Effective Family Philanthropy in Practice

STEPHANIE: Hello and welcome to the Purposeful Planning Podcast. My name is Stephanie Ellis-Smith. I am one of two deans of philanthropy here at PPI, and I am really pleased to be in conversation with Nicholas Tedesco. He is the CEO of the National Center for Family Philanthropy, and our conversation is going to be talking about effective family philanthropy. So I want to just start first with an introduction of Nick and a little level setting of how Nick and I know each other and have gotten together. I want to share with our audience that I am a pleased to be a proud trustee of NCFP, the National Center for Family Philanthropy, as well as a dean of philanthropy at PPI. So I clearly live and breathe this work. I'm also the CEO of Phila Engaged Giving, and we are a philanthropic advisory firm that works exclusively with families at the intersection of family governance, strategy, giving and impact investing. So as you can imagine, I'm very excited for this podcast, and to do it with our guest, Nick. So I'm going to start with an introduction of you, Nick. So hold on to your hat. I'm going to be talking about you for a little bit here. As I mentioned. Nick is the CEO of NCFP, and he is going to join me in talking about effective family family philanthropy, what that looks like, and how advisors can guide their family clients to achieve it. Now I first met Nick in Chicago in 2017 when he began his tenure at NCFP. He was a ball of energy, meeting and greeting everyone who came his way. I had to really make my way through a crowd to try to get to him and introduce myself. But his warmth and dynamism was a clue to how he was going to evolve NCFP over the next eight years. Before he came to NCFP, Nick was a senior advisor in the JP Morgan family philanthropy Center, where he provided clients with insights and services to help meet their philanthropic objectives. And before that, he was a relationship manager at the Bill and Melinda Gates Foundation, where he was a part of the launch of the Giving Pledge, the effort led by Bill Gates, Melinda French gates and more Warren Buffett to encourage the world's wealthiest individuals and families to commit the majority of their wealth to philanthropy. So lots of peer recognition here. Nick, this is he's been a superstar in our world. He was named to the Inaugural Chronicle of Philanthropy 40 under 40, ranking in 2016 the nonprofit times power and influence list in 2024, Best Guide to Family Philanthropy in 2023 by Inside Philanthropy, quoted in the New York Times and everywhere that you find news. So I am very, very pleased to welcome you to ppi Nick. Hello. NICHOLAS: Thank you for having me and thank you for such a generous welcome. STEPHANIE: Well, absolutely, my pleasure. Well, let's dive right into our conversation here, and let's begin at the beginning. Let's start with your story. What path led you to this work at NCFP? NICHOLAS: Well, again, thank you for the opportunity to join you on the podcast and thank you for the question. And before we begin, I also just want to thank you for being such a wise and helpful board member of NCFP. Your leadership has been such a gift, and we really appreciate you, Stephanie. STEPHANIE: Oh, thank you. My pleasure. NICHOLAS: Of course, it's always an odd experience to hear your bio read aloud, because it sounds so linear, when in reality, it's anything but. But what led me to NCFP really is a healthy dose of curiosity that stemmed from the privilege of partnering with philanthropic individuals and families for a number of years. As you mentioned, my career started in nonprofits, running programs and partnering with communities, before joining the Gates Foundation in 2010 to help build and launch the giving pledge campaign, where I spent four years listening and learning alongside an inspiring group of givers, and it's really at the Foundation where I found my North Star, which is to hold the question of preparedness and effectiveness in philanthropy. Throughout my tenure with the Pledge, I had the opportunity to hear from many wealth holders who had made a public commitment to give away the majority of their wealth. And what I heard was not only a recognition of the importance of giving back, but fundamental questions on how to do so and how to do it effectively. What I kept hearing from the pledgers were questions on how to get started, how to scale up, how to support your partners, how to make a meaningful difference, and how to know you're making a meaningful difference. And so for me, the questions began to emerge as a challenge, and after a few years of working at the foundation, I found myself wanting to get closer to a broader set of givers, which ultimately led me to join JP Morgan, as you noted, as a senior advisor in philanthropy. And again, during my tenure at JP Morgan, I saw the same questions emerge, and for me, it brought into full focus this gulf between intent and action. And again, kept bringing forward the questions of effectiveness and preparedness, and so I started to explore those questions. I started to ask about the infrastructure that's been built to support families. I started to explore what's possible when you bring forward the resources that are available to families. And truly the National Center for Family Philanthropy seemed like the place where I could have the big where I could have the biggest influence providing donors with the tools that they need to make their impact goals a reality. STEPHANIE: Yeah. Well, that's that makes perfect sense. And I love the concept, or the phrase that you use, this gulf between intent and action, and I think a part of that is this idea of effectiveness and how to be effective for those who may not be as familiar, how does NCFP