Presenter: Jeff Lawrence, The Lawrence Foundation

This presentation was actually given a number of years ago at a philanthropic conference on giving, but has been updated to reflect more current information.

Some important definitions needed for this presentation...

game n. 1. an activity providing entertainment or amusement; a pastime. 2. a competitive activity or sport in which players contend with each other according to a set of rules.

philanthropy n. 1. the effort or inclination to increase the well-being of humankind, as by charitable aid or donations.

Games are an important part of being human. They help us develop an understanding of physical and social rules and physical, mental, cooperative and strategic skills. From childhood to adulthood we increasingly develop an understanding of these rules and ability and confidence to use these skills.

Childhood outdoor games: Tag, Jump Rope, Dodgeball, Kickball, Tetherball, Foursquare, Hopscotch, Marbles, Red Light Green Light, Hide and Seek, Duck Duck Goose, Capture the Flag, Simon Says, King of the Hill, Marco Polo.

Board games: Candyland, Barrel of Monkeys, Chutes and Ladders, Operation, Connect Four, Clue, Scrabble, Monopoly, Chess, Checkers, Backgammon, Risk, Yahtzee, Trivial Pursuit, Dominoes, Sorry, Uno.

Sports: Football, Volleyball, Baseball, Softball, Hockey, Basketball, Soccer, Track and Field, Bowling, Golf, Tennis, Lacrosse, Cricket.

Video games: Space Invaders, Pac-Man, Donkey Kong, World of Warcraft, Mario Kart, Grand Theft Auto, The Legend of Zelda, The Sims, Animal Crossing.

This presentation will look at philanthropy as a game. There is the board, a set of rules, a definition of winning or when the game ends and a strategy to get to that end.

The Game board: Planet Earth

The Game pieces: People; Data information, knowledge, and experience.

The conditions for winning or ending the game: Filling needs, fixing problems, changing views, values or beliefs.

The Rules, constraints, and boundaries under which the game is played: Non-persistent, context-sensitive, and strategic.

A competive strategy: Competitive and/or cooperative

With some playing time: Indeterminate — can be intra-generational or inter-generational.

Players fall into three broad buckets.

Those that have money and resources: Individuals, Foundations, Corporations, Government. (64,000+ foundations as of 2002.)

Those that have ideas and need money or resources: Individuals, Non-profits, Schools, Government. (About 850,000 U.S. non-profit organizations as of 2003.)

Those that have advice: Membership Associations, Professional services, Consultants, Financial managers, Others.

Key players in the philanthropic ecosystem:

Individuals → work with Advisors (Legal, Accounting, Financial, Insurance, Program Development, Information Technology).

Funding vehicles: Corporations, Community Foundation, Public Foundation, Private Foundation, Government.

Recipients: Non-profits, serving Customers and Society.

Oversight: Legislature, Regulators.

Key observations about the current philanthropic landscape:

• There are a lot of broken things and a lot of people trying to fix them.

• The battles to fix broken things are very asymmetric.

• Foundations, corporations, and individuals cannot assume all responsibilities government is shedding.

• The non-profit world (grantors and grantees) is very fragmented.

• Non-profits are politically weak.

• People in the non-profit world are passionate, articulate, and generally committed to doing good.

• Many non-profits seem to be very personality driven and without clear succession plans.

• Understanding, measuring, and comparing effectiveness and return on investment of programs is quite often difficult.

• Funding and forums to pass on lessons learned seem to be scarce.

Jeff Lawrence's career timeline:

1975 to 1979 - Student, BSEE, UCLA; Recording engineer at Butterfly (spoken word recording).

1980 - Unemployed.

1980 to 1987 - Software and systems engineer at Amdahl, Doelz Networks (communications systems).

1988 to 2000 - Co-founder, President & CEO at Trillium Digital Systems.

2000 to 2002 - Chief Technology Officer of the Communications Group at Intel (chips, software, systems).

2000 to present - Grantor and Trustee of The Lawrence Foundation.

2002 to present - Founder of Clivia Systems (technology and business consulting).

2007 to present - Co-founder, President & CEO of Common Grant Application (Web service).

How did altruism develop and why does it exist at all?

Definition

altruism n. 1. unselfish concern for the welfare of others; selflessness.

Why?

It ensures continuation of common genetic material into the future.

The theory:

Evolutionary biology suggests people should only help genetic relatives, not others.

The reality:

• People will often act against their own self-interest.

• People will cooperate with others and punish those who don't, even when they have nothing to gain.

• People trust others when they should not.

• True altruism appears to be part of human nature.

Why?

Anthropologists, biologists, and scientists don't know for sure.

