Foundations Won’t Like This Conversation

[music] Hey everybody, welcome back to another episode of the nonprofit show. This is going to be a barn burner of a show because we are welcoming Glenn Gallich. He is the CEO of the Steky Foundation. Did I say those two names correctly? >> I mean, you have a gift, Julie. That was impressive. >> Well, it's impressive that you would join us because, you know, foundations are mysterious entities. People are so afraid of them. They're so afraid of leadership. And so I am thrilled. Um Glenn, you're what you what we call a big get, right? Because you're going to come you've come to us and you're going to be talking about fun control and we can't wait to hear why you are seeing big giving falling short. And um this is going to be riveting. We are here now. We just celebrated 1,600 episodes last Friday. And we're here because of our partners. They include Bloomerang, American Nonprofit Academy, Staffing Boutique, Your Part-time Controller, Third Sector Company, and JMT Consulting. I am so excited to um let you know that we are moving forward with uh the global edition of the nonprofit show. We'll be in London in a couple of weeks working on episodes that deal with international philanthropy. So, we hope you join us there. I'm Julia C. Patrick, CEO of the American Nonprofit Academy. More importantly, Glenn Gallich. Wow. Okay. You're the CEO of this amazing foundation, but you're also an author. Talk to us about your book and this process. >> Well, thank you for having me on. This is such an honor. I feel like you're the big get. I can't believe you're referring to me that way. Um we we have been through a process at Stubsky and um first of all I just want to point one very important thing out and that is that Joyce Stepppsky who is the co-founder of the foundation back in 2014 decided to make us a spend out foundation meaning we are completely spending out >> and we'll complete that process by the end of 2029. >> So um I did not do that. I came in as a CEO into a spendout and it was that experience of uh going through the spendout process and having done a lot of reflection and changes. A lot happened between 2018 in 2022 in philanthropy I would say and we definitely got swept up in that. Um and that led to some realizations that brought us around to writing this book. >> It's such an interesting thing. I I love your perspective. super unique, super exciting. But then you attract attached the word straight away control. >> Right? I mean that says so much across the philanthropic landscape. How we see ourselves, how we see our funders, our relationships, how we communicate. Um really powerful concept. So um it's a delight to have you on and to to learn about, you know, what you're seeing. Let's start off with this amazing foundation. Um, if you want more information, you really need to go to the foundation website and read the the moving story about the the stuffskies. Um, but share with us the origin story of this. >> Yeah, you know, it it I get emotional just seeing Joyce's picture because she's she passed away in 2021. It's been about five years >> right around this time. Five years ago, she passed away. Uh Larry Stepppsky is a kind of an unknown person, but he's had a big impact on a lot of people. He was the person who took Charles Schwab from being a small little boutique finance company in San Francisco to an international powerhouse. Um and in the process of doing that, he um obviously made a lot of money. There were a lot of liquidity events that turn became the Steky Foundation in 1998. Um he also suffered a very severe heart attack that literally killed him in his early 40s but he was revived on the table and in in and when that happened he completely changed his life um in many many ways and dedicated it to philanthropy and turned the foundation into an operating foundation which is not so common. Um Joyce on the other hand was not a big fan of that structure. >> Larry had terrible health problems most of his life. He ended up passing away in 2013 from something very similar what President Biden is going through. He had gotten prostate cancer and metastasized into bone cancer and then he died. So a lot of that really affected her. She decided to close the foundation for a year. She restructured it into a grant-making spendout foundation on on the issue areas that you see on our website. I won't go into them in two geographies, Calh Northern California and Hawaii. So >> in so many ways she was very different in how she thought about philanthropy and I really loved that about her and >> we had a great relationship and we challenged each other all the time and much of that I write about in control the control of the book is very much a philanthropy book I don't want to >> right >> that fact but it [snorts] is also a story of my own conversion from what we've traditionally called strategic philanthropy >> to something different um which I haven't named but it it is very similar to what you hear from other writers and thinkers out there around community first funding. >> Um, and it's also uh the story of of the conversion of the foundation from from one thing to something else. >> And it all has to do with this concept of control. Who gets to make decisions? Why do they get to make these decisions? And how is our system set up so that I believe we are undercutting our ability to get impact because of that control. It's fascinating because when I was uh preparing for this interview and and reading their story, you