define effective family philanthropy and and maybe also just tell us why it's important to get this right at the outset, or at least maybe a little bit easier for families if they can get this right at the outset? NICHOLAS: Great question. So at NCFP, we define effective philanthropy with four principles, accountability, equity, learning and relationships. And at its core, we talk a lot about how effectiveness requires intention. It requires a learning mindset to ask what's needed and what it means to steward wealth on behalf of others and so really centering intention is the necessary ingredient to effectiveness. So to be effective, we encourage families to ask themselves questions. We encourage them to ask, “Who are we accountable to, and how are we accountable in our actions, who makes the decisions? How are we transparent in our efforts?” We encourage them to ask, “How do we understand our position of privilege and power, and how do we create opportunities for those who are often forgotten or overlooked? How do we engage in learning? How do we embrace a culture of growth and responsiveness based on what we hear and what we do, and what does it mean to be in right relationship with our partners? How are we leading with trust and humility, and how do we empower our partners to do their best work?” And so centering, again, the principles of accountability, of equity, of learning and relationships is what's going to promote success in family philanthropy and any practice of philanthropy. And getting it right at the outset is a bit of a myth, but it's important to take the right steps to try to get it right at the outset, and it's important because it's far more challenging to course correct than it is to scale what's working. And it's also empowering to feel you're doing something right. And it's also the inverse. It's disempowering to feel you're not, and so if you feel that you're not getting it right, if you feel that it's not working, what we often see is that it causes people to disengage, and the philanthropy then stalls out. So really taking the steps to pursue your philanthropy with intention at the onset, to think about what it means to be a steward of these resources, to think about what it means to be accountable to center equity, to have a learning and growth mindset and to be in right relationship means that you can start this practice in a way that is going to help you scale it with the right mindset of what it means to do the work. STEPHANIE: And I think that maybe that's the better way of I should have asked that question instead of getting it right, because, as we know, there are right ways to do philanthropy. There are many right ways to do philanthropy, but I I like what you said about centering the intention and centering that intention first, at the outset, that your intention is to be accountable and to think about what it is going to mean for this particular family to steward wealth on behalf of others. It's an important distinction, and it's a huge role and responsibility. So I think that's a really key concept there, and I appreciate you spelling that out. I want to just sort of talk a little bit about our audience. I think you're a little newer to PPI, but our audience today is mostly attorneys, wealth managers, family office professionals, and all of these folks are already very deeply embedded in their clients’ financial and estate planning, family business world. From your perspective, what role does philanthropy play? Or maybe, why do you think it could be a core part of that advisory conversation, and then a second part of a question that I would ask is, do you just have do you have examples, or have you seen where partnerships with philanthropic professionals help the client advisor relationship? NICHOLAS: Again, great questions. And brings me back to being at JP Morgan and working in the private bank. And what I'd offer is that the conversation matters because your clients care full stop. Being a wealth holder most often means giving back in some form or fashion. And if philanthropy is not part of the conversation, your client is going to look elsewhere. And so the recognition that giving is a natural part of your client's story, is essential to being a good advisor. Giving is part of their legacy, and they want to get it right, and they want a trusted partner who's going to be there to ask the questions, who's going to be there to help direct them to resources. STEPHANIE: Hold them accountable, even. NICHOLAS: Exactly, and ask the question of what it means to be accountable, and it is a necessary component of the wealth story. It's fundamentally a question that is embedded in the recognition of what it means to be a wealth holder in the modern era, and so it's important as an advisor to bring these questions forward to ask, “Are you currently giving? Do you see yourself giving? Who's going to be engaged in that process of giving? How can I as an advisor help you get the resources you need to do this well? What does giving look like is that of your time is that of your financial resources, is that of your talent?” And so that is critically important. And to your second question, the client advisor relationship is an important one, and it's one that's really rooted in trust, and clients are often looking to their advisors to help them find the best advice possible. And what we often say is look to those you trust the most to find those who you can trust. And so for an advisor to be able to offer an advisor who is specialized in philanthropy, to come into the relationship and to supplement the support that you as an advisor provide is going to build out the team and is going to help strengthen your relationship and ultimately help the aims of your client be successful. STEPHANIE: