Podcast - May 16, 2024

Episode 105: Philanthropic Giving | With Special Guest Peter Fardy

Latest Episode: An update on the latest headlines and how to maximize your giving.

In our latest episode of Barenaked Money, host Colin White delves into the world of philanthropic giving with special guest Peter Fardy and regular guest host Matthew Kempton. Peter shares his extensive experience in the philanthropy space, offering valuable insights on creating meaningful and impactful giving strategies. From understanding donor motivations to setting clear expectations and building strong partnerships with charitable organizations, this episode provides a comprehensive guide for anyone looking to maximize their philanthropic efforts. Tune in to learn how to align your values with your giving and make a lasting difference in your community.

Episode Transcript

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Announcer: Welcome to Barenaked Money, the podcast where we strip down the complex world of finance to its bare essentials with your hosts, Josh Sheluk and Colin White, portfolio managers with Verecan Capital Management, Inc.

Colin White: Welcome to the next edition of Barenaked Money, where we get naked about things. So today, we’re gonna have a naked conversation about philanthropic giving. It’s a topic that, many people talk about at one level or another, but we’ve we’ve brought in a reluctant expert to talk today. Now we had a conversation about the use of the word expert. Now easily that’s thrown around.

But Matt is is sitting in the chair today, so Matt’s gonna be running the show. So, Matt, why don’t you do an official introduction of Peter?

Matthew Kempton: Well, maybe I’ll I’ll do a brief one here for Peter and and let him really, tell it tell our audience who he is and, and why he’s and where his expertise has come from over over the years. But, Peter Friday, the principal at Northport philanthropic, someone who’s been involved in, well, the philanthropy space for decades now and comes with that, has developed, quite an experience in in how, well, how families think about gifting, some of the challenges that can that could they can struggle with, and, some of the pitfalls that can happen, when a, you know, strategy isn’t put behind gifting or or how to put the strategy behind gifting maybe to make it more impactful. Think we’ll spend some time talking about what is impact and how to define it, how to and how to measure it even. So, Peter, well, thank you very much for joining us. And, maybe do you wanna tell the audience just a bit more about yourself and your background?

Peter Fardy: Sure thing. Well, thank you both, Matthew and Colin, for the opportunity. As you both know, this is a topic that I’m, I’m quite passionate about. So I’ve had the opportunity to meet the 2 of you and many other professional advisors over the last couple of years as I’ve prepared to, to launch this advisory service. But it was born out of the experience I’ve had for the last 20 years or so leading, advancement operations or advancement departments at 2 universities here in Nova Scotia.

And for those who aren’t familiar with the term advancement, that is kind of a shorthand version of saying the fundraising department, which usually also includes alumni affairs and so forth. And, I think it was my involvement as a volunteer in the community that really led to me being recruited to the first of those two roles. And as I spent time in those 2 organizations and learned more about philanthropy, I started to appreciate more and more, the impact that could be made and the motivations that donors have, and also the things that can lead to, them being, really delighted with the experience they have and putting themselves in a position to look back through their lives, the difference they’ve made through philanthropy and be proud of that. But it wasn’t always that way for every donor. There were occasions when donors through no fault of their own and no fault of the institution or the people involved, weren’t getting that same level of satisfaction and fulfillment out of the experience.

And as time went on and more and more experience, was, was built, I just started to recognize the factors that go into, helping donors become more satisfied and the things that can go wrong to leave donors feeling perhaps at the end of their time, that they look back at their, their philanthropic journey and account for, the money they’ve given away to how many organizations. And, and my mission now is to help donors get to that higher ground, get to a point where they really feel like they’re being as successful in pursuing philanthropy as they’ve been in other aspects of their lives. So that’s, that’s, what’s motivated me. It’s based on my, my background at those 2 universities, my volunteer experience, and, and I’m really excited about the opportunity to help, help philanthropy be done better, especially in this region where we’ll all see the impact, made in our communities.

Colin White: Peter, maybe I can jump in because you raise one of many interesting questions I have or sorry. Everybody gets to judge whether my questions are interesting. I’m interested in the answers. So the disconnect, like how somebody can, you know, choose an institution and make a make a donation and then be disappointed with in one way, shape, or form with that experience. Maybe could you highlight the top 3, the top 5, or the top one way that that disappointment manifests itself?

Like, what what what is the source? What what is the normal source of that discontent?

Peter Fardy: Yeah. Well, first of all, I find the question interesting. So, I hope

Matthew Kempton: you find

Colin White: the Thank you.

Peter Fardy: So if you find the answer interesting, well, let’s put it this way when, when donors and let’s consider a family here, a high net worth family who are, have the capacity to become engaged in philanthropy, have the inclination to want to become involved in philanthropy, feel like, it’s the right thing to do for one reason or another. That’s a really good thing. And there’s absolutely nothing wrong with families or individuals acting on that and writing a check for an institution or an organization that they believe in or with which they have a long standing relationship. But when you just write a check-in support of a charitable organization without creating a true partnership with that organization, especially if this is a significant gift in terms of of of its size relative to you as a donor or relative and relative to the to the institution. You’re leaving the opportunity for fulfillment on the table.

