Values First: Aligning All Your Assets

Audio Description

Looking to better align your decision making with your values? Whether you’re a philanthropist or leader in the social sector, Sharon Schneider has practical tips for you.


This transcript has been generated by an A.I. tool. Please excuse any typos.

Clare Golla: [00:00:00] Sharon Schneider is a philanthropy expert, impact investor, and social change strategist who advises some of the world's most prominent families. This includes members of the Giving Pledge, the Forbes 400 Wealthiest Individuals, Top Ten U. S. Private Foundations, and more.

She's also the author of a new book that I have personally been recommending to so many clients and practitioners.

It's called Handbook for an Integrated Life. And it really captures a trend we're seeing broadly. This desire to align mission, vision, or values with decision making across all facets of an organization's enterprise.

Or an individual's life, including how and when we give. So let's dig in.

Hi everyone. Welcome to Inspired Investing. I'm your host, Clare Golla, head of Philanthropic Services at Bernstein.

This podcast is where we strive to connect and share insights with listeners like you who are engaged in the nonprofit [00:01:00] philanthropy and broader social sector. So now for my guest, Sharon Schneider, thank you so much for joining us today.

Sharon Schneider: Oh, it’s my pleasure. Thank you for having me.

Clare Golla: Yeah, this is great. It took us a little while to get this one, you know, get our calendars synced up.

So it's great to finally connect. So I'm just gonna dig right in here, Sharon. So I want to start with your professional and your entrepreneurial journey.

Because you and I met years ago when you were professional in philanthropy and from there you went to founding, building, and then actually selling a social enterprise.

And then you became a consultant to others. Tell us how How have those experiences really affected and sort of impact your practice today?

Sharon Schneider: Yeah. Well, I started my career, I sort of lucked into philanthropy out of grad school as an intern at The Pew Charitable Trusts.

And really there, we were grant makers, you know, that was about being creative and thoughtful and impactful with the 5 percent grant budget that you had to give away.

So it was [00:02:00] a 12 billion foundation at the time.

And that's a lot of money, and you can do a lot of things. Um, but from there I went to, um, a company that managed private foundations, uh, that were much, much, much smaller.

And it was a very, very different kind of profile. You know, I was, I was kind of going, wow, we're doing these amazing creative things with the 5 percent and stretching the boundaries of what philanthropy looks like.

But I started to go, well wait, what about the 95%? Like, what are you doing with that?

Because... If you're, you know, doing this climate change documentary, but your endowment is invested in big oil, like, how is that working?

So, there's 20 times more money in your endowment. So what is that doing? And that, of course, has evolved into the field of impact investing.

But then for me, the next step was to look at these entrepreneurs and say, Sorry, how'd you make this money?

And so I was like, you know, the vast majority of the, of the [00:03:00] impact comes in when we make the money, you know, and like how companies make profit.

And if, if we're doing that and at the same time causing problems, and then we take a small amount of the proceeds, put it in a foundation and take 5 percent of that and give it in grants.

You know, this is really unbalanced.

So I got really interested then in social entrepreneurship, which is what led me to leave there and start.

Um, as you mentioned, I had a for profit social enterprise. And so, um, you know, that was, that was a five year journey through tech startup world. But I sold that company and then, um, said, okay, I don't want to pick one of these tools, you know, grants, investing, business operations.

I want all of these tools.

And, um, that's when I was recruited by the Walton family. Um, who's, uh, particularly third generation.

I think felt very interested in that same idea of [00:04:00] aligning more and more of their assets. You know, with their overall kind of the same values that illuminated their philanthropy.

Uh, how could it, how could that look, um, integrated into these other areas?

Clare Golla: That's so cool. Well, I love that. That's what I love about your experience, Sharon, because you've actually lived really deeply in these different universes that, you know, should and could be blended together, but you so often are not.

Uh, so you, I love that, how you have that understanding.

Um, because we, we work with so many of those same types of individuals that you just described who aren't the Pew Charitable Trust, right.

But who have sold a business, have, you know, been blessed with additional assets, have a foundation.

And you know, in many cases they're scratching their heads and they're saying, you know, I had all these other tools at my disposal in terms of creating other types of impact when I was growing my business.

Or when I'm out in the public, if I'm a public figure and I, you know, I have a fan base, I can galvanize or like all of these different things that they're scratching their heads and saying, well, why am I limited to just write this one box with, with my private foundation?

So it's really interesting. So that leads me to this whole concept of an integrated life. If you could just share a little bit of it, just briefly share the concept and why it's important.

Sharon Schneider: Yeah. So the, the integrated life is sort of this idea of applying the same value. that illuminate your own charitable giving to all the other areas of your personal life.

The book and the integrated life is really me turning that same lens on my own life as an individual saying, what does it mean?

