? Sometimes, applaud those failures, there's so much in this sector that is very sometimes wary of saying, oh, we said we would do this and didn't quite pan out that way, because sometimes, and we know in business this is quite normal. All of the products that get launched every day, we know that tons of those don't succeed, tons of acquisitions or mergers do not succeed. And that's well accepted. Sometimes you also have to experiment in our settings because we sometimes we don't know exactly what's going to stop early child marriage. We have a good Inkling so we can try a couple of things but then we also have to be honest and say well that didn't work so we're not going to do that. And this one did and now we need to scale that up so some of those business practices also apply to this sector so I would encourage particular philanthropists from the corporate sector, to not think that they have to leave all that good practice behind when they become a philanthropist in this sector. And ask us for evidence, but also be open to funding research and evidence in the areas that you are that you've picked because sometimes it's there and there's some great evidence that we have from some early interventions, but sometimes funders, they want to build the school but they don't always want to build the evidence and learning for the couple of years after that to understand what was exactly working and why and what wasn't and why not, right? And the last point about Patty’s point about collaboration, really seek out advice. Don't assume that you on your own can create all this impact I mean, you know, many, many organizations and tons of people have worked for centuries, I would say, to solve some of these issues. And, you know, there's a ton of good resources out there, organizations like Patty's and other NGOs and partnerships, public-private partnerships that do have a ton of knowledge so see where your specific capabilities add value, rather than either duplicating something or doing something in an insular manner that doesn't tend to help the global pool of knowledge or support.

Jane Greenfield: That's great Janti. I feel like we should just create a little booklet out of this. I’m taking notes and these are, these are great pieces of insightful information. Absolutely. Well, I'm going to add one. Just based on the conversation that the three of us have had before. And that is, once you figure out your passion, where you want to give, how you want to support multi-year, give unrestricted. Let the organization that you've decided that you trust, do what they need to do because Janti you mentioned the fact that, you know, we have pretty good ideas, pretty educated ideas as to what might work, but sometimes things work, sometimes they don't. We need you to have the flexibility to figure that out, learn from it and really put the resources where they're most needed, so I'll add that little plug for unrestricted giving.

Janti Soeripto: Very good.

Jane Greenfield: Well, I know I talk to nonprofits all the time and yeah that is that is a theme, that is a theme, so this is really good.

Janti Soeripto: I would say one of the good things that we certainly saw with our supporters and funders, out of the pandemic, was that there is all of a sudden more appreciation for that need for flexibility, because all of a sudden, all these plans of course were upended and people went like, oh yeah, no, no, no, no, be flexible, be flexible and figure out what works right, so all of a sudden that could be done. 

Jane Greenfield:  Well, you know, that's the other, I guess silver lining from a pandemic that we all experience, we saw that in our own lives. Like the need to be flexible and adapt. Things changed kind of weekly at times so yeah that's, that's very helpful. So great. So, you've given some insight into the impact of the pandemic and the biggest learnings. You've given advice for philanthropists, which I would say really applies to all giving, and particularly, giving for disasters. So, here's my final big question, and that is in 2020 and 2021, we've had so many disasters and challenges, but now we're recording this podcast in August 2021. Looking forward, what keeps you up at night? Don’t you hate those big questions?

Janti Soeripto: Those are very good questions, very good questions.

Patty McIlreavy: If I may just add something on the trust that Janti had brought up in the last question and I just feel is really critical to highlight, if I may, before we get into the bigger question. When we talk about trusting organizations and identifying them, it's also a respect, you know, respecting the professionalization that has happened in the sector over the past few decades. And even though there's a rise of a lot of new organizations and there always will be that the challenge of the new and looking for new ways to help, identify those who have a long history and trust them, as you said with the unrestricted dollars to do the work well. I mean in the same way that if you had your house on fire as much as you would love for your neighbors to show up with buckets, you really want the fire department to arrive. And so, it's the same in a disaster unfortunately. We love empathy, we love help, we want everybody to be involved, but we have to recognize that there is a professional core, and we should you know give them our respect that they do know how to make the right decisions. If you've identified the right organization that aligns with your values, that aligns with your mission, trust them to know what to do to help in, in the best way possible for those communities by listening to those communities and working with those communities. So, I just want to highlight that I feel it's really clear, really something that we overlook too often is, is that level of trust and recognition of the professionalization that has happened and that exists within a lot of organizations such as Janti's. 

