Philanthropy | Designing What You Want to Change

Legal disclaimer.

Bespoke Group investment advisory services are offered only through Bespoke Advisory,

an SEC registered investment advisor. Everything we share here is just for information and education.

It's not investment, legal, or tax advice. Bespoke does not offer or solicit investment services to the general public.

And as always, investing comes with risk, including the possible loss of principle.

So today I'm here chatting

with Jonathan Mintz who is the co-founder of Bespoke Group. And

Jonathan, you've really led the charge and spearheaded just what Bespoke philanthropy is. And so today I'm hoping

to um explore what Bespoke philanthropy is. Um because

yeah, I have to admit I mean I I want to kind of get into how we walk the walk and not just talk the talk because when

I typically and I think a lot of people like think of philanthropy like I think of or I picture like glamorous charity

events. Um you know often times like celebrities or just these very yeah

glamorous even galas sometimes. Um, and I also

think of, you know, just like dumping loads of money um, into a certain

foundation and right like you hear criticisms criticisms about that because

where is that money really going and like a lot of that could even be going towards like funding this like incredibly expensive event and um, I

think there's kind of you know a lack of yeah you don't really you don't really have a potentially a say of like how

that money is used. So that's like what I have thought of and pictured when I hear philanthropy and then I remember

you know when I joined Bespoke and like learning about how like when I heard you

guys you all describing philanthropy I was like huh like that's philanthropy

you know so I guess I mean what you described is

philanthropy but there are

there's there's really public and private philanthropy and and our clients generally are quite private and so

they're not looking for big galas or their name on the side of a building.

They're looking to impact causes that that are they're passionate about in a

way that uh is effective and without any recognition typically whatsoever. And so

it's a I mean it is different from what you I think first may think about when

you think about philanthropy but it's a big part of philanthropy.

Yeah. Yeah. Cuz you know it's like people could put their name on a building and you know that's giving or

charity I guess. Yeah. And and look, there's nothing wrong with wanting your name on the side

of a building or having advantages, being able to

serve on boards or doing things. Um, but when you're extremely private, which

most of our clients are, that's really not of interest. Yeah. So can we explore um the way that

I when I hear you talk about philanthropy or when I where when I hear kind of like the lengths that the team

different team like the leadership of the team I mean whether it's our head of asset management like going and spending

a month like exploring a far corner of the world right to like speak to people

and listen to people and understand you know we can go so deep into that but I want to kind of just highlight that like

the way that when I you know the team travels or kind of they execute this

like grassroots mission almost. Yeah. So let's let's take a step back

and and talk about um philanthropy as sort of what is

philanthropy and and how do you actually in my opinion effectively execute on

philanthropy. So the first part is some clients come to us knowing exactly the

causes they want to support and the charities that impact those causes. And it's it's really easy um that or at

least step one's easy for some clients. They have no idea. They may not even

realize that um their passions typically

are tied to philanthropy or or could be tied to philanthropy. And so for a lot of clients, the first step is what are

you really passionate about and figuring out the causes and then how

they want to impact those causes? Because there's typically lots of different ways that someone can impact a

cause. Once that's established, then how do you find the charity or

charities that are doing the work that you want to support? And that's not an

easy task. And so to your point, we've we've traveled, our head of asset

management, who's based in Europe, has traveled all over the globe meeting with people, basically doing due diligence on

these charities to determine if in fact they are doing what they say they're

doing and they're doing so effectively. And that step is an ongoing process. You

do your upfront due diligence. You make sure the charity is legit.

You negotiate with them in terms of the metrics that they'll report to you, in terms of the impact that they're having

in the areas that the client wants to impact. And then over time, you continue

to do due diligence. you continue to ensure that they're meeting those metrics, that they're,

you know, the the the direction of the charity hasn't changed, for example,

that they're continuing to do the work that the client wants to do. And so there's really three steps in the

process. And two of those three involve

often ha you know hands on the ground face to face meetings. And if the client

is supporting causes that are based in the far corners of the globe like the

the client you're thinking of who has um who supporting activities in South

America. Sometimes it requires a trip to South America to determine,

you know, to fully vet that charity and the people who are running it and determine that it is worthwhile.

So, let's say that cuz I was going to ask you like how Bespoke

transforms the passions that a client might have into like meaningful impact

and philanthropy. Like that was my first like how how

but I guess that can get really deep. Yeah. It's typically a series of conversations. It doesn't happen in a

single conversation. So if a client is really has no no history

in significant philanthropy often times they haven't really thought about

how their passions can connect with philanthropy. I mean, most of us are passionate about something.

