Morgan Stanley
  • Private Wealth Management Audiocast
  • Aug 8, 2023

The Pyramid of Giving: How to Say Yes. When to Say No.

With Katherine Lorenz, Cynthia and George Mitchell Foundation


VO: Welcome to the Morgan Stanley Private Wealth Management podcast. Theme music

VO: Today on the show: we’re talking about philanthropy. Because when it comes to charity, it’s hard to know when to say yes. And it’s even harder figuring out how to say no.

Katherine: I think it's easy to write checks. It's easy to give money away. It's hard to have an impact.

VO: That’s Katherine Lorenz. She’s the president of the Cynthia and George Mitchell foundation, her family’s philanthropic organization. It was started by her grandparents, George and Cynthia. While she works with their fortune now, when she was growing up Katherine never thought of her family as one that had a lot of money. Just one that was able to be very generous.

Katherine: In our family there was never talk about philanthropy or giving money away, but it was lived day in and day out. And so we had families that were in need living with us or staying with us. Whether it was giving them a house to live in or financial resources, and way more than I even realized. But at the time it just seemed very very normal. And so I’d say the philanthropy in terms of the values were a daily thing in our household. It was never really talked about. It was just lived.

VO: That lived experience deeply impacted

Katherine. After college, she started her own nonprofit in Oaxaca, Mexico. And when she turned 30, she was tapped to be president of the Cynthia and George Mitchell foundation.

Katherine: It's an interesting conundrum to be in, to lead a family foundation. And I say that in that there's this incredible opportunity to have an impact in the world and to work with your family and to be a part of passing along these values. And at the same time, in a large way, you're pursuing somebody else's passion. So you are carrying out somebody else's legacy. And I, and we, feel very strongly that this is something established by my grandparents and owned by the family or managed by the family. And so this is not my thing. It's our thing. And so when you're managing something like that it's a fine line between being an amazing opportunity and a huge responsibility and also sometimes a burden.

VO: Philanthropy can be tricky. There’s tension from working with your family, your brothers, aunts, uncles, your mom? And you also have to deal with unwanted requests from institutions, and non-profits, and even friends. It’s hard to know when to say yes. And it’s even harder trying to figure out when to say no. In this episode, we’re tackling those tricky parts of giving back. We’ll learn how families that donate together can stay united, how to say no when people ask for money, and how to give with impact. Music

Melanie: You need to protect yourself with other people that can help you say no.

VO: That’s Melanie Schnoll-Begun, the head of philanthropy management at Morgan Stanley. When people like Katherine need help running their philanthropic organization, they turn to Melanie. Because once Katherine became the head of her family’s philanthropy, everyone seemed to have suggestions for where she should spend that foundation’s money.

Katherine: I've often said if you have a knee injury or a back injury everyone tells you go to the doctor. If your tooth hurts they tell you to go to the dentist. If you have an accounting problem they tell you to go the accountant. But if you tell them you have money to give away and you're looking for a good place to spend it, everyone—your dentist, your doctor, your accountant—will tell you how to do it.

VO: Melanie often sees this happen.

Melanie: When you are magnificently wealthy, the world assumes that even if you have causes that you care deeply about and you have your own expenses, that you must have enough to give to anyone. And that's why protecting yourself with trusted advisers that can help you say no is incredibly important.

VO: In addition to using advisors to help you say no, it’s important to remember that you can always stand your ground without rejecting others completely — especially when it’s friends who are doing the asking.

Katherine: I think what people don't realize is you can give at a level that's comfortable to you. That also sets the tone for what other people expect. So they might come to you with a big ask and you can say, "Well I don't have the capacity or I don't desire to give that. But I do want to support you. It's not full out 'No.'" And I think that's an important piece too, because I also ask people for money for my causes. So, you know there's always the tit for tat in the social giving, but I think giving — it needs to feel comfortable and exciting. I feel really good when I give in small amounts to my friends for their causes. I don't feel good if I give more than I'm comfortable with and I don't think they would want that. I in my own mind have a kind of a pyramid of how I think of giving. And I give more significantly to a few causes I'm really involved and I give very modestly to kind of issues I care about. And if a friend were to ask for an issue I care about I kind of have a level of giving I give to that. And then I give very modestly, like 200 dollars, to friends who are running marathons or have an issue they care about. And you know I always give to those but I always give in the 150-200 dollar range.

VO: But running a family foundation means Katherine’s not only getting requests from friends, but from institutions and nonprofits too. Often times those types of requests come through grand gestures and flattering invitations that can make saying no especially difficult.