know, it made sense to me that there would be um different approaches because he was a man of numbers and impact and you know in the world of finance and wasn't she a retired teacher? >> She's a retired teacher. They met because she opened up an events company [laughter] and she was like their events planner and he he he just >> he just that all happened. Um >> and so yeah, you know, she she never in my opinion never really got over her grief. I think in many ways that's what killed her. Um >> it was very hard for her. Uh I in a weird way, you know, I I became like her business partner and you know and and friend. And so in the book I talk about the many times that we would sit and and talk. Um it was it was great. It was a great experience for me. >> Well, what a powerful thing because we're talking about um a phenomenal amount of money and influence, >> right? Um and then to look at this and to spend down or spend out um is shocking when you think about the work that has to get done with the the speed with which it has to get done. Um, so I am absolutely fascinated by that and I want to kind of ask you that question and and get you to reflect on that under the umbrella of this culture of philanthropy and creating a new way to think about it because it had to be a huge exercise in your own brain just to say, "Yeah, we're going to navigate this whole thing in a short period of time." So, you know, we talk a lot at the Stepppsky Foundation. We even have a podcast called breaking break fake rules. And there are a lot of fake rules, norms, mythologies in the foundation sector. Number one is just the concept of the foundation as an institution to begin. I think the part we kind of forget and that's I think by design. I'm not a conspiracy type person. And so I when I say by design, I'm a little bit I'm a little bit nervous about that phrase. But there's an aspect of this that we forget a couple of really important points at the origin of a foundation. Number one, it is a donation. That's all it ever was. An organization was created to accept a donation. That organization was then named after the person who gave the donation and is therefore and then the bylaws are written so that those people govern the foundation. At the end of the day though, it was just a donation. In theory, the donation could have gone directly to frontline organizations and skipped the step of a foundation. >> Yeah. >> We don't talk about that. >> No. >> And the other part is, which is probably one of the more controversial statements in the book, even I had a woman helping me with the book, and when I first said it to her, she was like, I can't believe you're going to write that into this book. But I do think the thing we have to remember is that the reason most people start private foundation and fund it is for tax benefit. They don't go into it with the idea of doing public good at first. >> And so when I said the controversial statement I said is when someone tells you they started a private foundation for the benefit of of the world, I tell you that I think they're probably lying to you. >> They really did it for tax benefit. And so when you look at the overall impact of these two really important uh realities of how foundations get started, it shouldn't come as a surprise if you're just going to jump through to the end of the point of of the book. Shouldn't come as a surprise that we have two trillion dollars of assets piling not just piling up but actively invested in things like private equity, >> hedge funds, venture funds, uh you know currency speculation. That money should be moving to charitable benefit but it is piling in these very countermission activities >> and we are not interrogating this stuff enough. We are not talking about this stuff enough. And the irony is you know the nonprofit sector which should be benefiting from all this the by nonprofit sector and I we these terms we use get very murky all of this is nonprofit from foundation to service to advocacy all of it but the service and advocacy organizations and there are over there millions of them now in the United States >> play along in this as well uh and don't ask questions either about why this money is not in their bank accounts where it's getting work done it's sitting in, you know, um, investment accounts, >> right? Well, you know, it's a very mysterious thing. Yeah. >> Um, the relationships and I find that um, >> and in my community there's some very large foundations. Um I God I was just literally I was at an AFP event uh last week and there were uh there was a panel of some very large uh CEOs of some foundations. Um I don't ask for money so I don't and I have relationships with these people so I don't have that structural um fear or or problem. I could not believe how fearful the room was even to go up and introduce themselves or shake hands or just interact and it really reminded me of like wow there is this hierarchy and there's this fear um that which goes back to control and so yes it it just happened like it just reminded me I guess I should say um and so I really applaud you for for bringing that out. Well, look, that's that's a huge reason why this money is not moving in my opinion. Um, >> look, I've gotten lots of very positive accolades for the book. I'm grateful for it. I've also had some real tussles with some of the biggest names in the sector. They don't like it when I ask these questions. Um, and I think it and I I understand why. I really don't you know I think our sector uh foundations