So I would advise donors to become more purposeful about giving like they would everything else in their lives that have led them to be successful, come up with a plan or a blueprint that helps them understand what they’re trying to accomplish with their philanthropy, what they’re giving guidelines or criteria are. And if they’re family members, this could be a more complicated discussion, than, than it would otherwise. And then really pursue opportunity that they already know is, is, grounded in the issues they care about in their community. And a lot of donors find themselves. And this, this I think is the key short answer to your question is if you find yourself reacting to asks, because you’re known as a donor, you’re known as a generous person.

You’re known as a high net worth individual or family. If you were in react mode all the time and not taking control of your philanthropic agenda, that’s a symptom. That’s a symptom that, you are likely to leave fulfillment on the table. You’re not likely to get as much out of the experience as possible. So I think that’s the number one thing.

And if you were to diagnose situations where donors are not necessarily disappointed, but they might be non plussed by their experience, It’s because they gave it in a reactionary way. Almost it gets to the point where where where they might feel like they’re playing space invaders because once they’re known as being generous in the community, everybody can rationalize their way to their door through the doorstep of that donor. But that’s that’s not a way for the donor to make maximum impact or get maximum fulfillment out of it. So getting out of react mode, I think is, is at the TSN turning point at philanthropy, if I could put it that way. And it it really opens up a world of possibilities that otherwise wasn’t, wasn’t evident to others.

Colin White: It sounds like, you know, what you’re what you’re describing is a lack of communication or a lack of setting expectations. And if those go unspoken, I suspect that the problem is everybody defines it after the fact.

Peter Fardy: That’s right.

Colin White: And and then it ends up being something that is not gonna be as satisfying, but, you know, how could I expect you to have done what I expect you to do when I never told you what I expected kind of thing. Or

Peter Fardy: Head on.

Colin White: Yeah. So it’s usually a communication thing, and you’re you know? And dealing with clients who don’t even know where to start because we do deal with clients who have amassed some successful wealth over over their lifetime. And there there’s there’s almost an obligation that some could feel with that. Like, I’m obligated now that now that I’ve accumulated this, I I’m supposed to do something now.

Peter Fardy: Yes.

Colin White: And they really get flummoxed right there. Yeah. Because they they they they don’t know how to answer the next question, but they feel this if If I wanted to be dramatic, I would call it crushing pressure of making the right decision because they have the means to influence many people, and I don’t wanna screw this up. So could you talk for a second maybe about how you take somebody from realizing or when they have that realization that they they have they feel an obligation, but they have no idea what the next step is, like

Peter Fardy: Right.

Colin White: Right. From that part of the journey.

Peter Fardy: The, I think it’s a really valid point. And, and I love having conversations with donors that, that exhibit the kind of angst that you just described, because it means that they believe there’s more that they can be accomplishing through philanthropy than they feel they are. They may not know exactly what that is, and they may not know exactly how to get there. And there’s nothing wrong. As I said earlier with, giving at least initially out of a sense of duty or obligation, it’s expected of me as a leader in the community or it’s expected to me as someone who’s been successful and has seen us as having been successful in what I do.

The key is to, I guess, lean in to philanthropy the same way you would lean into other things that you do in your life. I mean, you would never go and establish a business or invest in a business in as hands off a manner as some people get philanthropically. He would get very involved in it. You’d consider it as a partnership. And if it’s a financial investment, let’s say you’re investing in an early stage company.

You’re not just going to write a blank check and hope for the best. You’re going to want to get involved and be helpful in other ways, not just by funding, by providing advice, by making sure that the vision of the leaders of that organization and yours are aligned. It’s the same thing with philanthropy. So the lessons, around effective philanthropy sound an awful lot, look an awful lot and feel an awful lot like the same lessons that apply to other things in your life. So the way to think about it, I believe is to, once you understand what issues or topics or concerns you have in the community and how that manifests in a, into a given criteria is to find organizations and opportunities within those organizations that really align with your interests and the issues that you’d like to move the yardsticks on.

And then to approach that with the organization as a partnership, not as, not as a transaction, but to think of it, not as giving to an organization, which a lot of people talk about, I give to this and I give to that, but giving through it. So in other words, think about the difference you’re trying to make and how you would ever tell whether you’re making that difference and how in partnership with the charitable organization, you work together to accomplish something that neither of you can accomplish on your own, even though you’d love to see it accomplished. And by applying those partnership principles to philanthropy, you end up strengthening the organization that you want to, support and you enable them to make greater impact. And if it’s a true partnership and you think about it that way, you’re going to design that partnership There’s you could substitute, into this, There’s you could substitute, into this conversation, the same principles and apply them to a private sector situation. But really what you’re doing is, pursuing a higher purpose for the good of the community.

That doesn’t mean you shouldn’t feel like you can see the difference you’re making and that you can, be proud, of of of the accomplishment that’s being made, even though it’s not a financial return either. The return on your investment is seeing some change in your community that you care about and organizations benefit charitable organizations benefit from diners donors that lean in like that. They’re never going to develop a partnership if values aren’t aligned. It’s not a good idea for donors to, to try to, move, charitable organizations off their purpose, but as they approach it as a partnership and look through that partnership to what they’re really trying to accomplish, I think that’s the key to really fulfilling and really effective philanthropic partnerships.

Colin White: Okay, Peter. You took the easy way out on the question.

Matthew Kempton: Uh-huh.