Yeah, and I think, in my experience too, that it really does solidify the other professional advisors relationship with the client, because you are able to, as you said, bring in the right people who they trust who can really help round out the table team and bring philanthropy at the table. Because even if it may not be front and center in the minds of perhaps the wealth creator. I'd say nine times out of 10 the Rising Gen is thinking about it in some way, shape or form. And so it's, it's a longevity play, not to be too tactical about it, but I think that's real. NICHOLAS: And I also hear time and time again how the conversation on philanthropy informs the totality of the conversation on wealth and wealth planning STEPHANIE: One hundred percent. NICHOLAS: Centering questions on philanthropy is going to surface questions of succession and structure and investment philosophy. Philosophy that is going to help you be more full throated in your leadership as an advisor, and more fully informed. STEPHANIE: Absolutely, absolutely. We see it all the time and with that, I'll say we often work with families around navigating generational transitions. You just talked about succession planning, but also what comes up in those conversations with us is identity, governance, and this is just all on top of grant making, the traditional things people think of that go along with philanthropy. But if we think about all of the dynamics that are in play, how does NCFP see how family dynamics can shape also the philanthropic success or failure even? NICHOLAS: It's a great question, and we often say that families are systems, and their success in all efforts is dependent on the understanding and the health of the system. And so it requires families to acknowledge the interconnectedness of each other and the importance of tending to the interpersonal relationships that make giving and all other efforts possible. And so it's critical to think about family dynamics as families think about their philanthropy as they think about their wealth. Again, it requires a system that is healthy to be able to navigate the decisions that promote effective philanthropy and that help families be successful across all enterprises and so really acknowledging that family dynamics are a core part of the story of a family and its success is fundamental. And what we also say is that to have healthy family dynamics, to have a healthy family system, requires strong decision making policies and practices that is one of equality, one that empowers all voices. Good governance really enables families and their partners to collectively make informed decisions, and it is what helps navigate family dynamics and relationships to strengthen them and to fundamentally create enduring success of healthy family systems. STEPHANIE: I want to pull out something that you said about related to the family dynamics, but that it requires healthy decision making practices, and I think that's a something that can be overlooked by a lot of folks, because on one hand, it just sort of seems like, “Oh, well, isn't it obvious how we make decisions?” And not so much, because there are so many different ways and so many different levels and layers of power dynamics that come into play. So having those ideas and metrics behind how decisions are made, who is held accountable to those decisions are hugely important. And I would also think that particularly in philanthropy and for especially generous families who talk a lot about trust based philanthropy and equity centered giving, there has been an increasingly new way that people are starting to incorporate community voice, outside family members into their decision making that adds the sort of layer of robustness, but also a little bit more complexity to it. And I've seen some really amazing examples around that. And how do you see, Nick, families evolving to sort of better include broader voices in decision making practices, in their philanthropic giving? NICHOLAS: It's a great question, and it's one of the trends that we are seeing that is most prominent, which is diversifying the decision making that leads families in their giving. Before I get to the question on how, I'll again underscore something you mentioned, which is that governance is one of the most fundamental elements for success in family philanthropy and across all family enterprises, as I mentioned before. And I'll just share with the audience a framework that we use to define governance to help demystify what is often a word that creates a lot of confusion. So when we talk about governance. We talk about fundamentally, who makes the decisions and how are decisions made. So again, we talk about who the people and how the policies, the practices, and we talk about the 4Ps of effective governance: people, principles, policies and practices. We talk about first really asking who is going to be involved, as I mentioned before, in the decision making, and then really thinking about the principles, the values that are going to undergird those decisions, and then moving on to the policies and the practices that are going to extend those values into actionable, measurable decisions. And so one of the greatest things that an advisor can do is to inquire about the decision making that a family has in place and how to strengthen it. I will often ask a family how they make decisions, and if that process is working well for them, inevitably, the answer is that there's room for growth, and that's a huge opportunity for an advisor, which is to then think about how to work with that client, to strengthen their governance, to to work alongside them, to better understand how that family makes decisions, and to be able to optimize them, to make even greater, more effective, more efficient