in particular so you've used some really good words today mysterious opaque >> our the foundation sector and I like to differentiate that from philanthropy because we talk about philanthropy broadly but the foundation sector is but a sliver of what is American philanthropy financially speaking right so we're going to do over 600 billion in philanthropy this year 100 billion of it will come from foundations so it's really like 20% % it's not the it's not the bulk but it is it is that driving engine there's a lot of money that comes in bulk uh ways from these foundations so people really play to them you know as a side note I don't know why more work is not done to appeal to the everyday donors in America because they are controlling 400 to 500 billion in giving every year's far more attention way too much attention in my opinion given to the foundation sector which is what pumps them up these the we we we we love to be plenary speakers at events like yours. I love to be a plenary speaker. If I didn't have my title, if I didn't have my job, no one would want to hear a word from me. I know that. I don't know if they know that. Uh I do think many of these people start to believe that they are pretty special people >> uh and important in that way. So that I think is a part of why the money doesn't move because people can't imagine a time where their brand is gone. >> Mh. Um, so that's part of it. But the other really, you know, I think the big one in all of this is is that um there there just is this culture of wanting to control decision making, wanting to have a legacy, wanting to have these entities around for a long time. And um and for that and you know, it's it's fun actually to be able to say, "Hey, I think I can change this thing." >> Yes. and I'm going to put these resources to it. >> Yeah. >> But there's just a lot of irony in that when you look at how we actually practice social change. Well, I I have a lot of opinions on this and and now is not the time, but um I would say that what I see when I interview uh people of financial means that have navigated toward this section of their life where they're invested in philanthropy, oftentimes they don't realize that how they made their money and how they're going to distribute their money in a philanthropic environment don't necessarily align. the way that you make your money, right? >> Um versus the way you spend your money. There there's some actual opposing issues, right? And so I think that's a really hard concept for successful people to necessarily embrace. And we see this on boards. >> You know, successful people in business go onto nonprofit boards and they're like, "What the hell? You just need to run this like, you know, I ran XYZ corporation." It's like, yeah, it doesn't quite work like that, but there's this there's disconnection. So, you mentioned this $2 trillion bottleneck that needs to be fixed. Um, it's part of the great wealth transfer. There's been so much money made in this country that's now, you know, moving um because we have people passing away. Um, that is an astonishing number. Yes. >> I'm just like, you know, we know this number. >> Yes. >> What are other foundations talking about when you are with them as a peer? >> Um, well, they're not talking a lot about this number. Um, there are a couple of important numbers that I think we all need to start to grapple with. I've been I've been very um pleased that in the last 24 to 48 hours, we're starting to talk a little bit more about our $40 trillion national debt. >> Um because we hit 40 trillion this week. >> That's right. >> The other number that really which really brings that to light is that since 1975, Rand the Rand Corporation came out with a report that since 1975, our economy has transferred $80 trillion from the working class to the 1%. Mhm. >> Um, so a piece of that are these foundations. What make that possible are foundations and the tax evasion they offer. So you end up having this money piling up. We're going to see. So then you got that transfer from working class to the 1% and now you have an internal transfer within the 1% happening. And as that happens, there's going to be more taxes that need to be evaded. And what happens then is that gets piling up and up and up. In the next 20 years, we could have as much as 20 18 to 20 trillion in these charitable accounts. And you know I think at that point Americans will have to start paying more attention to this sector. I just you know we were talking earlier before we came on and we we surveyed a lot of people about the behaviors of foundations and you know the one thing we did not ask is do you know what a private foundation is? >> Yeah. >> Do you know where they operate? Do you know what they do? Most people don't. >> Right. >> Uh even you know very very informed people don't know. >> Sure. And you know what? I would I've always kind of been curious. You you've you've alluded to this in this conversation. I'm not so sure a lot of even nonprofit executives know much about foundations. >> Oh, I totally agree. >> Yeah, >> I totally agree because you know, we use that word mysterious. People are afraid to talk about it. >> Yeah. >> They know that there's a power structure there. And I think that Yeah. I think it's very secretive and I think it's very egofilled and um yeah I I definitely >> you know there's something I wanted to say earlier because that when you say that people are afraid that is at the core of that is is a really big problem in our sector and this is I