And so, how how do we take those passions and figure

out how giving can impact those passions? And so, like I said, it's

often a series of conversations and then figuring out, okay, now we know that

what you're passionate about, how do you want to impact those passions? Because there's lots of ways. Some clients want

really direct impact. They want to see that 20 people a day are served in a

particular way. Maybe it's a disadvantaged class or something. They want to they want to know that those people are actually impacted directly

daily. For others, it's how do we change an ecosystem? You know, maybe it's

through education or maybe it's through technology. And those are very different. You know,

a direct impact versus an indirect impact. And so, how you go about trying

to accomplish what the client wants to accomplish is not, you know, pun

intended, is Bespoke depending upon what the client is trying to accomplish.

Wow. So, once once that is established, what is it

what is the day-to-day involvement look like? So, okay, let's let's say like you

establish the passion, you establish how you want to um like move this capital

um you have a plan and then there's like this due diligence process that happens which involves sending our asset manager

potentially across, you know, to far corners of the world and then it passes the due diligence test. We're like,

"Right on. This is amazing. Like, it's go time, right? Like, let's deploy. Like, let's go." What does that ongoing

the relationship look like? Whether it's for I'm curious like for for a bis because

right like we've done this. So what does that then look like for either the Bespoke um person who is in relationship

like whether with that charity or with with that that um mission and then what

is the relationship for the client like involvement responsibility

like time out of their day weekly calls like what is the dayto-day of it all?

So as to your latter question it really depends on the client. Some clients want to be actively involved, some clients

don't want to be actively involved at all. And so determining their level of

engagement or desired engagement and then um acting accordingly as far as

what it looks like for us. So I think for me um the best example I

can use the philanthropy that I'm most involved in. So,

we have a client who is passionate about um

affecting racial and gender inequality. Those are those are her passion points

and you know, I mean that's just an enormous area. So, like how do you attack that?

Yeah. So, we had a lot of conversations. I reached

out to people that I know in the charitable space and said, you know what? What can we do that would impact

racial and gender equality in a meaningful way because this client really likes direct impact?

Wow. Okay. How do we do this? So, can you confirm again like you did earlier the what direct impact

is really? Yeah. So, so impacting the people who are affected by

whatever it is that you're trying to fix, I see directly.

Okay. As opposed to as opposed to

Yeah. changing um an ecosystem through education or through technology or something like

that. So a colleague who um a lawyer colleague

who works in the philanthropy space said you know I I know some people who do some work in human trafficking and human

trafficking is typically gender it it's really uh socioeconomic but it's

it's typically uh against women. It's typically against women of color.

Not always, but statistically typically. And so we had

lengthy and and numerous conversations with this organization that

um provided really did two things. Provided education, school education,

helping age age-based helping like young kids just sort of identify what is trafficking trafficking. And then as

they got older, um, looking for signs

and maybe identifying people in their school, their their fellow classmates

who in fact might be being trafficked. And trafficking

It comes in two types. It's sex trafficking, which I think is what a lot

of people think about when they think about trafficking, but the other is labor trafficking. um people who often immigrants who are

here um and who are here not on their own volition but they're here forced to

work uh under slavelike conditions. And so helping people identify uh

individuals who may in fact be under those circumstances. And in conversations with them, they

indicated that that they wanted to open a center in Sacramento, California, a

walk-in center for for victims of human trafficking because there's a there's a a study that was

done by Sacramento State and and a couple charities that work in the traffic trafficking space that revealed

that Sacramento is just a hotbed for both sex and labor trafficking in part because of its proximity to

the agricultural belt of California and in part because um it's a crossroads of

of major interstates in an obviously heavily populated state and so I mean I

I didn't realize like I live outside of the Denver metro area

and we also have north-southeast west interstate and apparently were a hot bed

for trafficking as well for that very reason. So I had no idea. Um

so we had many conversations. I flew to California to meet with this

organization, the leaders of this organization to learn about one what they're doing currently and then how

what they plan to do with this center. And then after a series of of numerous

conversations, we decided to fund or we the client decided to fund um with my

help that walk-in center for victims of human trafficking.

So So back to the day to I mean the day-to-day

like I mean that's an like that is an ongoing project. Yeah, absolutely. So, fortunately, um I

don't manage the day-to-day. There's someone who's involved on the the client

side who who does that, but at least initially

it was couple times a week conversations with them in terms of budgets and

logistics, you know, where do we house this center? So, we had to find a location

for that. um negotiating rent, all the things that you would think

about. And then what does that center do? What services does it provide? How do we dovetail those services with

things that the charity is already doing? Um how will we run we how will

you know that organization run this center? And so um on the front end it

was pretty time consuming. Um now I wouldn't say it's on autopilot

but it doesn't require the same level of involvement that it did early on. Okay. I see. So it's kind of it's an

initial frontend project that I mean of course there's ongoing maintenance

that's required but it's the lift and then and then the it goes

Yeah. Yeah, the due diligence ongoing is really ensuring that the the philanthropy is doing what we want it to

do, that they're providing the metrics that we want them to provide, um that

they're meeting those metrics. So, um

again, the lift is not nearly as heavy, but there is a lift. Yeah. So, can we talk about I want to

talk about the money of it all. I want to talk about um

there are different reasons right that people get into philanthropy like there are people who who are just super

philanthropic right like it's it's it's it's that desire that drives the the

giving but then there are there are also just incentives there are tax incentives

um that kind of make people philanthropic um can you break down for

me I'm in I'm curious about the um yeah just like if I were, you know, for

somebody who if I were somebody who came into wealth and like I'm learning about philanthropy quote unquote for the first

time in this way. Um, and I'm also trying to understand like the tax

benefits and what that means for taxes. Can you kind of introduce that to me?

