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High impact philanthropy

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Title: Apple Presentation Template Supplement Author: Carol Weiss Miller : Last modified by: stk Created Date: 4/22/2009 7:24:48 PM Document presentation format – PowerPoint PPT presentation

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Title: High impact philanthropy


1
High impact philanthropy
  • Steve Kirsch
  • www.kirschfoundation.org
  • www.skirsch.com

2
MISTAKES HAPPEN
3
Philanthropy is like Dragnet
  • Lot of stuff going on in the world
  • Sometimes, things go wrong
  • When they do, I go to work
  • I am a philanthropist

4
DISCLAIMER
  • I am not your typical donor
  • Do not try these techniques at home
  • If you are thinking of trying this, you should
    seek professional help

5
Agenda
  • About our foundation
  • About giving
  • Strategic philanthropy
  • Non-traditional giving
  • Mistakes
  • Results

6
About Kirsch Foundation
  • 501(c)(3) Supporting organization 50M endowment
  • Give 4.5M to 8M/year, 100 to 150 grants, 6
    full time staff people Medical advisory board
  • Goals we could accomplish in our spare time
  • Ensure world safety
  • Cure all major diseases
  • Restore the environment
  • Improve politics
  • Improve education
  • Support the local community
  • Encourage philanthropy
  • Battle the forces of evil government
    stupidity/arrogance

7
My secret motivation
  • To see my smiling faceon the cover of the
    Rolling Stone
  • and buy 5 copiesfor my mothing

8
(No Transcript)
9
Why give?
  • To benefit everyone (including ourselves)
  • To achieve certain goals we think are important
    to make the world a better place
  • Ideal investment is both
  • High leverage (ROI) and
  • High impact

10
Example of high impact giving Carnegie Foundation
  • Donated 5.2M 100 years ago
  • Built 65 public libraries
  • Still in operation today
  • Moral A small one time donation can have a bit
    impact

11
Some things that make us different
  • Invest in people, not projects
  • Long term commitments
  • People dedicated to environment, medical,
    politics
  • Invest endowment in private for-profit companies
  • Involved in politics when needed to achieve goals
    (e.g., ZEV program)
  • Encouraging collaboration between foundations
  • Look for market opportunities such as NEOS
    which have a great ROI but little visibility
  • Fund gaps (e.g., experienced researchers, stem
    cells)
  • Fund hair loss research

12
Agenda
  • About our foundation
  • About giving A personal perspective
  • Strategic philanthropy
  • Non-traditional giving
  • Mistakes
  • Results

13
Giving statistics in Silicon Valley
  • One of the richest areas on the planet, but
  • For high net worth households (assets gt1M not
    including their home)
  • 45 give lt 2,000/yr
  • 6 give 0
  • Source Community Foundation Silicon Valley

14
United Way
  • Sept 99 11M shortfall
  • Richest place on the planet (65,000 millionaires
    in Santa Clara County)
  • We waited 2 weeks for something to happen
  • We were the first to step up with a 1M donation
  • Only 2 other individuals matched it Gates and
    Moore
  • Only 15 people gave gt1,000

15
I worked really hard to make it
  • were talking REALLY hard
  • nightsweekendsholidays
  • gave up sex for 2 years
  • (not that I was getting any before the startup)
  • Now you are asking me to give it away?!?
  • Are you nuts?

16
Why dont people give?
  • Just earned it/want to enjoy it
  • Want to ensure have enough to have lavish
    lifestyle for rest of life, even if something
    goes wrong
  • If I dont, someone else will, so why should I?
  • Lack of time
  • Focus all cycles on business
  • Greedy/ego
  • Like writing your will or going to dentist its
    good for you, but low on the priority list
  • Lack of knowledge of how to do it
  • Never really thought of a cause that resonated
  • Lack of understanding of the benefits of
    enlightened self interest
  • Lazy/afraidhit reply key if you support clean
    air

17
How it is supposed to work
  • You start an Internet company
  • At IPO, you are worth 2.5B, but you cant sell
    any shares
  • So you donate 10 (250M) to a charitable fund
  • You get a nice writeoff and you get to make
    donations to your favorite causes for the rest of
    your life without an additional investment

18
A tale of two Larrys(a true story)
  • Larry 1
  • Worth 2B at IPO in 1999
  • Too focused on his business to make a gift to
    charity
  • Stock has gone from 240 to 1.7 today. Hes now
    worth lt10M.
  • Larry 2
  • Also a billionaire
  • Gave 100M to endow a charitable fund. Asked top
    scientist in aging to donate over 5 years
  • Largest private funder of aging research in the
    US
  • Business doing fine. Hes now one of richest
    people in the world

19
Giving strategy
  • Make periodic small donations as your stock rises
  • Many notable philanthropists regret not having
    taken advantage of this strategy. Dont make the
    same mistake.