Source: Science, NewScientist.com, Los Angeles Times.

Multiple factors influence charitable giving:

Individual social economic factors: Gender, Race, Age, Education, Occupation, Economic status.

Learned cultural behaviors: Taught, Social, Economic, Cultural influences.

Individual values: Reputation, Moral beliefs, Ethical beliefs.

Religious influences: Christianity (33%), Islam (22%), Hinduism (15%), Non-religious (14%), Buddhism (6%), Chinese Traditional (4%), Primal Indigenous (3%), Other (3%).

Political systems: From Anarchy and Dictatorship to Democracy and Meritocracy.

The Lawrence family's giving history across three generations:

Generation -1 (Parents): Attended church, gave food to mission, volunteered at public schools, volunteered to coach sports, volunteered for scouts.

Generation 0 (Ourselves): Attend some church, give food to mission, volunteer at public schools, letter writing and visits to elderly, family foundation, lobbying.

Generation +1 (Children): Food to mission, community service, family foundation.

Time given: Volunteering, community service, coaching, letter writing.

Money given: Food to mission, gave to homeless, gave to church, gave to family, gave to charities, gave to public schools, gave to employees, family foundation.

Wealth creation and transfer in the United States (based on Boston College research):

• People born 1906–1925: Total wealth transfer $3.5 trillion; Transfer to Charities $0.4 trillion.

• People born 1926–1945: Total wealth transfer $15.6 trillion; Transfer to Charities $2.3 trillion.

• All adults as of 1998: Total Wealth Transfer (1998–2052) = $41.0 trillion.

Wealth comes through three paths: Transfer, Accumulation, Creation.

The Lawrence Foundation's funding source: Intel stock, resulting from the sale of Jeff's Los Angeles-based company to Intel Corporation in August 2000.

Source: http://www.bc.edu/research/swri/, August 24, 2000.

After I sold Trillium to Intel, my wife and I had to decide what to do with our new found wealth. We didn't need most of it and wanted to give much of it away.

Considerations:

• Self-interest (family)

• Those we know (business and friends)

• Those we don't know (everybody else)

"When you learn, teach. When you get, give." — Unknown

Possible giving paths considered:

• Ad-hoc gifts

• Gift to non-profit

• Gift to public foundation

• Gift to community foundation

5. Form private family foundation (chosen path)

Steps to establish The Lawrence Foundation:

Legal & financial structure: Create legal structure, fund the foundation, establish family trust, children's trusts, parent's CRTs, survivor's trust.

Operations: Publicize the foundation, understand needs and problems, decide areas of interest, learn to judge requests and make grants, meet with people and do site visits.

Financial management: Learn about non-profit accounting and taxes, select a financial manager, establish an investment policy, manage assets, manage and review grants.

Ongoing: Attend conferences, let others know about activities, plan for succession, learn socially responsible investing, governance, pass on and keep learning.

Key financial context (2023 data):

• US GDP: $20.36 trillion

• US Federal Expenditures: $6.2 trillion

• Total Charitable Giving: $577.68 billion

• Foundation Giving: $103.53 billion

• U.S. VC Funding: $66.9 billion

• The Lawrence Foundation: $200,000

U.S. Charitable Giving by Source (2023):

• Individuals: $374.40 billion

• Foundations: $103.53 billion

• Bequests: $42.68 billion

• Corporations: $36.55 billion

• Total: $557.16 billion

Source: Lilly Family School of Philanthropy – USA Giving. Does not include volunteer time.

Evolution of grant-making philosophy and progression:

• Impact spectrum: Filling needs → Solving problems → Addressing issues.

• Approach spectrum: Problems → Ideas → Views, values and beliefs.

• Time horizon: Immediate → Short term → Long term.

Evolution of grant types:

• Grants → Direct Support (hasn't happened)

Unsolicited → Solicited (hasn't happened).

• Program → Operating grants.

• Single-year → Multi-year grants (hasn't happened).

• Environment, Education, Health, Human Services → Environment, Human Services, Other

Evolution moves through: Learning → Understanding → Knowing

What we hope for:

• To help others make the world a better place.

• To pass on some of our knowledge and experience.

• To learn.

• An occasional thank you.

What we actually get:

• Plaques, articles, acknowledgements.

• Honorary / advisory boards and committees.

• Knowledge and experience.

• Good feeling.

Right way to approach The Lawrence Foundation:

• Make it real.

• Be honest and tell us the good and the bad.

• Teach us if we want to learn.

• Push back if we go too far.

• Take some risks.

• Understand our frames and language.