decisions in the future. So to your question on the trend of diversifying decision making, we are seeing families again ask this question of accountability, and the response is diversifying governance. So we are seeing families that are bringing community members into the system as decision makers. We're seeing families that are diversifying the structure of their Foundation Board of Directors to bring on community voice and representation to help them make decisions alongside the wealth holders so that the family is making decisions with community and not for community. And so there's legal ways to do this, to bring community members on to a Board of Directors or the Board of Trustees, and there's other ways to do it, by way of having advisory committees or formal or informal advisors, or just people that you are listening to and in dialog with to make sure that the decisions you're making are informed, but it's critically important that the voice of those you seek to serve are present in the decisions that you're making. STEPHANIE: Yeah, I think that's a key component to accountability, to be sure, and I feel like I want to just go back and highlight those 4Ps for anyone who may have missed it, or like, “Oh gosh, what are those again?” Because it's so fundamental to good decision making, particularly if families are considering bringing on non-family members or outside voices, the foundation should be strong. And those four P's, again, are people, principles, policies and practices. And that's such a great way to remember and to think about the fundamentals of the structure and fundamentals of decision making. So I really appreciate having that moniker, Nick. It's going to be really helpful, I think, for a lot of folks. NICHOLAS: Yeah, and it's a great audit. I use it as an audit to ask family, go through the 4Ps and ask, “Have you made the implicit explicit? Have you defined who those decision makers are, or is it just implicit and not talked about, how can you make it explicit? Have you talked about the principles that guide your decisions, or are those implicit and people need to infer them? How can you make them explicit? And then how are you codifying the policies and the practices? How many times you're meeting, the ways in which you meet?” The ways in which you make decisions, and that's going to be what is going to help navigate conflict. Because when the implicit remains implicit, when it's something, people have to infer conflict arises. STEPHANIE: They will make it up on their own. And you know what happened, how that happens, and what happens when that occurs. And I also say this idea of making the implicit explicit, which for some reason, has sort of been a theme for us at Philo this year and working with our clients. So it's so funny that you brought that up, but it's also key for integrating the rising generations as well. NICHOLAS: Yes. STEPHANIE: It's not just for external folks coming into the family system or the family unit, but even just new people kind of coming on board, like, “What is actually happening here? How do we get this done? Can you really explain these things?” And I love the idea of the 4Ps as an audit. That's a really great tip. Thank you. So for us at PPI, PPI focuses really a lot on aligning wealth with meaning and legacy. So a question for you Nick is, how do you see philanthropy fitting into that broad. Broader purpose conversation? I know you kind of alluded to this already, but really particularly in thinking about families of significant wealth. How do you sort of knit together the idea of legacy and wealth to bring about purpose for a family? NICHOLAS: It's such a great question, and I see that it's all one conversation, that the conversation on wealth stewardship is inclusive of philanthropy. And fundamentally, philanthropy is the embodiment of purpose. It's a reflection of the interest of the cares and the concerns of your client, and so as you are engaging with your client as an advisor, as you're asking about questions of purpose, it is a natural extension to ask how your client is giving back, how they aspire to give back, and fundamentally, how they see philanthropy as part of of their legacy. And truly conversations on wealth, wealth that's connected to purpose really requires thinking about how to use all of your resources, including your name, including your reach, including your relationships. And so it's important for advisors to call the questions and to hold the totality of the question of purpose, and hold the question of the totality of wealth stewardship and and make room for a conversation that asks about not just earning and perpetuating the wealth, but giving of the wealth and exploring if that is, in fact, a part of how a family defines its legacy now and in the future, and what that means. I'll also say that a conversation on philanthropy can also be quite illuminating to bring forward a broader conversation on purpose across all efforts and enterprises of a Family, because it starts with why a conversation on philanthropy starts with why you're making the choice to give, and the values that are going to guide that, and those values are going to be the very same values that guide all of the decisions, including investment allocation. STEPHANIE: Absolutely, philanthropy is like a cipher. It's this: the values behind it, the metaphor is applicable all the way through to every other thing that a family is doing that's so great. Yeah, and we're talking about all of the opportunities that can come from having these conversations, but let's just talk for a brief minute, because we don't want to focus on the negative. But let's just talk for a second about maybe pitfalls. What are maybe some common missteps you've seen in early stages, or even well