Sure. So I think I mean fortunately for us

most of our clients come to us either already engaged heavily in philanthropy

or with a strong interest in engaging in philanthropy. And so the conversation is

pretty simple. But but some clients um and especially practicing estate

planning law over the years when I was practicing law, I would hear charity

starts at home. Meaning they they want to maximize the

wealth that they pass on to their beneficiaries, their children, grandchildren, etc.

And for those clients, we often would have a conversation about the tax benefits of philanthropy. So, I'm I'm

somewhat of a cynic. I mean, I tend to believe that Congress generally doesn't know what the heck it's doing. But in

the area of philanthropy, um I think they got it right because it takes about $4, four tax dollars

filtering through the government bureaucracy to end up with a dollar of

uh in the hands of charity. Whereas if you give directly to charity,

you know, you give a dollar to charity, they get a dollar. You give $4 to charity, they get those $4. So it's far

more efficient for folks to give directly to charity than it is through

tax revenue. And um as a result, Congress

incentivized people to give to charity. So again depending upon what the client

hopes to accomplish. So in the context of I want to, charity starts at home. I want to

maximize the wealth to my beneficiaries. There are actually charitable structures that are blessed by the IRS

that if implemented properly can get more to the family than if they don't

involve charity. And that's kind of counterintuitive, I realize, but the way

it works is if you structure, so without getting into the weeds,

it's a type of charitable trust that pays an annuity to charity for a number of years. And at that at that the

running of those years, that term, whatever's left goes to

whoever the client intends, typically children, grandchildren, etc.

The IRS assumes that the assets will grow at a certain rate throughout. It's

just an assumption. That growth rate happens to be the current interest rate.

And so if interest rates are low or the assets are growing at a much faster rate than that interest rate, then there will

be a remainder. And the bigger that delta, meaning the the the more the

assets grow above that assumed interest rate, the more that is available left

for family members. And this can be structured so that it costs zero from a

tax perspective, from a gift or estate tax perspective. Meaning the way you

structure it, there's assumed zero remainder value, but because of that delta, that assumption doesn't hold

true. There actually is a remainder value. the more there's a remainder, the more goes to kids free of transfer tax.

So, yeah, more into the structures. Um, you're talking about the charitable

Charitable Remainder Trust, right? That's a Charitable Lead Trust. Okay. So, yeah. So, can you There are a

handful of structures that I hear you all talking about. There's the lead trust, the remainder trust, there's the

I don't know that I'm thinking about a daff and uh I I I know I already know that your answer is going to be like

well it depends what your what your what you what the client wants. I know that, but like let's say can it maybe I could

I don't know what would help kind of specify this, but like let's say that I was a client who really was interested

like my I'm super philanthropic like I I'm like I don't care about the you know

okay great I get tax benefits awesome but like I just want to give um and I

really care about mental health like what structures and how are you recommending those things to me? So I I

hate to just play lawyer on you, but it really does depend. It dep it it depends on what the the assets and what the

client's trying to accomplish. So the the structure that I described, a Charitable Lead Trust,

works really well because it's paying an annuity to charity for a term of years. to say hypothetically 20 years. It works

really well for a client who is either already giving a certain amount to

charity, you know, say hypothetically $100,000 a year or wants to give

$100,000 a year for 20 years because that's how that structure works. You

know, you're going to pay an annuity to charity for a term of years, and at the end of that term, whatever's left, the

remainder goes to who the client directs.

that works really well for I I don't want to get in the weeds cuz

these structures are complicated, but that works really well for a client who

has a a a structured either structured philanthropy or want structured philanthropy for a term of

years and with relatively high basis assets

because relatively high basis assets Yeah, because so actually cash is

probably the best thing to contribute to um a Charitable Lead Trust because even

though it's a charitable trust, when you sell those assets in the trust, it's a

taxable transaction. And so depending upon how the trust is structured, that tax may go back to the

trust creator um or you get an offsetting deduction

for the annuity payment to charity. But it is a taxable transaction. So you

mentioned a Charitable Remainder Trust almost the mirror image of a Charitable Lead Trust because what's happening is there

is an annuity payment typically to the client and or the client's spouse sometimes to children for a term of

years and at the end of that term of years the remainder goes to charity. So

before we had the annuity to charity remainder to family members that's a Charitable Lead Trust. Now we have an

annuity to family members, remainder to charity. That's a Charitable Remainder Trust. And a Charitable Remainder Trust

unlike a Charitable Lead Trust is a tax-exempt trust. And so when you sell assets in a Charitable