Wrong way to approach The Lawrence Foundation:

• Get greedy.

• Get impatient.

• Don't respond or answer our questions.

• Be unrealistic.

• Don't do your homework and know our guidelines.

Evaluation framework comparing business investment criteria to non-profit grant criteria:

People: Strong, transparent, predictable, and ethical management team that gives voice to the vision and serves stakeholders. (Same criteria for both.)

Vision: Addresses a real problem or need for change. Realizable, easy to communicate, with good timing. (Same for both.)

Opportunity: Business = large addressable market. Non-profit = identifiable need, problem, or issue.

Value: Real and understandable. Business adds strong market position; non-profit must show real value.

Execution: Business = strong revenue/earnings. Non-profit = strong, effective, consistent performance.

Exit: Business = liquidity event. Non-profit = understandable path to fill the need, solve the problem, or change views and beliefs.

Grant acceptance rates are highly competitive:

The Lawrence Foundation: 2%

Harvard: 10%

US Military Academy: 11%

Stanford University: 13%

MIT: 16%

Venture Capital: Unknown

June 2024 Grant Cycle: Approximately 20 grants awarded out of over 1,500 requests — a stack 1.5 feet tall.

Sample applicants include: A Home Away from Homelessness, American Lung Association, Braille Institute, Clean Water Network, Delancey Street, Engineers Without Borders, Friends of the Sea Otter, Los Angeles Free Clinic, Orange County Rescue Mission, Pancreatic Cancer Action Network, Save the Whales, Venice Family Clinic, Volunteers of America, and hundreds more.

Source: US News and World Report.

The good parts of philanthropy:

• Saying yes.

• The people.

• The passion.

• The learning.

• The hope and faith.

• What unites us.

The bad parts of philanthropy:

• Saying no.

• Not having enough to go around.

• The pace.

• The odds.

• The clueless and those who should know better.

Short parables from the field:

"The swing set" — what unites and divides us.

"The Sav-on parking lot" — don't assume or underestimate.

"Parauresis" — don't judge.

"Treasury regs" — sometimes, no one really knows.

"But, it's my money" — no, it's not.

"The Seed Lady" — the power of personality.

"The California Grey's" — the universe breathing.

"Remix" — the repackaging of a story.

Key observations and critiques about the game:

• The game is too slow.

• The religion of the market requires more business people in non-profits as players.

• Winning is going out of business — some non-profits are too interested in staying in the game.

• Many non-profits are fighting to win the battles, not the war.

• Government is changing the rules with more unfunded mandates; non-profits should become more active with policy makers and media (get more political).

• Non-profits should be using more technology (e.g., social networking).

• New metaphors are needed (e.g., music, art).

"Whoever decides what the game is about also decides who gets into the game." — E.E. Schattschneider

Major systemic challenges facing philanthropy:

• Improving the transparency, governance, and accountability of non-profits.

• Dealing with the asymmetrical relationships between government, business, and individuals.

• Improving and harmonizing economic, tax, and other incentives to encourage charitable intent.

• Understanding and appreciating the importance and impact of non-profits.

• Developing and training non-profit leaders and staff.

• Getting non-profits to invest in their infrastructure.

• Improving the efficiency and scalability of non-profits.

• Communicating qualitative issues in quantitative terms.

• Improving the visibility of externalized costs and risks.

"Intuition is linear; our imaginations are weak. Even the brightest of us only extrapolate from what we know now; for the most part, we're afraid to really stretch." — Rafe Needleman and Ray Kurzweil

Some of the Lawrence Foundation's operational challenges:

1. Selecting the best grantees.

2. Signaling other funders.

3. Improving the performance of grant recipients.

4. Advancing the state of knowledge and practice.

Key lessons from years of philanthropic work:

• It's all about people.

• People will surprise you.

• You can't do it all by yourself.

• Never stop listening and learning.

• Understand the frames and languages of others.

• Communicate, communicate, communicate.

• Look forward and think backward.

• Pick a direction, stay focused, and keep at it.

• Stay flexible and adaptable.

• Stay true to your values and principles.

• Learn from the differences.

• Embrace the surprises.

• Some luck is important.

"Anyone who has never made a mistake has never tried anything new." — Albert Einstein

"Live with intention"

Walk to the edge. Listen hard. Practice wellness. Play with abandon. Laugh. Choose with no regret. Continue to learn. Appreciate your friends. Do what you love. Live as if this is all there is.

— Maryanne Radmacher-Hershey

Thank you for attending "The Game of Philanthropy."

Presented by Jeff Lawrence, The Lawrence Foundation.

Web: www.thelawrencefoundation.org