Colin White: I’m I’m gonna give you the harder version of that question because you made an assumption there that it’s the driving force that accumulated that wealth who’s gonna be in charge of distributing it. What say you to the situation where the hard charging force, the businessperson who generated the wealth is not on the scene? They’ve already passed, and now you’re dealing with the other part of the family or the Yep. The part of the family that was not as instrumental and not as businesslike in the way they approach things. Because your example is perfect for the hard charging person who has created the wealth.

Matthew Kempton: Yep.

Colin White: But there’s lots of wealth out there on the hands of people who are the beneficiaries of that, And they’ve inherited or received it, but they’re not those people. And they’re a little bit they’re they’re they’re not going to engage in the way you described. So what say you to that group of people? How how what steps can they take, or what what questions would you give them to help them find what is important to them?

Peter Fardy: Sure. Well, the situation you described is increasingly common and will only become even more common as we see the wealth transfer that’s already underway, continue. You know, there’s going to be more discretionary net worth available for philanthropy, year in and year out for the foreseeable future, probably forever that, unfortunately will find itself in some ways stranded vis a vis the original, source of the funds or the person who, who, built the wealth. But let’s take that situation. Ideally, the individual, the leader who passed would have thought about this ahead of time and would have conversations about how to minimize the chances that, things will go awry or go off track or maximize the chances that the legacy that he or she wanted to establish will be established.

So that the better answer is to deal with these things before, before one passes. But in the case where family members, multiple family members now have shared responsibility or shared privilege or obligation to manage this money, for philanthropic purposes, it is unreasonable to assume that all of these folks are going to be of like mind in terms of how philanthropy should be approached. It it’s it’s very, very unlikely. Even if on the surface, it looks like everybody’s pulling in the same direction or has shared priorities. It’s rarely the case when you scratch below the surface.

So first of all, nothing’s gonna happen unless, some member or members of that family using a family as an example, really are motivated to honor perhaps the legacy of, the parent, or their predecessors, in a meaningful way. And some may look at it that way and some may not, but if there’s no motivation around that table or no one advising them that says, you know, there’s a way you could get, you could honor, this legacy more fully. You could get more fulfillment yourself from this experience unless someone, kind of letting them know what’s available to them. That that funding may never serve as greater purpose. Those funds may never serve as greater purpose as they could have, and that’s a real shame.

And, you know, if you aggregated all the money that is held in endowments now that’s stranded because there wasn’t forethought applied to what’s gonna happen with it, it’s it’s sad because there are 1,000,000,000,000 of dollars across North America sitting, unused, that could be applied to help solve societal and community problems. But but unless there’s motivation there, and this is a place where professional advisors like yourself can come in. If you witness, clients or the offspring of clients, you know, worrying about this at all, they can there’s a there’s a there’s a process that could be undertaken to help bring them together and really invest time upfront in figuring out what the shared values are and what their purpose is. If the money is just there and they’re making it up as they go along in terms of how it’s going to be, directed, that’s a recipe for things being no greater than the sum of their parts. There is an opportunity with any fund to make this proportionate impact in the community relative to what would happen if you didn’t, if you weren’t, deliberate and conscious about what you’re trying to, trying to do.

So that there’s no simple answer unless there’s motivation. If there is motivation, it’s not a simple answer, but at least there’s a pathway forward. So it it can be tough.

Colin White: What what if we simplified that down to it’s one person dealing with their piece of the pie, and they’re just saying, you know, x amount has come to me. It’s all within my purview. Right. And I don’t know where to start. You know?

Is it is it as simple as asking them what they care about? Or, you know, are are there better questions to ask somebody to help them?

Peter Fardy: I I think, what you care about can change, day to day sometimes or certainly year over year. So I wouldn’t start with what you care about, even though we’ll get there. I think it’s much more important to reflect on what your family’s history and values are and how your own values, have, have, have evolved and what they are today because values are things that don’t change day after day, week after week or year after year. You carry your core values with you through your whole life and they may get refined a little bit, but generally, those are the things that drive you toward making one decision over another, making one choice over another, whether it’s related to education, whether it’s related to family, whether it’s related to business or philanthropy. So there’s not a simple, survey that yields the answer, what are my values, But there are discussions that you can have.

There are exercises that you can engage and to reflect back on previous generation or the generation before that and come to terms with what, your values are that govern your decision making. Because if you anchor your philanthropic plan in your values, it’s much easier then to make decisions about what do I care about right now and acknowledge that they’re related to values that you have, and to come up with giving criteria that are related to those priorities and related to your values. So it sounds a little, academic on the surface because most people carry their values around, but don’t really they’re implicit. They don’t really express what they are and they may not even be able to until they’re invited to. So coaching them through a process where they, they really acknowledge what their values are either

Matthew Kempton: as an individual, more important when there are multiple players

Peter Fardy: involved, because those values will and, and then put yourself in a position. And this is like the superpower that I think everybody should aspire to have. It’s hard to say no when people come to your doorstep or you receive a proposal, by email or someone invites you to dinner or someone you can’t say no to, it’s hard to say no. Especially if you don’t know, what your priorities are or what, what you’re trying to accomplish philanthropy. So what donors should aspire to is having this values anchored, purpose, giving criteria or guidelines associated with that, that are as explicit as they can make them at any given time, which allows them to say, yes.

There’s an opportunity that matters to me. It makes sense. I know why I’m interested in it. Let’s spend time and effort trying to do, make a philanthropic partnership happen over there. The superpower is the ability to say no comfortably to be able to say no, that’s not for me because I’ve spent time and my family has spent time, throw others involved, deciding what difference we are trying to make.