meant to mention this when I said I've gotten some push back there is a everybody who does this work you know you and I both want to be good people and want to do good things and we believe so much in the way we do good things and it becomes a big part of our identity and we become very defensive. I'll speak for myself. I become very defensive when people start to question the way we do good at Steky >> and I really challenge myself when that happens. I have to say why am I being defensive? At the end of the day the feedback I'm receiving is just feedback about being better at doing good things. And but many of my peers and many of the people in this sector are very resistant to talking about doing this work better. There's some sense that if we're not doing it as well as we can that we're doing something bad. >> I think we need to get over that because if we're not able to do that, we stagnate. And I think that's part of what's going on here is that, >> you know, if you question something like perpetuity, which is a huge fake rule of our sector, that your foundation must live forever. If you question that, people get very, very defensive about it. And I think part of why they get defensive about it is that they feel like you're kind of attacking them. They probably internally have some guilt that that money is going to sit forever and not get used in a moment of crisis like we're in now, >> right? >> And so I just think we have to get over it. We are incapable of having open conversations at the foundation level. >> Yeah. It it's a it's an interesting thing too because when I look at my friends who are in this space, you know, they go to bed every night with their employees on their on the pillow next to them, including their own jobs, >> you know, and so you're buying yourself out of a job or you're spending yourself out of a job, I should say, right? And so >> that's human, right? That's human. >> Sure. >> I mean, you can be like, "Yay team. I want to do the best for my community or my interest, but at the end of the day, you're it's bold. It's bold to say this is going to go away, right? >> Yeah. >> It's completely antithetical to the American minds for any human mindset. It doesn't be American. I don't think there are a lot of countries that are saying it's let's get rid of ourselves. It's not it's not it's very antithetical. Everything is about growth, growth, growth, growth, growth. I'm telling you, as a spendout leader, I am constantly swimming upstream to to shut down this entity. It's not easy. >> It's not easy. >> No, it's it's it's so fascinating to me that you are in this place in time. Also, you knew the founders, so you you have that voice in your head. >> This is this is real. I mean, you you you're carrying on the value of of human beings that you knew. Then you're in a in a time of crisis. I mean, she passed away before some of these modern crisises. He certainly did. He did. So then you're you're like, "Oh my gosh, what would they have done during these times?" I mean, it's a fascinating place to see where you live. Um, so I want we don't have a lot of time left. I have so many questions. One of my first questions and and this is going to maybe seem like it's come from left field, but when you wrote when you were writing control, >> if you weren't with a foundation that is a spend out um spend down, would you have had these same sensibilities and these same theories? >> I'm going to say no. Um however I don't know what was in the water between say 2016 and 2020 but I was because I had worked with in a prior job which I held for quite a while training individual donors on on how to give strategically as we called it and I talk about this in control. Um, you know, after working with thousands of individual donors, I kind of started to question a little bit about what what was I doing here and what was I teaching them and and were they getting as much as they could out of their impact. So, I kind of came I wanted to work at a spendout because it was different. >> But I'm not going to tell you that uh I'm not going to say I I was having these thoughts about reforming our work when I got there. It definitely was the benefit of being there, making grants, making strategies, having to take accountability for this stuff, which I didn't have to do before. >> Yeah. >> Um, so that was a certainly a big part of it. And I know a lot of >> I I talk to CEOs on a daily basis across the foundation sector and many of them go through transformations once they're in a position of really guiding these entities. Many do. And there there is and this is just this is just an an I don't have real data to support this but I've noticed that there's more willingness to change the lower the amount of resources you're stewarding. The higher you go up the more rigid you are about these systems. >> Sure. >> Just my experience. I can't tell you why. I mean I I would love it if we have a new very dynamic leader at the Ford Foundation. I would love to see her do something incredible. I don't expect she will because it's just not common to anything over a billion dollars to do and especially if you've been around for a long time. It's just hard. They don't want to make those changes. >> A lot of pressure uh on that leader uh with the historic nature of of what's going on and and think about the change. Yeah. That they have navigated just in the last 25 years was revolutionary when they started. As we finish up, I've got to ask you more about this restrictive donor control