Remainder Trust, there is no upfront tax. What happens is that tax gets

distributed over the distributions those uh often over lifetime sometimes for a

term of years that's not greater than 20 years. But in any event, the tax is distributed out over those

distributions. And so basically a Charitable Remainder Trust works really well for someone who is philanthropic

because something will go to charity and they have low basis assets. So, you

know, let's say they they bought or they mined they mined Bitcoin early on and so they've got this trove of Bitcoin that

has zero basis because they mined it and now it's worth 90 some odd thousand

dollar a coin. And so if they sell it, that entire 90 some odd thousand would

be subject to capital gain tax. if they if they transfer it to a Charitable Remainder Trust and then sell

it. So, let's say let's say it's worth hypothetically just a million dollars.

If they were to sell that uh that Bitcoin on their own, that million

dollars would be reduced by 23.8 plus whatever their state uh

capital gains tax rate is. So in California, which has the highest combined federal and state rate, it'd be

roughly uh the 30 37%.

In Texas that doesn't have a capital gains rate, it would be the 23.8 federal rate. But any event, that million

dollars would be worth a million dollars less that tax. So if

it's uh 23.8, let's do the math. uh 76.2,

they'd get $762,000 left over if they're in Texas and far

less if they're in California. If instead they contributed that bitcoin

to a Charitable Remainder Trust and then sold the bitcoin within the Charitable Remainder Trust, they would have a

million dollars and they could then pursuant to the terms of the trust,

distribute out that annuity payment over the term of the trust and that capital

gain gets distributed out with those annuity payments. Now, the the taxation of the payouts is fairly complicated and

I'm simplifying it, but that's really what's happening behind the scenes.

Can we talk about different assets? You described how Bitcoin is a great asset for a Charitable Remainder Trust. I mean

what other assets are because I also want to be really clear about when we talk about Bitcoin and we're going to

have we have a Bitcoin in this colle sorry we have an episode in this collection with um Matt McClentok

co-founder about what Bitcoin means to Bespoke and our relationship with Bitcoin. Um I want to be really clear

about yeah that we all of this we all of our work applies to other assets. So

um yeah can we break into some others? Yeah, of course. Any low basis

asset works really well. I'm going to be honest. Can you explain? I don't know what a low basis asset is.

I'm being so frank right now. Okay. Um I appreciate the candor. So

a low basis asset means that for income tax purposes

um when it is sold it it would be the basis determines how

much is subject to income tax when it's sold when the asset is sold. So a high basis assets and cash is

the highest basis asset means that if you have a transfer of cash there's no there's no gain in that transfer and

therefore there's no income tax consequence. If you have a zero or low basis asset, it means that there is

significant gain in that asset. And when the asset is sold, that gain will be

subject to ideally long-term capital gains tax, which is an for an asset that's been

held more than a year, or short-term capital gains tax, which is in essence

ordinary income, same rates. That's for an assets that been held for a year, one

year or less. So, it makes a huge difference if because if I sell an asset that let's

say I I I bought real estate and that real estate is worth $500,000

and I turn around and I sell it and I sell it for $525,000.

My gain, assuming no depreciation, just for simplification, my gain's $25,000.

Only that $25,000 is subject to tax. And depending upon how long I held it, if

it's more than a year, it's long-term capital gain. If it's a year or less, it's short-term capital gains, which is

ordinary income. But there's only that $25,000 gain. And in real estate, you actually have an exclusion. But let's

not get into that. If instead I bought that home years ago

and maybe I paid uh $100,000 for it

and now I'm selling it for $525,000. The section 121 exclusion for capital

gain for uh primary residence aside. If I were to sell now sell that

asset, that uh real estate, there would be $425,000 of gain. And so that would

be considered a lower basis asset and would be subject to long-term capital

gains tax. In stocks, same thing. You know, if you bought

Microsoft or Apple early on, you paid, you know, $20 a share, it's now worth

thousands of dollars a share. All of that gain is subject to income tax

when it's sold. There is one catch to this though. Under current law,

there always is. Always. Under current law, if I own an asset when I die,

that asset gets a step up in basis or potentially a step down in basis to its

current fair market value on my date of death.

So that real estate example, that home that

I purchased for $100,000 that's now worth $525,000. If I die owning that

home, um, and on my date of death, the basis steps up

to that $525,000 value. And if my daughters then would turn around and sell that property shortly after death,

their gain would only be post death appreciation. So, anything above

$525,000. So, Bitcoin is simply an asset. And

we have clients with a lot of Bitcoin and so we talk about I mean they have very low basis in their Bitcoin. But

again stocks, real estate, um if it's not your primary residence, then you don't have an exclusion. So the examples

that I gave you would apply. So let's say it's just an investment property. So it really could be any asset.