established family given, family giving efforts, and how have you seen that advisors can help steer families around these missteps? NICHOLAS: Great question, and there are many. I will highlight three, but I will also encourage advisors to work with their families to acknowledge that philanthropy is iterative. It's a process that is refined over time and is refined by doing and by learning and by going back to what we talked about before, intention. So holding the intentionality of learning and growing by doing is what's going to inform the effort, and it is something that is going to get better as it progresses. But in terms of common pitfalls, there are three that are perhaps more common than others, and those are not managing conflict, not establishing clear governance practices and not planning for succession. With regards to conflict, people tend to want to ignore it, which typically ends with people feeling resentment or resigning or deferring to others or disconnecting from the system. And what we often talk about is the need to anticipate and manage conflict, because conflict is going to be present in a family system. It's a natural part of family philanthropy and family business. And there can be a healthy range of conflict that allows for differences to be observed and allows for opinions to be brought forward, that allow people to feel empowered and to be present. And it's important to be able to navigate and manage conflict so it doesn't become unhealthy. So it's important for advisors to be able to identify when conflict becomes unhealthy and when advisors can offer some solutions by way of professional support, to be able to help upskill a family on how to anticipate and manage conflict. Our research has told us that the most effective way to manage conflict is to prepare for it and to prepare we suggest creating good governance structures to… STEPHANIE: Leads to number two. NICHOLAS: Number two. Because if you have again, clear decision making practices in place, it allows for an understanding that minimizes conflict, and it in many ways depersonalizes the decisions themselves. STEPHANIE: Because there's a framework there. NICHOLAS: Exactly, the decisions are then not personal in nature. They are processes. We are following a process. We are a majority vote system that means sometimes you're going to win and sometimes you're going to lose, and it is not personal. And so you can fall back on a process that then takes it out of the personalization to some extent. And so good governance, being clear about how you make those decisions, when you make those decisions, who makes those decisions? Who has the authority to make those decisions at what time? Then depersonalizes it. It's not about a brother-sister power dynamic. It's about the role that you hold in that system and the particular decision that you're making. STEPHANIE: We talk about, sometimes bringing the dynamics of the dining room into the boardroom. It's like, “That's what you do not want.” NICHOLAS: Yes. Yes, yes. We talk about reimagining relationships, as professionals, as partners, and that is so critically important, and it's hard to do. It's hard. And another pitfall is not thinking about succession strategically. So you mentioned onboarding the next generation. We often talk about how important it is to be clear about your intention when you are bringing on the next generation, making sure that first of all, it's an invitation, not an obligation, and that invitation is clear, that the expectations for participation are understood and that they're embraced, that they're articulated and that there's support for those who are going to come into the system to be able to be successful in the system. And what we often find is that most families default to succession. They don't necessarily plan for it with intention. STEPHANIE: Yeah. Well, thank you, Nick, this is a really helpful piece of advice. And I'm glad I asked about the pitfalls, because sometimes it's helpful to learn about, “Oh, what not to do and what to avoid.” So I really appreciate the way that you shared that with us, and I want to wrap with our final question, and it's maybe an extension of the way you were just explaining your last concepts, but really, this is a call to action for advisors. If every advisor listening right now could take just one action this year to help their clients elevate philanthropy, what would you want that to be? What does that look like for you? NICHOLAS: I would encourage all of the advisors who are listening to embrace the questions, to not be afraid to ask your client about giving, to ask your client if they plan on giving, to ask what success looks like, and ask about the barriers to success, open up the conversation and commit to listening and understanding the goals and dynamics that your clients working with. But you need to ask the question. And so what I would recommend for all the advisors who are listening is to be curious, to ask the question, and not be afraid of not having the answer, because you can get back to them. You can refer advisors like yourself and others. Us to come in and answer the more complicated questions, but again, open up the conversation on giving so that it creates a path for you to be a true partner with your client. STEPHANIE: Yeah. And it brings them closer in touch to their purpose, which is what we're all here for. NICHOLAS: Yes, indeed, indeed. STEPHANIE: It was such a great conversation, Nick. Thank you so much for giving us your time. This has been very enlightening, and I'm really happy to welcome you to ppi for your first podcast, hopefully first of many. NICHOLAS: Thank you. It's been a great privilege, and I appreciate what you do for the field, for NCFP, and what PPI does as well. So thank you so much.