20
How to donate to charities when your stock is
locked up
  • Your stock seems to always peak when you are
    locked up but...
  • You donate the stock the charity shorts other
    shares
  • Allows you to give charity lots more money AND
    gives you a bigger writeoff
  • Typically done through a community foundation so
    you can decide later where to give and how much
    to give

21
Where do you want your estate to go tomorrow?
  • CHOOSE ANY TWO
  • Family
  • Taxes
  • Philanthropy
  • Who would you rather invest your dough?
  • You? Or the government?

22
The best things in life arent all that expensive
  • House
  • Car
  • Vacations
  • Subscription to Fortune
  • Replay/Tivo box
  • Private jet
  • Assets for guaranteed income for rest of your
    life
  • So now what?

23
So we had a choice...
  • Sit on our assets
  • or
  • Put those assets to work in a way that will
    benefit
  • ourselves
  • our kids
  • future generations of our family
  • our friends and community

24
Why give young
  • No tax advantages to giving after you are dead
  • No personal satisfaction to giving after you are
    dead
  • Giving can ultimately benefit you or your family
  • Reduce current tax burden
  • presbyopiahair losssleep apnealactose
    intolerancepsoriasisreceding gumsnear
    sightedtorn ACLtype I diabetes macular
    degenerationtinnitus

25
Example
  • Ten years from now, you might be diagnosed with
  • Heart disease/stroke
  • Cancer
  • ALS, Parkinsons disease,
  • At that time, starting a giving plan will be too
    late to have an impact on your health
  • In hindsight, would you think keeping your assets
    sitting in stocks was the right move?

26
Take an objective look at yourself
  • What kind of person do you want to be?
  • In A Christmas Carol, did you like Scrooge
    better
  • BEFORE
  • or
  • AFTER
  • ?

27
Virtually all who try philanthropy stick with it
  • 100 donor satisfaction at CFSV
  • No donor advised endowment funds have closed
    (except if the donors move)
  • Problem is that it takes them a while to break
    the code to figure out that giving early is
    good.
  • Bill Gates is very smart and it took him years
    to figure this out.

28
Giving can be pragmatic
  • Doesnt need to be altruistic can be totally
    pragmatic
  • Example
  • We give because we get a higher return on our
    assets
  • Our one-time 80M donation may cure cancer,
    diabetes, or arthritis save the world help
    reduce pollution
  • Was that a good use of 80M? Or should I have
    invested it in stocks? For whose benefit?

29
Giving can be purely in your self-interest
  • Or giving can be in your self-interest
  • Example donate to causes that affect or may
    affect you or your immediate family
  • aging research
  • heart disease
  • asteroids

30
Why Give? Summary
  • We DO give to make a positive difference in our
    own lives and the lives of people we care about.
  • We DO NOT give
  • out of a sense of obligation
  • payback
  • civic duty
  • because it is the right thing to do
  • to create a legacy
  • because it is fun
  • because we have nothing else to do
  • because we like to see our name in print
  • to feed our ego
  • to get our picture on the cover of Worth
  • to win awards
  • to win friends or social status (keep up w/Ken
    Lay)
  • to atone for being wealthy
  • to get invited to all the cool fundraisers
  • to get preferred seating at fundraisers
  • to avoid income tax

31
Why give
  • Your wealth gives you an opportunity to make a
    difference
  • If you dont take advantage of it, who are you
    trusting to look out for your interests?
  • We are the leaders weve been waiting for
  • One person CAN make a difference

32
Agenda
  • About our foundation
  • About giving Why give?
  • Strategic philanthropy Where?
  • Non-traditional giving
  • Mistakes
  • Results

33
Traditional philanthropy
  • Donate to American Cancer Society, United Way,
    public TV, etc.
  • s.o.b.s symphony, opera, ballet