Okay. Any any asset that appreciates that appreciation

is subject to income tax. Again, depending upon the holding period, the rates change.

But if there is appreciation, then that appreciation is subject to income tax when sold.

So right now people are talking about Bitcoin and DAFFs, but DAFFs are not specific to Bitcoin. Like number one,

why is, yeah, why is that relationship really hot right now? Number one. And then number two, how are DAFFs used for other

assets? Like can we just talk about a DAFF for a second? Yeah, of course. So, DAFFs are really an

an intermediary charity. So, you make a contribution

to the DAFF and then over time you request and that

I use that word intentionally. You request that a grant be made to a charity or charity of your choice.

the DAFF has to give to 501c3 charities, meaning their IRS approved

charities. Um, the way a DAFF works, you get an upfront charitable deduction for

the contribution to the Donor Advised Fund and then you get no additional charitable contribution when the grants

are made over time. You know, you you alluded to the fact that foundations are kind of under the

microscope because they only have to distribute out 5% of their income and

some of these uh foundations have enormous enormous endowments with

incredible income and so some people argue that they're not as philanthropic as they should be. DAFFs

have similarly been under the microscope because there's no requirement that you actually make grants from the DAFF under

a specific period of time. So theoretically, you could contribute again hypothetically a million dollars

to the DAFF and then do nothing with it and let it sit let it sit and grow

theoretically indefinitely without any requirement that it makes grants. Now

once you make the contribution to Yeah. I mean I'm not sure why you would do that other than for the growth

potentially right but once you make the contribution those funds are gone. It's like giving uh

making a contribution to directly to a 501c3 from from a from a control perspective

because theoretically the daff could say no I don't want to make that grant

um that you're requesting. Now, in reality, because you have the ability to move funds from one DAFF to another

DAFF, my experience is that the the Donor Advised Fund sponsor will make that

grant if it's to a qualified charity. They won't make it if it's not to a

qualified charity. But as long as it's qualified charity, they'll make that grant.

Okay? They don't have to. They don't have to. So, DAPs are really popular right now

because the administrative costs are far less than a foundation.

Um, they're really simple to set up. Um, most big,

um, you know, financial firms offer DAFFs.

Bitcoin. Um I think Bitcoin is popular with DAPs

because for a lot of individuals they have very low basis Bitcoin and so they

get the full fair market value of their Bitcoin meaning today's value when they

and um now again it's worth somewhere in the '9s. They make that contribution. They

get that value based on the $90,000 value today, not the hundreds of dollars

downside. I was going to say there always is. Most Donor Advised Funds will require

that that you liquidate the Bitcoin immediately and that's and that's a downside because

then you're sacrificing growth. Growth over time. Exactly. So, the client's held on to this Bitcoin for

You're paying attention, Claire. It's good. I'm learning. I'm learning.

The clients held on to it for a decade or more, and they believe in the

long-term growth proposition of Bitcoin, and so it's it's not in their ethos to

just sell it, to turn around and sell it. So, we we believe in the long-term

value proposition of Bitcoin. I mean, just look at its growth history. And

so we we work with Donor Advised Funds that will allow the client to hold the

Bitcoin in the Donor Advised Fund rather than sell it all immediately. And so

what we've developed is a we call it a stoplight, but basically it's a

strategic way of looking at where Bitcoin is in a pricing cycle and to

determine whether it's, you know, a strategically good time to sell versus a

strategically bad time to sell. And so by by doing that, it avoids sort of a

force sale under bad price circumstances. So, let's say a client

wants to fund some activity through their Donor Advised Fund.

Um, they don't have assets in the Donor Advised Fund currently. So, they're going

to use hypothetically Bitcoin or any other asset, but that but that price the

price of that asset is depressed currently. And so, if they gave they would get a depressed value charitable

contribution, whereas if they could wait a month, perhaps they'd get a much higher value. And so

just looking at sales strategically rather than a forced sale of all of the

contribution at once. Okay. So let's talk I wanted to ask you about the relationship with our right

like under Bespoke is this this grassroots philanthropic giving

mechanism as well as this asset management mechanism. Mechanism is

probably the wrong word. Um, and there's a relationship there. I'd love for you to talk to me

about that relationship because when it meets the eye, right? Like it

can seem a bit like, wait, why would you be recommending to give away all of this money because then you're losing assets

under management, right? Like that's a bit contradicting, but I think it's amazing to highlight. So, I'd love for

you to chat to me about that. Well, I mean, you said it. We

we get paid on assets under management and we're encouraging our clients to

give away assets. So, it's really not in our best interest, but it's the right thing to do. And our clients are

incredibly philanthropic and we're going to do everything that we can to help them be philanthropic. But I would say

there's really two aspects to this. There's the the funds that they give

away that they give to a Donor Advised Fund. Although we can continue to manage those as long as they're in the Donor

Advised Fund or there the funds that they give to a Charitable Remainder Trust or a