and and you have been so incredibly articulate about your journey, what you see engaging the wishes of your your founding your your founders. How can somebody like me or the person running the dog shelter down the street or the art museum push back against restrictive donor control? Um, do we just have to wait for a sea change or or can we actually be engaging in the in this fearful conversation? [snorts] >> I understand the fear. I understand there's a power dynamic in a system where you're trying to build your organization. But I do think and I so look I put the onus on this almost entirely on the foundation leadership to start to make these changes from trustees to CEOs and even program directors. I do and the investment world if they would just kind of back out and get the hell out would help a lot too. But that aside, I I do think there is a role for the nonprofit leadership. I think by nonprofit again I mean service advocacy groups working at a dog shelter. There are two things I really encourage and I know it's I know it's you said fear and I don't I don't want to come off as being you know blind to that fact but to the degree that you have strong relationships with donors or program officers and feel that you can speak somewhat safely with them we need to see service and advocacy organizations asking for what they need to do their job not what they need to get the grant you know there's there's a lot of this that goes on we we are trained as fundraisers And I've done quite a bit of that myself to know the inside and outside of what a foundation or an individual is willing to do even though they could be sitting on 5 to 20x the amount that they're willing to give. We have to challenge donors to meet community need. The only way I can think to get donors to become more aware is to tell them what the community really needs, not what the donor is willing to give. Mhm. >> Um, so I do think there's a responsibility there. I recognize it's challenging, but you you're using the phrase pushing back, so I'll I'll lean into it. That is a push back we need to see. >> Um, the other thing I'll say, you know, is pay attention to announcements that foundations make online. There's a lot of positive reinforcement on social media to the very lackluster work that foundations do. So most foundations are going to give at the minimum they're required, it's 5%. When a multi-billion dollar foundation announces a $100 million grant, that's eyepopping, but it is still within a 5% giving structure, >> right? >> So a hundred million for most of us individually would be whoa. On the level of the problems we're dealing with, the entire endowment of of a Ford Foundation is still pocket change against the issues we're addressing. When they announce a $100 million grant, please don't like it. Stop positively reinforcing this. Ask the question, why a hundred million? Why not 1 billion? Why not two billion? >> This we are we are reinforcing the this behavior. I expect when we make grants that look very small against our endowment, I would hope people would ask why such a small grant. >> They don't. No one does. There is no accountability for us. There has to be a wider net of accountability to put pressure on us to make these decisions because we we don't like again we are a culture of good. If someone's questioning our good, we don't want to come off >> bad. So there is there is leverage in social media. I believe again I know the risks, but I I would encourage the more we come out in mass and question some of this stuff, >> the more we protect ourselves. >> Wow. Okay, I'm just going to call it out. This has been one of my favorite episodes that we've done in seven years. Thank you. >> Um but our time is up. Um everybody go out and get Glenn Galish's book. It is really important that we have this conversation. Um, control is such a loaded word from how we are funded to how we serve, how we work within our communities. And I think this has just been a riveting conversation. Um, Glenn, we're going to rope you back into some other episodes. This has been fascinating and uh I really applaud your um your bravery and it and the way you've thought about things. That's what I love. The way you thought about this and and your approach I think has been absolutely >> fascinating. Um go to um stupitsky stubsky. >> Got it. You got it. >> Uh.org and look at how this couple navigated this vision and this journey and what they fund and how they are working through it. It's very interesting and I think it can teach us a lot about this mindset. Certainly Glenn's book echoes what he's learned and what he's seeing. It's a fascinating, fascinating thing that we do need to be talking more about. Um, I'll get off my soapbox, Glenn, uh, as our time winds up and I'll thank our partners. Uh, they include Bloomerang, American Nonprofit Academy, Staffing Boutique, your part-time controller, Third Sector Company, and JMT Consulting. Um, again, wow, one of my favorite conversations ever and uh really powerful. We need these messages and we need to have more bravery and courage uh when it comes to to this. Um, it's just been a pleasure. Thank you, Glenn. >> Likewise. And congratulations on thousands of episodes. Uh, you've obviously got a great audience. Thank you so much. >> Yeah, we do. We have we do have a great audience. And thank you. Thank you for saying that. Hey, as we end each and every episode of the nonprofit show, we leave with this message and it goes like this. To stay well so you can do well.