So I think that’s what we want people to fall in love with is the idea that they can say no, comfortably and be respected for saying no and know why they’re saying no. So no no is the superpower in in, in giving and I I think we need to equip people. They can’t you know, they won’t feel comfortable just saying no, unless they know why they’re saying no.

Colin White: Well, that’s not an academic answer at all. That’s actually a very helpful answer because many people who feel the obligation I described earlier will get a call. It’s like, would you like to cure kids’ cancer? Well, obviously, everybody wants to cure kids’ cancer. Then the next phone call is about, you know, do you wanna save the environment?

Because we’re all gonna die if the planet dies. Oh my god. Yes. I wanna save that too. And the 3rd call is, well, we need to have these underprivileged groups.

And we wanna, you know, provide education. And, oh my god, that’s a great cause too. You know? And if you get into, I don’t like that cause just on its face, now you’re a bad person. But I think if you’re doing it from these are my values and my values are important to me Yep.

Then then it that should equip you to get the strong. No. That doesn’t align with, you know, we’re making a difference in the world in a different way and being able to define that. So that’s a tremendously unacademic answer from somebody who spends so much time in the academic world. Very well.

Peter Fardy: Of the academic. The periphery of the academic world.

Colin White: I I’m afraid, Peter, you’re you’re you’re an expert, and you disproved it. Okay. So now you’re gonna have to walk around like, well, I’ll get you a T shirt and everything.

Peter Fardy: So, Colin, just a little a little more on that because and and and thanks for that comment. But, you know, the ability to say no doesn’t mean you always have to say no or you don’t reserve your right to say yes when you might otherwise say no. So here’s an example. And it’s really about focus. If you want to make a difference, this could apply to anything in your life.

If you focus on it, you’re likely to make a bigger difference. They’re likely you’re more likely to achieve whatever outcome it is you decide to make, whether you’re building a chair or fishing or, or building a business or engaged in philanthropy. But the advice I’d give to a family or a donor, isn’t that when you build this criteria, you are, without exemption, with, you know, fully committed to just these 3 or 4 priorities. And you’re gonna say no every time to anything else because that’s not practical. People who are in a position to give at that level are known as leaders in their community.

They want to reserve the ability to by times, say yes to something that doesn’t fit their criteria because things happen in the community that are unexpected. Conditions change, floods, earthquakes, pandemics, you know, you name it, things can come along that you wouldn’t have predicted that you as a community leader or, someone who cares about their community, wouldn’t want to, stand by the stand on the sidelines and see other people address. So the, you know, the way you might translate that, and there are some times when, when people who’ve done you some service in the past, you don’t wanna say no to, and that’s okay too, as long as you’re making a conscious decision about why you’re saying yes. So I might advise a family or donor to say, well, if your fund is, is this big, I know this is a podcast and no one can see how far apart my hands are. But, you know, if you’re if you’ve got a $1,000,000 fund, well, maybe 70% of it or 60% of it, you’re going to dedicate to these purposes that are values based where you’ve decided you really wanna move the yardsticks.

Maybe we reserved 30% or maybe it’s 20%, whatever it is to be flexible, to be able to say, yeah, I can’t say no to that. I don’t feel right saying no to that. So it’s it’s not a binary, you know, absolute. There’s an art to the science of it. So I wouldn’t ever suggest to a donor that you, disabled yourself from saying yes to things that are outside that criteria.

You need to strike the right balance. But if if the majority of your energy and effort and funding is going to the areas you’ve said are most important to you, you’re doing well. But it doesn’t mean you have to say no to everybody that that knocks on your door.

Matthew Kempton: Well, Peter, I That makes sense. That’s a fantastic answer and just a fantastic way to think about this and and building the criteria for your longer term plan. But but having a flexibility to say yes and to say no to causes that come up that matter to you, but those that that don’t fit the broader plan. Mhmm. You know, Peter, I would say where we find most people get caught is that we’ve we’ve gone through a wealth plan.

We’ve shown you have the ability to do more than your sort of ad hoc gifting that you might do annually. Yep. And this can get more thoughtful, but but now what? And, you know, I think that Yep. Try building that criteria of values is an excellent place to start because it’s not tied to any organization.

It’s not tied to any 1 or 2 organizations. It’s tied to values. And from that, different organizations, you know, can meet that criteria. So once you’ve gone through that, you know, probably that thoughtful exercise, it might take some time to really define and then especially if you’re including different family members. How do you take it to the next stage to find organizations that meet those values, that satisfy that criteria, how does that next step work?

Peter Fardy: Yep. Good question. First of all, I have to say that, you know, the kind of, expertise since we’ve we’ve put the I’ll let you know the expert. The kind of expertise I have is, is not in the area that, that folks like, you have expertise, but it’s really important for people to have a comprehensive wealth management plan or whatever you call it in order for them to have confidence in terms of the, degree to which they can engage in philanthropy. You know, and I’ve, I’ve seen it so many times as, as I think you have, where people don’t realize the capacity they have to give.

But once they understand their current situation and what’s forecast in the future, most people have more net worth and more what I might call discretionary at worth than they ever imagined they would. So that, that gives them, they feel like they get licensed to get, roll up their sleeves and get them, get them based in philanthropy more than they might otherwise have. So picking up from there, you’re right. Getting the value sorted, getting a philanthropic blueprint or plan in place, coming up with giving criteria. And by the way, if 2 years from now, the donor decides to change their mind about that, they have the right to do it.