Charitable Lead Trust which we spoke about earlier. But there's also their investments generally

and there are a lot of ways that the clients can invest so that they

have an impact impact investing for the assets that are not being given away to

charity. So, they've got funds that are invested generally and those funds can have a

charitable impact in addition to the the dollars that they're giving away through a Donor Advised Fund or some type of

charitable trust. I'm so curious to hear about the I've

heard Sune head of our Head of Asset Management talk about you know the the

idea of wealth stewardship and like when these different parts work actually work

together because I guess sometimes they can be right like maybe there's somebody who has a portfolio and in that

portfolio there are you know certain funds that they're investing in that actually could be like maybe against

that values of that incredibly philanthropic person are just like not aligned or working together. Am I

getting that right? Mhm. So, I mentioned the client

earlier who is passionate about solving gender and

racial inequality. There are companies

that have been accused of basically slave labor in parts of the world. And

so she absolutely would not want to invest in those companies. And so that's

sort of the obvious the obvious, but but the less obvious is

she can invest in communities that historically have racial and gender inequality. So she has invested heavily

in the South because the South has a history of racial inequality. And so um

you can I mean, it's interesting impact

investing. Um, some people will say, "Well, that's great except for you're not you're

you're giving up on the returns." But it doesn't have to be. You can still get

good returns yet direct your dollars to be investing in an area or areas that

you want to invest.

No, I think it's in it's incredible that the first example that you gave me, you

were like right like she wouldn't want to be investing in companies that are like uh yeah doing something that is against

her her I keep using the word mission um but just what she's trying to build and

express like what she's trying to you know express with her wealth um because

wealth really is an extension of us. And um yeah, it kind of just blows me away

that like I'm just I'm imagining a wealth adviser

or somebody who's managing someone's portfolio and like that that that they're like that that it would be

uncommon or not standard to that they have a relationship or that the um just

like the different areas of her wealth management or her philanthropy like aren't talking. I mean is there not

historically like in traditional family offices or in traditional just wealth management firms like that there is kind

of communication and collaboration among the different area like the different pockets that deploy someone's capital.

So unless the family has their own family office and they're they're running that family office is running

their investments and doing so in a way that is aligned with the family, you don't typically see that because most

these are quite Bespoke in terms of how we're investing the client's assets. And

so there is a significant amount of time

and energy and in some instances dollars involved in the due diligence process to

find the right investments that support the client's ethos. And so you wouldn't

typically see that um in a financial firm. You wouldn't because

they they're for the most part about efficiency

because efficiency drives profitability and what we're talking about is more or

less oneoffs per client family.

Yeah, it's kind of impossible to talk about this and not come back to the fact that everything is so tailored and built

around a longer time horizon and like just not being not not subjected to the

same kind of pressures that I think more traditional uh wealth managers are.

Anyway, but yeah. Well, but you mentioned stewardship and I think we should spend a little a

little bit of time on that. So, yeah, let's do it. you um

when we talk about intergenerational wealth, we are definitely looking over

the long term. So, we're not we're not looking for, you know, immediate, you

know, next quarter returns. We're looking at preservation and growth, but

over the long term, and by the long term, I mean many generations. And for a family that has that level of wealth,

um, stewardship, I think, is the right word because they have more wealth than

they need, at least in the, you know, current generations or maybe multiple

generations. And so, how are they good stewards of that wealth? And generally,

that stewardship is in the form of philanthropy. But as we've discussed, it doesn't have to be it doesn't have to be

giving away dollars. It can be through the investments that they're making with their dollars that remain within the

family or within the structures that are created for the family's benefit. And so

helping the family um embed the stewardship philosophy in the

children and grandchildren. Um, I mean, that's really where these

conversations, you know, where the rubber hits the roads, helping the family recognize the need to be good

stewards and helping educate them as to what what that means and how they in

fact can be good stewards. And in my experience, it starts younger

than most clients would think. So, I like to use my own

um example. I mean, I'm not not that I'm ultra high net worth, but um fortunately, you know, I'm comfortable.

And my daughters when they were young, let me back up. I had a colleague who

who shared with me what she had done. She had said, "Oh, Jonathan, when my kids were young, I for the holidays, we

gave them, I think she said, $100." And then said, "Research the charity or

charities that you want to give this $100 to." And I thought, "Wow, that's a really cool idea." So, when my girls

were young, I did the same thing. I gave them I think we started with $50 cuz

they were pretty young. And um I think my oldest was around 10, maybe nine. My

youngest was six or seven when we started doing this. And there's there

are websites that allow you to not only identify charities that support the causes that you want to support, but

they rate their efficiency. And so what I did was I spent time with my girls, like my younger loves animals. like she

she wanted to support organizations that supported animals. So

that's so sweet. So we found we found some charities that support the type of animal that you

wanted to support, but then we looked at how efficient they were. And by efficient, I mean how much

what percentage of the dollars contributed go to the actual cause as opposed to administration, marketing,

overhead cost, etc. And really good charities are typically at least in the

90s in terms of percentage going to the cause. And so you can identify charities that are really efficient at attacking

whatever it is that they're doing. And so I taught my girls not only to be

philanthropic, but I also taught them that that there are different types of charities and

different efficiency levels for charity. We gave more and more over the years and as they got older. I mean, I

honestly I think my girls are probably more philanthropic than they should be for their level of wealth, but I'm proud

of the fact that they're both quite philanthropic.

