This post is part of a series looking at the history and future of Tactical Philanthropy. The series is in preparation for a number of new initiatives we’re preparing to roll out soon.
Until I was fourteen, I wanted to be a major league baseball player. I played second base and wore number 13. Then, stuck on a long car ride with my family, I read a book about the stock market and completely fell in love.
In high school, I read everything about financial markets that I could get my hands on. I took advanced placement economics and decided I would major in the subject before I even applied for college. As a college student I took classes in behavioral finance, accounting and financial markets. I couldn’t get enough.
After college, I went to work immediately for a large, Boston based wealth management company. I completed the Chartered Financial Analyst program and continued learning everything I could about financial markets.
Later I transferred within the same wealth management company back to the San Francisco Bay Area where I had grown up and joined their private client group. It was here that I was exposed to socially responsible investing and found joy in advising individual clients instead of just managing financial portfolios.
In 2002, while the last recession roiled the markets, the firm I worked for was bought out by a large German bank. Within a few months, I was caught up in a round of layoffs. But as is often the case, even if it is a cliché, getting laid off turned out to be for the best. With job offers from two large wealth management companies, I made the decision to instead join a one-person firm called Curtis Brown & Company.
In Curt Brown, I found my mentor.
Within a year and a half, I became a partner in the firm and we changed the name to Ensemble Capital Management. With an opportunity to set the direction of our firm, I sat down and gave a ton of thought to the kinds of clients I wanted to work with.
Skip back to my childhood…
My father is a professor of sociology and my mother is a psychotherapist. Conversations about politics, social change and cultural movements dominated the dinner table. When I was eight years old, I gave a speech to the media covering a community development issue that threatened our neighborhood grocery store.
But I had an old school mind set when it came to my career. I thought I would build a career doing something I loved and when I retired, I would focus on the social impact I hoped to achieve.
Back to Ensemble Capital…
[During all this, the really important stuff happened. I met my beautiful wife, got married, had two kids and settled in a community I love. But that’s a story for another time.]
In 2004, trying to figure out the niche in which I would grow my wealth management company, I stumbled upon a radical shift going on in philanthropy. The company Foundation Source was dramatically lowering the costs of setting up and managing private foundations. At the same time, the Fidelity Charitable Gift Fund and Schwab Charitable were offering donor advised funds, growing like crazy and slashing fees and minimum account sizes. The core tools of sophisticated philanthropists where becoming cost effective for a huge new segment of affluent Americans. They were becoming viable for my clients.
From where I sat, this process was strikingly similar to what happened in the 1980’s and 90’s in financial markets. Driven by the burgeoning financial planning needs of the Baby Boomers, the cost of financial products and advice plummeted. Those decades gave rise to the individual investor. The percentage of Americans who were invested in the stock market went from single digits to over 50%.
As the Baby Boomers got sophisticated about investing, those that had the financial wherewithal turned their backs on financial salespeople and their products. Having led the way in slashing transactions costs in the 1970’s, Charles Schwab & Company began working with independent investment advisors whose compensation was based on providing objective advice rather than selling financial products. The shift took hold and the advisory model became considered the best in class model for high net worth clients.
What I believed then – and believe today – is that the cost of participating proactively in philanthropy was falling in response to the Baby Boom generation shifting from an asset accumulation stage to an asset spending and gifting stage as they entered their retirement years. The demographic bulge that transformed financial markets was set to do the same to philanthropy. At the same time, Generation Y (the children of the Baby Boomers) was leaving college as digital natives who embraced their parents’ social impact legacy, while wanting to incorporate their values into their careers instead of rejecting the system.
At Ensemble, I found success in customizing our wealth management services to the needs of philanthropic individuals and families. I also found joy deploying my financial skills in a way that resonated with my personal values.
The philanthropic planning we were doing at Ensemble was impact driven from the beginning. While most all large, wealth management companies had begun to roll out “charitable planning” services, these groups almost exclusively viewed philanthropy as a tax planning opportunity within which they could give financial advice. For us, philanthropic planning was about helping our clients engage with a set of financial tools that would provide them the best platform on which to reach their philanthropic goals.
But by 2006, I realized that helping our clients package up their financial assets for philanthropic purposes was only Act I. Our clients needed continued advice on how to achieve philanthropic impact. Which organizations should they be supporting? How should they structure grants? Who were the other important players they should know in the issue areas about which they cared? The field of professional philanthropy was wrestling with many of these issues, but there was an exploding demographic of people who were quite simply new to philanthropy and needed a way to get plugged in. They needed more than financial advice.
That’s when I decided to launch a blog called Tactical Philanthropy.