Jane Greenfield:  That's a great point Patty and we are lucky to have experienced people who rush into a variety of different disasters and really know what they are doing. So, thank you for that. So, because you jumped in Patty, I am going to ask you to answer the big question first. How about that?

Patty McIlreavy: I want Janti to go first so she can take the first run at it.

Jane Greenfield: Yeah. All right.

Janti Soeripto: What keeps me up at night? Well, as a humanitarian organization you have always a little list to choose from when asked that question as you can imagine and I generally, generally really try to make sure I sleep well at night because that sort of is good for the quality of our decision making, I think. But there are certain crises, you know, as we sit here today, August 2021, we've just witnessed the fall of Kabul, I mean, clearly, the safety and security of all of our humanitarian colleagues and I don't just mean the people who work for Save the Children, but the many, you know colleagues across the sector who are putting their lives on the line every day. The community volunteers, and activists, you know, particularly for women's and girls’ rights, you know, those, those lives are at risk every day and never more so than today in Afghanistan, I would say so those, you know and this is an exceptional circumstance I realize but those are the things that actually do cause me sleepless nights to some extent right and they have over the past couple of weeks. Going forward, I think if you if you think about this whole balance between, you know, systemic change or immediate, the fire department analogy, I think it does, there's still a huge, you know, you said it Jane, you know there's so many crises this year, you know, almost hard to know which ones to pick, and to some extent it also dulls the senses a bit right because everybody gets desensitized to it. They are like, oh okay, an earthquake in Haiti. Well, you know, it’s sort of in the news for two days and then it's gone right? There is a looming hunger and famine crisis now in 20 countries, even, even a famine crisis in one country alone in, 1984 was, you know, was the big story, and attention and it actually led to quite a significant change in action at the time, and at the moment, that isn't even in the news. There are over 40 million people at risk of starvation in a world that has plenty to feed every woman, girl, child. So, you know, that that is worrisome, and I think, in a world that's wealthier, every year I know economic impact of COVID etc but by and large underlying trend, there is more wealth, more capability, more resource in this world every year. And yet, we see the funding for humanitarian need as a percentage of what is required, versus what is actually given go down, and that is a real concern and that didn't just happen, I mean that's certainly the case for 2021. If we look at, you know fourball OSHA figures, I think Patty might know this better, and 33% for the Global Humanitarian ask. So, a third of what is asked for globally for all crises, has been funded and at least two thirds is currently unfunded. So, so that is a concern in a world of plenty, I think.

Jane Greenfield: Right, that's fair. That's fair. Boy, I think I'm not going to be sleeping as well tonight after that. But it's very well said, then really you know the current very present worry that we've seen from what's going on in Afghanistan, and then the ongoing worry about the need for greater systemic change and you know the fact that there's so many, so many crises that, gosh, you can’t keep a headline for too long, you can't keep it on everybody's radar screen for too long. It's very fair. Patty, I'm going to turn to you. 
 