Yeah, we've talked about this before and I honestly, I yeah, I just admire it.

like you've I feel like you've the way I've heard you talk about the way you

help people cultivate kind of like their own their own expression of giving or

philanthropy, right? You said your daughter is like six and she cares about animals and the the willingness to meet

her where she was like you were like, "Oh, okay. Amazing." Like, "Let's see where we can go with that as opposed to

putting putting your version of philanthropy or your specific areas of

interest onto her." So, I find that I admire that. And then I've also heard you you know that's not only with

your daughters, but you've I've asked you before. I'm like, how do you know when you're when you're working

with clients and they're they are you're helping them find like their their

passion and their meaning and their purpose, like that's theirs. It's not yours. And I think I just see that as

like it's a very

I don't know. I guess what I'm trying to say is that I that I admire the the

ability to like be in the position that you're in where you're really helping guide someone but like allowing allowing them to just find their genuine

expression of it and not putting on your own cuz that's like that to me is then I think just think of fiduciary like

walking along alongside somebody as opposed to because there's so many you know it's like oh do this or do this or like we are specific to you know

Jonathan I know that you care about I know about your own philanthropic efforts and like how you you know you

care about biking and and bicycles and like delivering bikes to you know uh

girls across the world because they so that they can get to schools um and that story is just incredible but like you're

not then saying okay Bespoke you know we do this because that is your that is

your interest and putting that on others and I think that that's very special. So I just wanted to highlight that.

I appreciate that Claire. I will I will say and you've probably seen I in my office I have a letter from the charity

that you just referenced that gives bikes to school age girls in subsaharan Africa. Um because I'm a cyclist and the

idea of empowering young women through a bicycle and also making them safe through a bicycle is near and dear to my

heart. And I have that letter hanging in my office because I will use that as an

example of me personally connecting my passions to philanthropy, but it's only

an example. I I would never encourage a client to give to World Bicycle Relief

unless they said, "Hey, I want to support World Bicycle Relief." And then I would help them do that. Um my goal is

not to align their passions with my passions in philanthropy. My goal is

to help them flesh out their passions if they haven't already done so and then align those

passions with philanthropy. And sometimes Claire, there aren't charities

that are doing the things that the client wants to happen. You know, like

um I gave an example earlier of the walk-in clinic for victims of human trafficking.

There wasn't anyone doing that exact thing. And so we had to create it and we

we basically created a charity. We hired that charity that I mentioned earlier, that third party charity to run it, but

we created the charity that is now doing that work.

Yeah. I I think about what a a privilege it is to have like to be in a position

where you are able to like to be in a position where you are able to be that

creative and create in that way is such a gift. Like I you know I am not an

upper high net worth person but I give in my own way and like yeah one of the

things that I can't control is like how that money is going to be used. like, okay, I trust that I'm, you know, I walk

down the street and I, you know, stop and speak to somebody and they're representing an organization and like I

speak to them for 10 minutes or and I try to judge, you know, or understand is this something, is this where I want to,

you know, kind of give and then I have to I have to trust. Um, but it's amazing

if you can be in a position where you don't you don't have to kind of like hope, right? like you can really design

it well. And it's it's challenging because in some

respects you don't want to bind the charity. You don't want to be big

brother looking over their shoulder. Um and so I think some clients have a

legitimate concern that they don't want to be that. But on the other hand, a lot of times these charities

can use the help They can use the guidance that we can provide in terms of

maybe they should consider this or maybe they should have more, you know, in the

case of that clinic, maybe lived experience on their board so that they

can address the issues that the people who've experienced

this in this case trafficking um the services that they want feel that they

want and need and so it is so

tailored it, you know, this is an area I mean I'm passionate about philanthropy

because I think there are so many areas where um

there just isn't enough whether it's government assistance or whatever there just isn't enough and um I've been

fortunate I've traveled old enough to see things that make me really appreciate how good we have it here. Um,

how blessed we are, but not everyone is so blessed. And so, you know, helping helping people

attack problems, issues, they're not necessarily

problems, issues that are meaningful to them. Um, I'm very privileged that I get

to do that and it makes me get excited about getting up and going to work every day. Quite honestly,

I love it. Jonathan, thank you so much. We've explored so much.