Melanie: So they might have a non-profit who comes and solicits them by beginning to steward them, inviting them to lunch, to events, to gallas, sending them materials. The best nonprofits are the best salespeople. In fact, they should not be called directors of development. They should be called directors of sale because they are selling the nonprofit organization and they do it marvelously.

VO: Just because an organization is wooing you, doesn’t mean they’re not doing great work. But it also doesn’t mean that they’re the right fit for you or your foundation. So Melanie suggests a simple way to help prevent saying yes too soon. By having a strong mission statement. A mission statement focuses on your philanthropic goals. You should be as specific as possible about the impact you want to have. It’s great if you want to save the environment or fight cancer, but your mission statement needs to say how. Are you going to help these issues through education, advocacy, research, or on-the-ground projects. Once you have a focused mission, it’s a lot easier to reject requests that do noble work but ultimately don’t fit your philanthropic goals. Katherine’s experienced that first hand.

Katherine: Being focused doesn't only help where to help where to say yes, it helps you know where to say no as well. And to say no for a good reason. It's not because those things aren't important but it's because you can't have impact in the things you care about if you're spread so thin.

VO: A strong mission statement makes turning down outside requests easier, but philanthropic families still have to deal with each other.

Melanie: When you're sitting on your family foundation's board the benefit is that you're sitting with family. It could be your grandparents, your parents, your siblings, your cousins. The problem is that you're sitting with family. And in many instances it's hard to forget that that cousin was mean me 10 years ago. That my sibling stole money from me. That my parents kicked me out of my house. Right, so you can't forget that we're family. And sometimes we're more tolerant of strangers than we are of our own parents.

Katherine: Both the good and the bad transfer over. So I have these amazing relationships with my aunts and my cousins and my uncles that I would never have if we didn't work in the foundation. If we didn't work together we’d come together at Thanksgiving and that's it. But because of this foundation we have many many touch points throughout the year. Those are both positive and sometimes filled with conflict.

VO: This is another instance when a strong mission statement comes in handy. It’s important to focus on the goals of the foundation instead of the personal preferences of family members. For example. When you follow the mission, there aren’t as many arguments over choosing causes — causes are chosen not because they fit one family member’s interests, but because they are in line with the foundation’s goals.

Melanie: Very important for individuals who have a foundation not to believe that they are owners. Because that money has been technically legally given away. They've really lost dominion and control over those those assets from a personal perspective. So it's important for our clients to think like owners but not believe that they own those philanthropic dollars that are sitting inside of their foundations.

VO: Still, disagreements happen. And when they do, you can rely on a strong mission statement to guide your decisions. Having a sophisticated management structure is also helpful to resolve conflicts. That’s a tool Katherine’s family uses. Her foundation has multiple committees devoted to different programs, which makes tough business decisions less personal. And if they can’t come to a decision, the board does a majority vote. And that’s that.

Katherine: If 80 percent of the people are 80 percent happy then we're doing well. You can't always all be happy, but try not to make sure that it's the same person always unhappy because that doesn't work either.

VO: So, to make the most of family philanthropy there are a couple things to remember. Music

VO: One: Use your resources — surround yourself with advisors who can help you say no to unwanted requests for money. Two: create a strong, focused mission statement. It should be specific about the impact you want to make with your philanthropy and how you want to achieve it. And three: When conflict arises, you can always fall back on a good ole fashioned vote, or the foundation’s mission statement. Despite its challenges, philanthropy really can be a rewarding opportunity to make a difference.

Katherine: To take it seriously, it really is a true profession. And having an impact is both an art and a science. But you can get better at it. And I see my work very much in line with the values I grew up with and saw day in and day out. Music

VO: Thank you for listening to the Morgan Stanley Private Wealth Management podcast. Till next time!

The guest speaker is neither an employee nor affiliated with Morgan Stanley Smith Barney LLC. Opinions expressed by the guest speaker are solely his or her own and do not necessarily reflect those of Morgan Stanley Smith Barney LLC. Individuals should consult with their tax/legal advisors before making any tax/legalrelated investment decisions as Morgan Stanley Smith Barney LLC and its Financial Advisors do not provide tax/legal advice.

Philanthropy is a great opportunity to bring family members together and give back to the community. But it comes with complications: hard decisions, unwanted solicitations from organizations, rising tension between family members who care about different causes. We turn to Katherine Lorenz, president of the Cynthia and George Mitchell Foundation, to share her insights.

In this episode, we’ll hear how Katherine Lorenz runs her own family’s foundation and get advice from Melanie Schnoll Begun, Head of Philanthropy Management at Morgan Stanley. We’ll learn how affluent families can devise a plan to generously support the people and causes they care about, while turning down requests when they feel like they’ve done enough.