Like anything else, you come up with a plan. It’s your plan. You have the right to change your mind about things that something changes in your life. And that’s just fine. But while you have those, criteria or like those guidelines in place, where do you find appropriate opportunity?

I would say more often than not, donors have found their way into relationships with organizations, that they are already predisposed to want to support. And a perfect example of that would be their Alma Mater. So, I used to work at St. Of X. I know a lot of people who are alum at St.

Of X and, and, you know, they’re very inclined to support St. Of X and that’s fine, but what is it at Sativex or whatever your alma mater is that would really mean something to you. You could write a check and be acknowledged and celebrated at the president’s dinner for having written a check with a certain number of zeros behind it. But, you know, that’s only gonna be fulfilling for about, 15 minutes after the gala ends. But what is it that’s going on there?

Or what is it that they’re trying to accomplish that they could do a better job at with help from you that you’d be proud of? Maybe it’s helping people who, wouldn’t otherwise have access to higher education to access it. Maybe it’s to make sure that students have the supports they need in order to live up to their potential. Because once they come out of high school and find themselves in the university setting, you know, it’s more challenging than than, than they expect. So, and it could be anything else.

It could be related to research. It could be related to community service. I’m just using this as an example. We’ll see thing with a hospital foundation. Many people who are in a position to give in the way we’re talking about have already got a tradition or a history of giving a fairly generously, at least if not very generously to organizations and that they’ve already built good relationships with.

But my, my, I would prompt them. I’d invite them to think about let’s go a little deeper in the partnership with that organization, with whom you already have a relationship that you already care about. It’s a children’s hospital or something, but what is it that they’re trying to accomplish that really aligns with your value? So to take it to a richer, deeper level, because the return on the hard work that goes into that kind of those kinds of discussions is, is really, is really, is really tremendous. So the short answer is people generally already have the relationships with organizations in place that are the starting point for investigating something a little bit more purposeful.

In cases where they don’t, and it will happen, or in cases where, the issue that they want to address, they’d like to address through other organizations or through an organization that they don’t have a relationship with, that’s where they sometimes could use some help. Sometimes have an advisor, deeply understand what they’re trying to accomplish and then do some investigation on their behalf, so that they don’t have to spend a disproportionate amount of time or put themselves in an awkward position to have to say no, you know, if there’s a contemporary issue related to food security or homelessness or whatever it is, you know, there are multiple organizations with feet on the ground in our city and in other cities that might be the right place. And they might be the right group to partner with in order to address those issues. But if you don’t already have a relationship understand the work they’re doing, just like anything else, again, I keep going back to how do you succeed in other aspects of your life? You need to roll up your sleeves and and and go in and and oversimplify, kick the tires a little bit, understand what, what you’re looking to philanthropically invest in and how your funds are going to be used to help that organization accomplish something important.

So if you don’t have those established relationships, you can go look for them yourself or, you could ask someone, to do that on your behalf. And that’s the kind of work I would do for example, if a client required it, but it’s it’s less common than you might think because most donors have experienced and have relationships that really they have an opportunity to get more fulfillment out of, and they have an opportunity to strengthen an organization they already care about a little bit more fully than they might otherwise. If they just cut a check, there’s no fulfillment from cutting a check. You won’t find a donor

Matthew Kempton: who feels good about that.

Colin White: Well, this is probably true that, you know, somebody who has certain morals or priorities or principles that they’re probably already naturally affiliated with some of these groups.

Peter Fardy: That’s right.

Colin White: And it would you know, I think it would be surprising to go through this exercise and determine that all of a sudden your principal is actually completely outside of the entire scope of your life. Like that would probably be a little bit rare. But maybe with all your experience here, you can make a comment on, like, let’s just say I’m new down this road and and I’ve like I’ve gotten more focused. And I hear about this new group that I haven’t heard of before for whatever combination of reasons.

Peter Fardy: Yep.

Colin White: And, you know, I’m concerned because not all groups are created equal, and there are groups that are more efficient at what they do and and that kind of thing. And and frankly, this is a business for many. Right? So you you can have organizations that it is their business to run a charity. What kind of questions or what kind of vetting?

Would a what what’s a good question, I say, or good set of questions for a donor to ask of an organization that they maybe don’t have all that much clarity on?

Peter Fardy: Well, I don’t it goes I think it’s about developing understanding. And, so, you know, there isn’t a single question that I think, covers enough waterfront to say, well, once you got the answer to that question, you know, you should be in a position to make an informed decision. I’d look at it a little bit and I’m drawing on my business experience here, which I hesitate to do because people hate to think about how charity or how philanthropy can be like business. But the principles you apply to be successful in business are the same principles you apply to be successful in life and in everything else. So it shouldn’t be it shouldn’t be a dirty concept to think about how we apply business principles, the philanthropy, the return being something different than a financial return.

That’s kind of the way I look at it. So I would want if I didn’t, if I was intrigued by what an organization was, apparently either accomplishing or endeavoring to accomplish, It’s it’s a it’s a form of due diligence that needs to be conducted. So, you know, one thing could be I guess if I if if there were one question that I were to ask, it would be, help me about what you’re trying to accomplish. This is a long question with lots of, commas in it because those simple way to put it. Tell me what you’re trying to accomplish, what your plan is to get there, and how my resources are going to be coupled with yours and other resources to accomplish it.