34
Reactive approach
  • You wait for people to ask you for money
  • You evaluate each one without a scoring system, a
    context, or a budget
  • Semi-reactive You say that you fund area X and
    evaluate proposals that are relevant to area X

35
Life changing advice
  • SK What is the secret? How do you separate rich
    people from their money?
  • LE You know, there are some people in this
    world who want to give money away.
  • SK Ohso you are doing them a FAVOR!
  • I later came to the conclusion that it made more
    sense to be someone who knows what they want and
    gets it instead of being someone with a lot of
    cash and no purpose

36
Strategic approach
  • Figure out the areas important to you
  • Create a vision and a set of annual goals
  • Create a strategy/plan to achieve the goals
  • Fund and/or initiate projects consistent with the
    strategy
  • Create your own criteria for evaluating grants (I
    have 13 that total 100 points)
  • Make a long term commitment
  • Realize that results are often hard to quantify

37
How it works in real life(sometimes)
  • I read in Time about how we just had a near miss
    from an asteroid
  • Say to myself
  • Wow! That is really brain dead that they arent
    spending 50M to save 6B lives.
  • Someone should do something!
  • Look in mirror
  • Bottom line I get pissed off and use
    philanthropy to combat the stupidity and/or
    arrogance.

38
3 top criteria
  • Fit with our goals?
  • Will outcome be really useful or solve a problem
    that pissed me off?
  • Are they likely to achieve their goal
  • People
  • Funding outlook
  • Track record
  • Approach

39
My history
  • Started with a donor advised fund at the local
    community foundation 10 years ago
  • Added to it over the years
  • Switched to a supporting organization so we could
    invest assets more aggressively, hire a staff,
    and lobby

40
To apply Some rules
  • Dont bother us if you dont fit our criteria
  • The spreadsheet we post is for your benefit
  • Ignoring it wastes your time and ours
  • Keep inquiries simple and short and compelling.
  • Dont bombard us with information.

41
How to make me feel truly valued
  • I dont care about Thank You letters or
    recognition.
  • I do it for results
  • The best way to thank me for my contribution is
    achieve the goal you set out to achieve.
  • Show me it worked!

42
Agenda
  • About our foundation
  • About giving
  • Strategic philanthropy
  • Non-traditional giving
  • Mistakes
  • Results

43
Selected charitable projects
  • NEOs
  • Catalyst for a Cure
  • Curing cancer
  • Junk faxes
  • Terrorism
  • Environment/Energy
  • K-12 education
  • Political reform

44
NEOs
  • NEOsNear Earth Object
  • Your chance of dying from asteroid hit is 1 in
    20,000 same as a plane crash
  • Your chance of winning the California state
    lottery 1 in 41 million.
  • Therefore, asteroids are a certainty
  • 1 most likely reason the earth could end
    tomorrow
  • When a 6-mile-wide asteroid slammed into Earth 65
    million years ago, it wiped out the dinosaurs,
    about 80 percent of the world's plant species,
    and all animals bigger than a cat.

45
NEOs
  • What I dont understand is this
  • People buy lottery tickets...
  • Our government spends BILLIONs on missile defense
    but virtually IGNORES the statistical certainty
    of an asteroid hit that is PREVENTABLE if we
    spend the 2M/yr for the next 10 years
  • Someone should do something!

46
Catalyst for a Cure
  • Collaboration with Glaucoma Foundation
  • Brings together scientists from different fields
    to collaborate on new approaches
  • Pick areas where there is potential for a
    breakthrough
  • Replicate in other areas (spinal cord)

47
Targesome
  • Large molecule technology for targeted delivery
    of drugs
  • Chemo therapy can be delivered only to sites of
    angiogenesis resulting in a quick elimination of
    cancer without any side effects
  • Same technique can be used to image cancers which
    are too small to detect
  • Today have fantastic lab data, partnerships with
    leading drug companies, and NCI
  • I provided initial funding. Unlikely to have
    received funding without a charitable investor
  • The whole donation resulted from follow up from a
    chance meeting, not proactive research on my
    part.