You know, if I, if I support the cause of environmentalism through my charitable dollars, what does that mean about my eating habits, about my clothing habits, about my household, about my vacations, about, you know, there's so many chances every day to either align with your, [00:06:00] um, values or not.

And so the integrated life is sort of an attempt to consciously integrate those values into all the aspects of your life.

Clare Golla: Yeah. That's really helpful because when we're having these conversations with clients, the questions are much more about like, why me? Why was I so lucky?

What is this, what does this all mean at this point?

And how can I make an imprint on the world that is positive right at the end of the day?

And I think it does lend itself to all of these questions about the various decision points that I have across my life and the various decision points and leverage points I have across all of the entities that I have control over and I have some power over, right?

How do I really leverage my power in this positive way?

And so. Your book is very, I love it's very clear cut and it's actually very broadly applicable because you don't need to be a gazillionaire, right, to, to apply these principles.

So can you talk through some of the principles and like, are there any [00:07:00] that just continue to stand out to you?

Sharon Schneider: Yeah, I do think, you know, the first principle I say, see the current and by the current, I mean sort of the mainstream.

You know, what seems normal, what seems just regular, of course it's what you do, you know, you take Ubers and you order from Uber Eats, or you know, get delivery from DoorDash, or you use Amazon.

And those things are just normal, and so, if you dig into them, you know, you might see an article here or there, and go, hmm, maybe they're not the halo around that, it's super convenient for me.

But I recognize it might not be the best for, um, the merchants on the other side of this platform or the drivers that are, you know, essentially working for less than minimum wage once all their expenses are taken into account.

I think what's shifted over the last couple of years, like, 10, 20 years is it used to be actually a philosophical decision that you wanted a firewall between charity and let's say [00:08:00] business or charity and investing because you said, I'm going to maximize the money I make and then I can give more, right?

Because 5 percent of 2 million is more than 5 percent of 1 million.

And then I think a lot of us have changed the philosophy, but the problem is our behavior has not caught up to that revised philosophy. I work with.

Family offices folks that have usually multiple properties. They have staff people that run those properties, right?

And if you hire staff people, they probably have two principles.

They assume are at the top. It could be they assume that one, money save it like being very efficient with money.

So quality matters, but be very efficient. And two, you should never feel inconvenienced when in fact, if they asked you, you might say, Oh no, I don't need that tomorrow special delivery, one small box.

It can wait till next week's standard order.

So there's just this sort of the way things work if you don't intervene. Like what is idle pilot?

It's [00:09:00] often at odds with what you would choose or what you would design if you were thinking about it from your values first. So that one matters a lot to me.

And I think the two others I would just highlight one of them is I like to say Don't give back. Just give.

Clare Golla: And I love that. Yeah, that's one of my favorites Sharon. I've used that. I'm stealing it from you. I'll cite you. But yeah. Good.

Sharon Schneider: Well, you know and the reason is because people in our industry like people that are fundraisers love to use the phrase, giving back, you know, giving back to your community, giving back, but inherent in the idea of giving back is the assumption that first you take or you extract.

And so unfortunately, if we think, well, I'll give back, you know, 20 years from now when I've made it, then again, you know, you can unintentionally be causing or exacerbating a lot of problems, um, in the meantime.

And two, the other problem with give back is. I find, and look, [00:10:00] I've worked with, I don't know, at least half a dozen, if not more, billionaire families.

Many of them never get to a point of enough.

So I say like, look, give now with what you have at your disposal, which to your point is much broader, many more things, leverage points, opportunities than you think.

But don't wait. And the last one I'll just highlight. Is resist the allure of convenience because society is constantly selling us that the highest and best, you know, attribute, any product can do is our own convenience.

And so we, therefore, in the name of our convenience, often sacrifice other values.

And again, Amazon being like the brilliant, you know, example, poster child for this.

So, um, how do we start to be more conscious about. You know, balancing our convenience with some of our other values about supporting small business or environmental concerns or whatever.

Clare Golla: Yeah. No, I love that. It's those everyday [00:11:00] ironies.

I mean, it's like you have to sort of step back sometimes because we're so programmed to your point that the current going back to that current, right?

It's like telling you to just operate in a certain way. It's amazing. I think this also resonates.

For all of our listeners who are leaders of social service or other sort of, um, social sector organizations, because I often have a conversation with folks, especially board members who say, you know, we're values driven organization.

We're mission driven, but we're also running a business. And I always have to stop and say, You're a values driven institution and you're running a business, right?

These things are not mutually exclusive, right? Like you can do both and be, you know, highly effective. I just, there's so many relevant, I think, um, applications for this.

So I want to dig in, of course, my day job, I'm in investment management.