So that’s shorthand for say for asking, how are you gonna deploy my resources to, to, to help us achieve something together that we can’t achieve on our on our own? And the beauty of getting answers to that question is that you’ll see how, how confident the organization is and how well they know the issues and how confident you are that they’re going to be able to, to pursue them successfully. The other thing it implies, but you’d wanna be explicit about is, well, you’ve got a plan to achieve these outcomes, no guarantees. But if you have a plan, we should be able to tell that if if if that plan calls for you to achieve a certain amount of certain milestones within 6 months, a year, 18 months, 24 months, we should be able to tell whether we’re making progress against achieving that goal, whether we’re on the right trajectory or not. So by having that plan and thinking about it as a plan that you’re contributing to, implementing, that means you’re gonna be able to tell at any point in time or at least regularly whether or not the impact the things that your funding is supposed to enable are being done and whether the impact that you’re interested in making is more or less likely to be accomplished.

So if I had to ask one question, that’d be the question. Show me your plan. Show me how I how I can participate in helping you deliver on it. Does that make sense?

Colin White: No. Absolutely. Do you put any weight on the some of the calculations that get thrown out there? Forgive me. My background’s accounting, I tend to ask calculation questions.

Yep. There’s some of the calculations out there on percentage of donors’ money that is used for overhead versus actually the cause. And, you know, as an accountant, I know that these things are subject to, you know, interpretation for sure.

Peter Fardy: Of course.

Colin White: Of course. But it it it is that standardized enough calculation. Is that a valuable piece of information for an organization, or do you think that it it just doesn’t tell you what you think it’s telling you?

Peter Fardy: I think it’s absolutely the wrong metric, and I’ll tell you why. You don’t evaluate anything else you do in your life in terms of cost, to raise a dollar. For example, you wouldn’t invest in a business thinking that way you might look at it as what’s the return return on dollar invested. And when I led advancement departments at Dalhousie University and at St. Francis Avenue University, that was the language I used.

I would go to our board and make every effort to demystify fundraising because some people think fundraising is like a black box. You put wine and cheese in one end and cash comes out the other. It’s not that at all. It’s fundamentally a business development enterprise within the context of an institution that has a higher purpose. But the principles that go into driving that business development enterprise forward and securing the commitments that allow the institution to achieve its mission, are the same as if you were trying to build a law practice.

So how can we say that the issues in our community are of the utmost importance? How can we say that the planet is facing existential challenges and crises and not be prepared to invest in the organizations that might be able to actually address and solve those problems with the same vigor that we would address, that we would approach the company that we want to, invent the next widget. So we get a financial return. So if I invested in an early stage company for financial return, and I took all the attendant risk and so on, And this is a company that’s doing something in AI or something related to intellectual property, but all the value was kind of intangible. Let’s put put it out there as an extreme example.

All the value is tied up on people. So if they were to tell me, you know what? 40% of our, of of our, budget, goes to salaries or 60% goes to salaries. You wouldn’t automatically run away from that if you thought that was what was required to achieve those outcomes. Why that same logic, the philanthropy?

And why would you why would you, you know, why would you give a gift and say, I don’t want any of that used to pay the people who know how to accomplish the outcome? It’s just it it’s incompatible in my mind. I know that’s gonna be a little controversial, for some people, but I think we’re we’re really giving ourselves as donors a short shrift by listening to HOS per dollar raised and thinking of that as a metric, because that’s a way to kind of it’s like trying to save your way to success. It doesn’t work. The these organizations achieve things by putting human capital to work, putting smart people with lots of energy to work, to solve problems.

Why would we not? Why would we feel uncomfortable attracting, enabling organizations to attract the talent they need to solve the problems they’re trying to solve? It just doesn’t add up for me. So that that’s kind of the way I I I think about it.

Colin White: Well, Peter, this is called bare naked money. We’re okay with being uncomfortable. You know, so that I I I feel I just get I slipped a soapbox underneath you so you could say all of that. That. But that was not an intention for our audience.

That was not a preplanned, but thank you for the perspective. And that’s what I was looking for because you spend more time in the space than than we do and that that many people do. So you’re however controversial people interpret that, I think that was a good answer to the question.

Matthew Kempton: Appreciate it. Yeah. Peter, we also work with a number of not for profits, and many of them are run by passionate members of the community who aren’t necessarily, you know, or who are doing this in a volunteer basis. Yes. How do you ensure that these organizations that do very good work and and have a very passionate, you know, member base behind them, how do we show that they can be sophisticated enough to participate in these partnerships and and be able to answer the questions in the way that your donors and our donors want to to hear to get that confirmation that they can achieve this and just as, you know, just as much as a very sophisticated and experienced type charity can be.

How how what sort of work have you done with those type of grassroot organizations?

Peter Fardy: Well, I’ve been involved as a volunteer with many of them, and I’m chairing the board of a small independent school for children with learning disabilities right now. And you’re describing the very situation we find ourselves in, and many, many organizations do, they do good work. The professionals who are engaged in operating these, charitable organizations are experts at what they do. They do wonderful work, but these organizations also don’t have the capacity to have staff on hand who can, you know, manage, building those relationships, that are required in order for philanthropy to make a big difference. So it’s a bit of a quandary.