This was wonderful. Um, what I'd like to end this end this

conversation on is um something that I've been thinking about a lot just in my life or and in my

work, which is um language and how limiting certain words can be and and

sometimes words kind of lose um their meaning or they start to kind

of warp a bit. And this happens all the time. And that's why we we kind of like recycle words, you know

what I mean? Like if you look up it's amazing if you look up a word like I love looking up words and the their

journey over history like when they're you know Google will now they have kind

word was really used all the time and then you'll see like when it makes a comeback. Anyway, all that that that's me being kind of like a word nerd, but I

uh I think that we have a like I we we're we have a language challenge right

now in the world, but also when it comes to the word philanthropy and the word

specifically impact investing. And so what I was going to ask you is like, and there's no right answer here. It's kind

of for us to maybe blue sky, but like I'd love to hear from you if you weren't to describe philanthropy with the word

philanthropy and maybe it's a set of words. Um, or yeah,

what would that maybe sound like? What words would you use? I mean, it's interesting, Claire, maybe

this is a little off topic, but you know, there was this huge movement towards ESG,

um, environmental, social governance here in the US.

And then ESG became basically a four-letter word. And now there's this huge movement away from ESG.

And what's interesting to me at least is that here in the US

ESG was I think

misused. I think companies reported and and and tried to

express a much higher ESG value than was reality. Whereas outside

the US and particularly in Europe, ESG is really legitimate in terms of what

the company is or isn't doing. And you can really gauge whether or not the the company is

sincere in terms of its desire to have some in let's pick environment

environmental impact versus um here in the US where I think the the metrics

that were being reported were wholly unreliable. And so it was really easy

quite honestly for companies to abandon ESG because they weren't really doing ESG in the first place. Um whereas you

know finding the companies that are truly mission driven to in this case uh

impact the environment in a positive way or change some aspect of society. Um,

that's challenging and it requires significant due diligence and that's why

Sune, our head of asset management, makes these trips to the far corners of

the world because that's the way that you actually determine whether or not um

these companies or these charities are doing it because it's both. It's not just charities um are doing what it is that

they say they're doing and they're doing it how they say they're doing it.

So many thoughts. This is about relationships. This is about trust, right? Like it's a it's a I like I

really am kind of a um a hopeless optimist,

but it is a shame, right? like that these words or

ideas I'm seeing this all around. It's amazing. you you said misused I think

misrepresented um and then they and then they become empty and then trust is broken

and I think I just think that's a really big deal and um yeah and the I was going

to ask you too when you were talking about like the challenge of of of assessing whether

something isn't empty right like whether it's genuine And yeah, I was going to

ask you like in today's in today in these times like how does one what do

you look for? Like maybe it's some of these I'm asking about qualities like you know.

Yeah. So I mean you can look at a company quantitatively

and it's easy. You look at their numbers and you see what they're doing.

But in my experience, it often takes seeing them

in person, seeing their operations, gauging their culture, sitting down with

the leadership team, and just hearing them talk about what they do and how they do it and how passionate are they

about what they're doing. You can glean a lot in a relatively

short period of time, but it does require sometimes travel to the far corners of the world to make that

happen. Yeah. No, I Yeah, I think I find that so

important is to spend time with people face to face because that's where, you

know, there's Yeah, I'm getting now I'm getting so off tangent, but like the

what the, you know, with everything happening on on in tech or like on Zoom

and and the way I remember during co like I was reading about just like from psychologists or like somatic therapists

who were talking about like the amount that um when we communicate when humans communicate with one another like I'm

hearing what you're saying if we're in person I'm hearing what you're saying I'm I'm I'm interpreting your lang the language your voice but I'm also like my

my senses are absorbing like all of your body language to like get a full read on

the experience and we've we've because of this digital age like that piece is kind of missing and we need that like

that piece is critical like in developing trust and being able to fully assess something. So, I just think it's

incredible the the lengths that our team will go to to like do that due

diligence. I can't remember the statistic, but it was something like 90% of communication

is non-verbal. It was a quite high percentage. And to your point, this is fantastic. You know, so you didn't have

to get on a plane for 5 hours and I didn't have to get on a plane for five hours. So, we could be face to face. Although as much as I enjoy spending

time with you face to face, Claire, it's not the same. I mean, it's

fantastic. It avoids travel for, you know, an hour meeting. I

used to travel across the country for an hour. It's like, okay, and then turn around and fly across the country back.

Um, but it's just not the same. And I do worry. My girls are 31 and 28 and

they use technology far more than I ever have and

I worry that they don't have those skills that they they don't read people

the way my generation does because we had to we we everything that we did was face to face or maybe it was over our

phone. Um, but you didn't have a call waiting. You didn't have voicemail. You

know, you were doing a ring dial tone. I mean, all that good stuff.

Yeah. Yeah. No, that's one thing, you know, the human really the human

experience, the human condition is like just something you cannot replicate with technology. And that is

I love that. Um, okay, Jonathan, thank you so much. This was a pleasure as

always and I yeah each time I leave these conversations I'm just excited for the next.

My pleasure Claire.