When you and I met, I was in community development banking too. So this whole idea [00:12:00] of money wielding your financial power for shared prosperity.

Can you discuss here a little bit of sort of the role of responsible investing? You mentioned a little bit before, but maybe how you've partnered with some clients and putting this into action.

Sharon Schneider: Yeah, obviously ESG investing has become a lot more popular. That's for like a very specific segment.

It's your public markets. You know, what you can do, but in debt, you know, in, um, in bonds, you know, green bonds versus typical municipal bonds, or there's so many ways that even as individuals, we can continue to, at the very least align our assets with our values.

If you're always asking the question, is this going to change the world?

You're not going to bother to do anything because nothing individually is going to change the world. But if the driving question is, is this an alignment?

With my values and who I aspire to be, then it's worth doing.

Yeah. It's great to hear you [00:13:00] say that because first of all, you can align your investments at a high level, right?

Your mission or your vision or your values across asset classes, right? There are a lot of different flavors.

There are a lot of different ways to do it. You can do in the public markets, private markets.

I loved you mentioned bonds and muni bonds because a lot of people think they're kind of boring, right?

But you can do a mate like that is direct impact when, you know, a charter school in a low income neighborhood is issuing a muni bond or. Right. Like an alternative energy type of like, there's so many things you could be doing very directly.

So I think that's a really great, um, great example. And more and more of our clients that that's the fastest growing part of our platform, um, at Bernstein is what we term sort of purpose driven, you know, investments.

So, um, you also mentioned these buckets and this is so important. And we've found that regardless of the size of the overall pools of assets.

You know, a whole host of other things going on in an individual or family's life or an [00:14:00] institution's life that the first step of really being able to move forward with figuring out which of those assets can I just let go of versus which do I feel like is sort of my core capital that I'm going to be drawing from for, you know, for my own living expenses.

And maybe there are these in between to your point is always the most fuzzy, especially for our organizational clients are like, well, we may be spending this over the next five years and maybe not.

So actually. I'll put a, you know, shameless plug for all of our clients out there who are listening. Use us for analytical tools because we're doing forecasting analyses.

We have a whole reserves analysis tool to really help both individuals and institutions create those buckets and then invest them.

So we got the sizing correct and the time horizon and the liquidity needs. And then we invest them in alignment with.[00:15:00]

It's one of those building blocks, kind of critical things that we sort of gloss over sometimes.

One of the things also, Sharon, I wanted to touch on is there's a chapter called Charity using your time and money wisely.

And this is one where you actually list a number of ways that donors can be more intentional and effective.

And I was wondering if you could just talk through that a little bit.

Sharon Schneider: Yeah, I think it's worth, um, differentiating between institutional philanthropies, right?

That are professionally staffed, that like, this is their literal job. So as individuals. We usually have a day job that is not about, you know, philanthropy.

And so, you know, I wanted to really craft some. advice about how you can be effective as an individual giver.

First, it's like to pick an issue, like to pick an issue and learn about that issue and not just be doing a scattershot, you know, kind of shotgun approach to funding [00:16:00] all these kinds of different things.

And, and, and the reason for that is you just don't know enough to be giving to effective organizations if you don't really know enough about the issue. I mean, the first. homeless shelter, or the first workforce development program you see, you're going to say, oh my gosh, that's amazing. They're doing amazing work.

They're really, and then after you've seen seven, you can say, wow, this one is actually really the cream of the crop. But you need to see some in order to know.

So number one, pick an issue. Number two, I say set like a budget. A goal for yourself of what you're trying to do.

And you probably do this as a matter of course with your clients, but you know, a lot of people don't, but it's sort of a, look, are you going for 5%?

Are you going for 10 percent of your, you know, maybe you tie.

Clare Golla: We're always like 5 percent of floor.

Sharon Schneider: Yeah. And make it a stretch, you know, make it a little bit of a stretch goal.

So set a budget that you're trying to meet. And then I think putting guardrails for [00:17:00] yourself. Around ad hoc requests would be my next one.

I have worked with so many families that When you give them kind of an analysis of their giving over the last 10 years, if you can even kind of pull it together in some kind of report, much, much more than they think is a response to a request from a friend they know from church, from school, from work, whatever.

Not things they actually care about.

And I had one family where we 40 percent of the gifts. So I've had other people that have said, Okay, I'll give 500 bucks.

When someone asks me to donate to like a cause, and then the next one would be if you really are dedicated to, um, a charity and you want to be a supporter of them.

Then you need to put that donation on autopilot.

And so this is good not only for meeting your budget and making sure you give what you intend, but frankly it saves resources, stress. You know, allows the nonprofit to plan.

Sharon Schneider: So if they have cashflow, like it evens out their [00:18:00] cashflow. And so if they had one request of you, I'm guessing that would be it.