It’s a little bit of a roll of the dice, whether you’ve got volunteers involved in one of these smaller organizations who have, the experience and the capacity in terms of, of I am an energy, to devote to, building these, these kinds of deep partnerships that would help both a donor achieve something that’s important to them and help the organization achieve something that makes them even stronger. There’s no simple answer to it, because volunteers are sometimes folks who just put up their hands. They’re not and, and, and God bless them for doing so. But it’s really difficult for, that organization to, be expected. It’s probably not reasonable for that organization to be expected, to be able to negotiate and steward a relationship that is as sophisticated as, like a university could.

And what I would encourage donors to think about in a case like that is, you know, sometimes, you will invest in a business just because almost always it’s it’s it requires you to have confidence in the people that run that business. And, you know, with a charity that’s smaller like that, that’s community based like that, that’s volunteer led by like that. I think the key is to, if you really believe in that organization, if you understand and what they’re trying to achieve, sometimes what you have to do is actually revert to a different set of metrics than you might otherwise and align your metrics for success with the organization’s metrics for success. And what I mean by that is, I know donors, for example, who, when they support smaller organizations like that, they don’t ask for anything special. They believe their reward is helping the organization achieve what it’s already trying to achieve.

And the line of sight comes from that organization reporting back that, yes, we serve this many kids this year, or we solve that many problems this year. Nothing different than we planned to do before, but we were able to do more of it or do it more effectively with your support. So you have to be reasonable about the way you approach and what you expect of charitable organizations, depending on their size, quite frankly. A hospital foundation will have staff who can roll up their sleeves and be dedicated on making sure the relationship with donors is rich richer and richer all the time. And that the donor is fully stewarded and satisfied all the time.

Smaller organizations don’t have the resources to do that usually. And even if their hearts in the right place, they’re too busy delivering on their mission. So with with smaller community based organizations, find the ones that, you like what they’re trying to accomplish anyway. And in those cases, I think all of you want to see is whether or not they’re succeeding and that’s an expectation that you can layer onto them because they’re all organizations that have to report to somebody, either boards or somebody at the end of the year, how they’re doing. So it really scale matters when it comes to what donors can expect.

And some some organizations can’t can’t absorb a gift that might be available to them. If someone came along tomorrow and said to some of these organizations, you know, I’d like to give you a $1,000,000 they wouldn’t know what to do with it. They wouldn’t be able to absorb it. So, you know, usually smaller organizations, require less at any given time in order to to be, disproportionately successful. Well,

Colin White: that’s also something the advisers can get involved in by advisers, like, how setting that broadly because we Absolutely. One of the most more tax effective ways of making a donation like this can be the transfer of securities. You know? So we’ve worked with some smaller charities that, you know, the in order for that to work, you need to have an established trading account in the name of the charity.

Peter Fardy: Of course.

Colin White: You know? So, you know, an organization like us, we can get involved and say, okay. We’ll hold the hand of the charity. We’ll set you an account up to receive this money, and we’ll facilitate some aspects of what you’re trying to do. So sometimes there is a role for the advisers on all the different sides of the table Of course.

To help facilitate things, to make the the donor able to do what they’re setting out to do, and to make the charity a little bit stronger than when you found it from a operational perspective as well. So, you know, just just to throw that out there.

Peter Fardy: Yep. Absolutely.

Colin White: Matt, did you have anything left on your bullet points?

Matthew Kempton: Well, maybe just a final item or just another question that’s in the back of my mind here. We were jumping around a little bit, but we talked a bit about the establishment of, you know, the families, values, and and then that then to leading to what organizations might be involved in in the gifting. But how does it work in the, let’s say, the establishment of something that’s a bit more of a legacy fund? And when someone’s establishing something that they hope to live beyond themselves and ultimately be and so family will truly be the ones administering that, how do you how do you set up success in in a set in a situation like that where ultimately, the one donating may not be the one doing most of the distribution of, of funds?

Peter Fardy: Well, many families face this challenge, or the opportunity depending how you look at it. One of the things that that I I think a donor needs to be conscious of is what impact they want to make over what period of time. And when someone wants to establish a legacy, that usually implies that money is going to be put aside and actively managed in a way that will make a lasting impact for years years years, maybe a 100 years, maybe generations, who knows? As long as that’s an informed conscious decision on the part of the donor, I I think that’s a that’s a perfectly fine way to proceed. But a donor who is who is in a position to be able to influence how their legacy is managed should think about issues like, do I really want this to go on forever in terms of, you know, what perpetuity really means?

And I suspect not many donors really care about what happens 500 or 750 or 1000 years from now. So, what are the mechanisms to make sure that if I’m establishing an endowment, for example, that typically is established so that the income generated every year goes to whatever the intended purpose is that that’s not left to just, go on forever and ever. And that it continues to be relevant into the future because a donor today might feel very strongly about a certain set of issues. It might be very specific in terms of what they care about, but when they pass on that responsibility to presumably the next generation, they need to empower that next generation to ensure that that fund remains relevant. And that it’s, it’s honoring, the intent of the original donor who in cases like this usually is apparent.

So the answer to the question comes back to not taking anything for granted, not just leaving it open ended in the hands of others, but by doing some work upfront to prescribe how this fund is to be managed, how decisions are to be made, how it’s to be governed. And just, you know, not, not leave it, open to, any more interpretation than is absolutely necessary. And that that’s where some endowments, for example, end up getting stranded because they were designed to achieve or address an issue that goes away in 30 years. You know, let’s say somebody wants to cure breast cancer. We’d all like to see that happen.