48
Junk faxes
  • Fax.com sends out 4 million junk faxes a day, all
    in clear violation of state and federal law..wake
    you up tie up your resources
  • I got pissed off at getting 4 faxes for an
    illegal credit repair scheme from a company that
    keeps changing its name and location. Now only
    99!
  • Got pissed off and did a lot of research and
    phone calls and e-mails. I am responsible for
  • a comprehensive website on the topic
  • getting the California state AG to sue fax.com
  • getting .. to file a class action against them
  • filing 20 lawsuits on behalf of my company
  • getting their Sacramento lobbyist to drop them
    as a client
  • getting key California Senators to change their
    vote to support the federal ban through arguments
    tailored to them

49
Junk faxesso why should YOU care?
  • Plan to sue them for 250B and
  • donate the recovery to charity!
  • We tried to get a hospital or university to be a
    plaintiff. Judge would award 50K participation
    fee.
  • So I thought this is a nice way to be like Robin
    Hood legally steal from the bad guys and give to
    the poor guys
  • Result Most cant make a decision.

50
National security
  • How many terrorists are in the room today?
  • Way too expensive and inconvenient to secure
    every resource
  • Much cheaper to keep terrorists from entering the
    country
  • A reliable lie detector that can give you an
    instant, unambiguous result can save billions of
    dollars

51
Environment/Energy
  • Cars are the 1 contributor to oil use,
    pollution, and GHG
  • Washingtons plan Business as usual, but well
    invest in FCVs and provide incentives and try to
    keep secret who we met with.
  • Why so secretive about energy when Republicans
    said we MUSTNOT be secretive about national
    policies developed by a Democratic President?
  • We need more.
  • Can you imagine what would happen if there were
    no standards on electrical voltage or the shape
    of the plug?
  • Why not apply the same strategic planning process
    you do for winning elections?
  • We need a clear goal, some clear decisions, and
    all the wood behind one strategy and one plan H2
    direct FCVs.
  • Gephardt and Lieberman were the first to get it.

52
Education
  • TIMSS 42 countries. We did better than South
    Africa and Cyprus.
  • Our top 10 kids Singapores worst 15 kids
  • Urban HS dropout rates 50 typical
  • So how do we get to international parity?
    Piecemeal changes?

53
Bush approach
  • High standards, testing, accountability, and
    local control.
  • If you do all of these things, does it work?
  • Lets look at Texas

54
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55
K-12 education
  • Washington Accountability is the answer.
  • My response You are insane. That has never
    proven to work in the past, so why should it work
    now?
  • US teachers are under paid and unqualified, there
    is no pay for performance, principals cant fire
    a bad teacher, you have no national standards,
    and insufficient resources to get the job done.
  • You cannot hold anyone accountable who you
    havent given the resources, training,
    experience, and authority to succeed.
  • This isnt rocket science. Why not just copy what
    works in other countries? DUH!!!

56
Financing the Bush plan
  • What they say
  • Education is the 1 most important problem in
    America today.
  • What they do
  • Spend 1.6 trillion on a tax cut to benefit the
    rich but only increase education spending by
    4.6B which is too small to have any impact and
    still arent funding special ed as required by
    your own law (unfunded mandates)

57
Why we get involved in politics
  • To accomplish our goals
  • Medicine Stem cells
  • Environment CAFÉ, ANWR
  • Political reform McCain-Feingold/Shays-Meehan
  • Asteroids Funding for NEOS
  • World safety Nuclear arms control
  • Education
  • Energy
  • Huge leverage
  • To balance special interests
  • I also have a 501(c)(4) for additional political
    advocacy beyond that allowed by (c)(3)

58
Political reform
  • Difficult to get some key legislation passed if
    there are special interests influencing votes
  • Public financing is the best solution and is
    working in 4 states
  • Our job
  • Put Clean Money on the ballot in 2004 in
    Calfornia
  • Get rid of or increase term limits to eliminate
    the brain drain.
  • All of this is not sufficient. We still seem to
    struggle with electing effective leaders. How is
    it possible that in 2002 America still does not
    have a long term energy plan?