How to be a better donor from their perspective, sustaining member.

And then, um, I do think my fifth kind of, piece of advice on this is to reserve some amount for sort of unexpected things that come up.

So a lot of times the natural disaster, and you'll want to be able to. To contribute and then the last one, um, which you alluded to, which is also one of the principles is know your power, take inventory of there are so many other things that you have everything from your social media space and advertising, right?

Your social network, your professional skills, your time, your purchasing power. You know, um, your donations of goods.

So if you're an animal lover, a lot of times, um, they're always looking for towels, you know, and, and old linens and things.

And so there are many ways that you can, um, contribute beyond [00:19:00] cash.

Um, so once you've picked one or two issues that you really care about, again, carry that through the rest of your life and go, what does this mean for.

You know, or how can I activate this cause that I care about in these other areas?

Clare Golla: You know, one of the areas that I stress so often with our clients and just our, our network is social capital.

It's so many organizations and it's a, this is a great phenomenon, a great trend, but smaller organizations over the last several years are receiving larger unrestricted, right?

You know, donations. And they're really grappling with Issues are, you know, legal issues, H. R. issues, financial issues, building out investment committee, all these sorts of things, and they don't necessarily always have your, you know, A.

B. C. grassroots organization may not have the professional resources at their fingertips or those connections that a major university or a, you know, a [00:20:00] huge cultural institution just has, right?

And so opening up our social capital and thinking through our networks, I think is so Critically important.

So I've gotta, you know, ask you, you mentioned, uh, in your book to sort of the, um, donor advised funds.

We have a lot of clients, thousands of them, right?

With donor advised funds. We get pushback from our nonprofit clients often like about sort of lack of transparency.

I'm curious about your thoughts on, um, Where donor advised funds have been a useful tool for donors where

Sharon Schneider: I think they can be really Useful is a couple of places one.

There are a lot of donors who do just want to be Anonymous, so having a donor advised fund obviously allows you to control What is public and what it's not?

But the other thing that's becoming more and more interesting, I think, is that because a donor advice fund is housed inside of a public charity, it actually has even more [00:21:00] freedom to do things than a private foundation does.

You know, parts of public charities have been able to do really creative, boundary pushing kind of things, um, that might not, um, You know, that might make your private foundation counsel uncomfortable.

So, I think it's a really interesting kind of tool in the toolbox. And what I find is that frankly, my clients often have a foundation, one or more donor advised funds.

One might specialize in a geography.

Um, one might specialize in impact investing or other kinds of creative stuff. Another one might be, you know, more corporate.

Um, so they have multiple donor advice ones. They probably have an LLC. Uh, they might have a 501c4 that does advocacy work and, and, um, even political giving, so it's really much more part of a constellation, um, where it used to be, you thought of a foundation was the vehicle that held your.

Clare Golla: Impact-oriented work. No, I that's such a good point. And we see that as [00:22:00] well, especially, you know, going back to your point on, um, both creating guardrails and anonymity. Um, we have, we have more and more, I think clients who they built, you know, a private foundation is anything but private in terms of right.

Everyone can look at, you know, what you've been giving and whatnot.

And for, so for a family to have, right, everyone can see the 990 PF. So to have a mission, um, And to be able to give on mission once you've gone back to.

I think you're number one of your, you know, pick an issue or maybe a few, but then for that, the, the guardrails around the ad hoc requests, they're using the donor advised funds often for those types of ad hoc requests, because frankly, they want the anonymity because that's not, they don't want that identified with them, right?

Yeah. And so that's, that's one way that we've seen, uh, a very effective sort of mix of, of those different tools.

So, so it's really interesting. So we're coming up to time, Sharon.

So I'm curious if [00:23:00] there are any final thoughts that you'd like to share with our audience across the, you know, sort of philanthropic and social sector.

Sharon Schneider: I think my final thought would be, and I hope that this comes through in the book is

It's about incremental improvement, you know, it's not about being perfect tomorrow and changing everything about your life or your money, you know, or your philanthropy or any of that. It's sort of about.

Continuing to make progress and starting where you are and celebrating the small wins and then saying, okay, what's the next thing I can do?

And, and, you know, I, I certainly don't hold myself out as like having figured it all out or doing everything perfectly, you know, I, um, I definitely order things from Amazon, but it's not my go to, do you know what I mean?

So it's like, don't let the perfect be the enemy of the good and, and, um, you know, keep doing it because it's.

It's, it feels [00:24:00] good. It feels good to be more and more in alignment with your own values. So let those, um, small wins and small changes buoy you to the, to the next one and, um, and just keep making progress.

Clare Golla:. I love that. Thank you so much, Sharon, for joining us today. Ah, my pleasure. It's really been great and thank you to our audience.

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