And maybe there are researchers somewhere who are on the cusp of, you know, finding a cure or an effective treatment within the next 20 years. Well, sometimes people wanna address that problem, but the problem gets solved and their money is still sitting around, you know, generating income. So you want to make sure there’s someone there who see it has a real responsibility and feels that responsibility to honor the intent of the donor and make judgment on behalf of that original donor as to what the next thing is or what the most contemporary version of of that issue is so that they’re honoring the memory of the of the donor. So not leaving it to chance, being very explicit about how you would like to see decisions made in the future, making room for, those charged with that responsibility to exercise decision making so that the funds remain relevant or that there’s a sunset mechanism that allows them to be dispersed after a certain period of time, 50 years, whatever. Or when a when certain conditions arise like a cure being found for disease or whatever it is you’re trying to accomplish.

It’s not a simple answer. I guess it is if I were to say, you know, don’t leave it to chance. But those are the things that should be addressed before, in one’s estate planning, I think, to give them confidence that they’re gonna their legacy is going to be as meaningful and impactful as possible. You can’t predict the future. So you have to kind of empower other people to act on your behalf and make sure they take it seriously and have some guardrails in place, to help help guide them.

Colin White: But that’s, you know, that that’s kind of the tough part. That’s the tough advice to give. Somebody walks in and says, here’s a $1,000,000, and I want you to spend it on this very specific thing. In that moment to hold your hand up and go, well, wait, that’s too restrictive. That’s probably not gonna work long term for us.

Matthew Kempton: Yep. We

Colin White: need so it’s that’s the difficult advice to give and that’s where courageous advisors and courageous charities are going to stand up because otherwise the Rothschilds have set up enough money to make sure that we have steam train locomotive operators, at least 5,000 a year being graduated to run all the trains that they’re going to need for the industrialization of the Midwest. Thank you. That’s very specific. Probably not as useful today. So but to stand up to the Rothschilds and say, no, no, wait a second.

That’s stupid. You guys need to rethink this. Not many of those people around, I wouldn’t imagine.

Peter Fardy: Well, that that may be true, but there aren’t many Rothschilds around either. And in my career, I haven’t really dealt with very very many folks who would who I would characterize that way. And most owners want want to, wanna wanna do well by through their philanthropy. Wanna do, you know, to do good through their philanthropy, and they’re and they’re open to, being coached toward making an informed decision. So, you know, there are some folks who in every field that think they know more about something than they really do, but most people are are open to receiving advice.

You’d know that in in your business as well. And it’s our responsibility if we’re going to represent ourselves as being helpful to these folks to make sure that people are put in a position more than anything else to make well informed decisions, whatever they decide to do, as long as they’re well informed. It doesn’t have to be what you do or what I do, The choice they’ve made after they really, you know, learned about what what the alternatives are. That that I think is the key. And I’m confident that as people make, as more and more people are in a position to make informed decisions, they’ll make disproportionate impact, individually and as a group than, than they ever would if they just trusted their instincts at all time without it being based on on good information.

Colin White: Well, Peter, I think you just, you know, codified the the role of advice. Or the the the advice giver, our job is to give the clients or give the the donor the information they need to make a decision with, to frame it in such a way that’s useful, to give them information that informs their decision making and make sure that they make the best possible decision for themselves. And Got it. For me, that’s always the the goal of advice. Like, that that’s where you should be aiming to to inform and equip the person who’s making the decision to make it in their best interest and and support them in doing so.

Matthew Kempton: And maybe just highlight some, unintended consequences that we’ve seen in our experience that can come from your restricted plan or a plan that they might have. So that which

Peter Fardy: We’ve all learned SCRs and we’ve made mistakes that we’ve learned from. They have too. But that’s how we learn. We see the experiences folks have had, good, bad and ugly And, and all we can do is provide the best advice we can as to how to increase the likelihood that they’re gonna be making greater impact and achieving greater fulfillment and decrease the life that they won’t have those things to celebrate. So, yep, couldn’t agree more.

Colin White: Right. So, Peter, wow. Thank you. We have just spent a lot of time, and there’s stuff we didn’t even get to. I think we did a great job of talking about the important stuff, which is the messier stuff, and the more difficult stuff, which is the foundation for any other conversation to be had about the technicalities on how to execute a donation long before you get to the technical aspect of things.

Mhmm. A lot of what we talked about today about aligning with your values and things of that nature are super important in this space, And I think we have outlined the role that both financial advisors as well as as advisors such as yourself can bring to the table to help people, you know, get the most out of and have everybody, the whole world, be a better place for having done things more more aligned. So thank you so much for your time. Greatly appreciate it. And maybe we maybe we’ll do a follow-up on Barenaked Money.

We’ll see how the world unfolds.

Peter Fardy: Thank you so much, Colin and and, Matthew. I really appreciated the opportunity and, and, look forward to chatting again sometime.

Colin White: If you’re breaking a sweat trying to figure out what your financial advisor is talking about, you’re not getting the service you need. You probably hate trying to get an answer from them, but you also think moving your accounts will be a headache. And it might be. But working with Dontrocktheboatwealthplanning.comor.ru isn’t exactly stress free, is it? Call us.

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