 Patty McIlreavy: Yeah, so I think for me, I obviously agree with everything Janti has said, serious concerns on the, you know pace of disasters we're having at the moment and the scale of them is a serious concern. I also think, you know, climate change, and the disasters that are coming, you know, faster and more furiously and more severely. I mean, we just had hurricane Ida right so, you know that is a major concern, we're going to have worst, worst disasters and those who are already vulnerable it's going to exacerbate those inequities unless we really are looking at programming that goes beyond the disaster, goes beyond the humanitarian, and really looks at those new social justice issues, looks at development, looks at Sustainable Development Goals, etc. I mean, what are we doing to, you know, rectify, and mitigate the impact that climate change is going to have, in addition to stopping climate change right? We know that there's already--some of it left the station, so we have to also address you know both at the same time, this isn't merely about climate promises this is also about what are we going to do with what's already out here and we know is coming. And there's, there's so much evidence now I mean the pandemic as Janti has said has, has really put a spotlight on the evidence of inequities that exist. People who work in disasters we already knew about this. It was already something that CDP highlighted, it's something I'm sure Save the Children is already highlighting regularly in work on children, it's, it's, we know that disasters exacerbate these inequities that are baked into the system. They are not created by the disaster; they are highlighted. And so that keeps me up is that that double barrel that's coming towards us, which is you know bigger disasters but also more harmful to those who already have so much to lose. And the other thing that keeps me awake has less to do with either the disasters and what's coming and more to do with the philanthropic community, and that's, are they going to keep practicing what they learned in 2020 and 2021? Are we going to stay nimble? Are we going to support innovation? Are we going to explore how you know in the past we would say we can't have remote this or we can't do remote that? It's too complicated to look at new ways to you know educate children, it's too complicated to figure out how to accommodate you know people from all over the world to participate in this session well actually, yes you can.

Janti Soeripto: Yes, you can, that’s right.

Patty McIlreavy: And are we going to say, in our desperation to go back to this version of normality, that we abandoned all of that or are we going to go forward and create a new normal, create a new reality that brings forward the best of what happened in our changes and how we looked at things during the pandemic and takes them into the future? And says we actually will do better. We will be better about addressing vulnerability in our programming. We will be better about, you know, multi-year general operating dollars. We will be better about supporting nimble innovation, about trusting. That, that's for me, that kind of keeps me up at night because I fear that inertia is a powerful force. And there's such a desire to go back to what feels comfortable and right, that we may, you know, if we don't really focus on those silver linings, as you said, Jane from the pandemic, we may, we may slide back to where we were, and that'll be even more disappointing for those who saw that it was possible, and then see that we abandon it. And that's I think something, really a challenge to philanthropy and to all of us working in this, in this field, like, what are we going to take forward and how are we going to adapt and be different, better?

Jane Greenfield: Well, those are fair worries. I will say, having the privilege of talking to so many donors who work with charitable, they are long term in their philanthropy, they are passionate about making a change, and we will, we will do what we can to help them make that longer term commitment to really leveraging the silver linings, leveraging our learnings and pushing it forward. I'll tell you, we could talk, I could talk to you both for so long, about this but I know we need to wrap up, I think your advice to the philanthropists, listening is just so spot on, so I'll just close by thanking you and also by just reiterating a couple of points that you made. One is, you know you both talked about having a long-term focus in giving. Donor-advised fund donors tend to have that which is great. And so, you know, I will underline that for all our listeners that, you know, not only being long term in your focus but maybe doing some of the non-sexy stuff, to your point Janti. The research you know, not just doing something in the moment but making sure, following through with that donation to ensure that the program continues to be successful over time. Second is, you know, figure out your passion and collaborate with others to be educated on it so you can make a great difference. And, you know, three, ensure that you ask those that give to be as transparent as possible. I know it's really hard to run a nonprofit, and at the same time, do all that donors would want you to do in terms of information and transparency, but we do appreciate those nonprofits who do that. And then fourth is, you know, once you find the organization that is pursuing your goals, you know what you think is really important to pursue in the world, they're doing it with the kind of transparency that is important to you, and the leaders know what they are, they're the firemen not the neighbors with buckets, trust them, respect them and let them do their work. Give so in a way that makes them flexible and adaptable as they do the work. I think those were some of the key takeaways. Thank you both. I will encourage everyone to check out your websites, lots of great information on the work that you're both doing. Thanks for being with us today. And to our listeners, thanks for joining us.

Janti Soeripto: Thanks for having us.

Patty McIlreavy: Thank you for having us.