59
Agenda
  • About our foundation
  • About giving
  • Strategic philanthropy
  • Non-traditional giving
  • Mistakes
  • Results

60
Our biggest mistake
  • We were too aggressive. Our endowment went from
    50M to 95M then to 30M
  • New policies
  • Never put more than 5 of equity in any single
    stock and 25 in a sector.
  • Always keep 12 to 18 months cash on hand

61
Agenda
  • About our foundation
  • About giving
  • Strategic philanthropy
  • Non-traditional giving
  • Mistakes
  • Results

62
Did we make a difference?
  • Hard to measure
  • Funding NEOS discovery
  • Funding nuclear disarmament
  • Funding medical researchers
  • Funding campaign finance reform now focused on
    California initiative
  • Kirsch medical investigators

63
Did we make a difference?
  • Medical
  • Cured cancer in rabbits
  • Got CFC funded/started
  • Swayed some votes on cloning
  • Helped clean up the air
  • Passed AB71 and designed the sticker
  • Got CO2 bill passed Assembly
  • Got key US Senators to think differently and
    strategically about energy
  • Got 20 leading energy experts to develop an
    energy business plan
  • Swayed votes on CAFÉ standards
  • Got tow-away signs posted at SFO EV parking
  • Free parking for EVs in San Jose
  • Helped fund various charities
  • Reduce junk faxes
  • National security/Durbin bill new provisions
  • Helped education Funded buildings at MIT and
    DeAnza

64
My approaches
  • Promote responsible plans with goals and credible
    strategies
  • Energy
  • Encourage people to copy what works and make
    the obvious decisions
  • Education
  • If it isnt working, try something different
  • Medicine/Catalyst for a Cure in glaucoma
  • Keep an eye out for market opportunities
  • NEOS
  • Targesome

65
Summary
  • Start now, no good reason to wait
  • Easiest way to start DAF at a local CF
  • Spend the rest of your life spending someone
    elses money!
  • Be strategic set measurable goals
  • Hold yourself accountable for results
  • Pick a cause you are passionate about and get
    involved
  • One person can make a difference

66
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67
Reforming politics
  • Cranston Campaign finance reform
  • Powell The other systems are worse
  • Wyden They think this is on the level
  • No politician in Sacramento has said lets
    uphold the intent or letter of the law.
  • Politicians act in a way that their constituents
    perceive is in their best interest (or based on
    polls), not in their true best interests
  • Key
  • Campaign finance reform
  • Helping to elect candidates you believe in
    through contributions, independent
    expenditures, research,

68
Giving options
  • Charitable Lead Trust (income to charity now,
    later assets pass to heirs)
  • Charitable Remainder Trust (income to you now,
    later assets pass to charity)
  • Donor advised fund
  • Supporting organization to a community foundation
  • Private foundation

69
Which option?
  • Smart estate uses a combination
  • CRT Secure income stream for you
  • CLT Pass money to your heirs
  • Donor advised fund Under 1M assets minimizes
    tax bite and maximizes charitable giving
  • Supporting org gt5M in assets you can influence
    investments and donations

70
Easiest way to donate
  • Gift appreciated stock to a donor advised fund at
    local Community Foundation (typically 25K
    minimum)
  • E-mail them whenever you want to make a grant
  • After you make the donation, you spend the rest
    of your life giving away someone elses money!
  • For any progressive community foundation

71
Charitable fund advantages
  • You can add stock (and liquidate) when your stock
    is locked up
  • Can donate to fund when stock peaks decide on
    recipient later
  • Gift to charities at anytime from the fund
  • Less hassle (no personal recordkeeping, no
    periodic stock transfers, e-mail donations)

72
Advantages of charitable fund
  • Endowment compounds tax free forever
  • You get to give away an infinite amount of OPM
    and your annual grants will typically increase
    each year
  • All this from a ONE-TIME donation!

73
Kirsch Foundation
  • Hired CEO
  • Recruited world-class medical advisory board
    (including Gordon Gill from UCSD)
  • Currently
  • 80 M in assets
  • Donate 6M per year
  • Total staff of 5, including program officers in
    medical and environmental areas

74
My recommendation
  • Start NOW with a small donor advised fund
  • Add to it as you become comfortable with the
    results and as your estate grows
  • 10 of your net worth after taxes is a good
    starting amount
  • Supporting organizations beat private foundations
    on every single metric

75
Education copy what works
  • Spend 11 years studying what works in other
    countries. Create program that will work in
    America.
  • Result NCEEs Americas Choice
  • Systems solution adapts to local school
  • CPRE measured 50 to 100 test score improvement
    after just 12 months in 3 states (takes 5 years
    to implement)
  • In use today at over 200 schools
  • Trick to national adoption is in the packaging
    large monetary incentives for adoption,
    implementation, performance for any qualifying
    educational program.
  • We must de-politicize this.
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