The Funder Breaking All the (Fake) Rules / Cosmic

Full Interview

Eric Ressler: Jen Nguyen, thank you so much for joining me today.

Jen Nguyen: Thanks for having me, Eric. I am really excited about this conversation.

Eric Ressler: I am too. As we've started this series and started to get more interviews in the mix, I've been trying to get some funder voices on the show. And that's been a lot harder than I expected. I was hoping that as I've been reaching out to different people in my network and people I don't know who I think would be a good fit for the show, that largely people would be receptive and open to it. But I have found that funders have been the least receptive and the least open to it. I'm just curious, why do you think that might be?

Jen Nguyen: If I could take two betting guesses here, even though I'm not a betting person, the first thing that you're witnessing is probably this wait-and-see approach that funders typically take, even outside of the current moment. Let's wait and see and analyze the entire situation and try to come up with a perfect solution to a problem. And you're noticing that that wait-and-see approach doesn't work when the current situation moves very, very quickly.

The second guess that I would make is that talking about the current moment and our philanthropic practices requires some level of reflection of what's happening within foundations. And I have found that foundations typically are not very reflective in nature or candid about their practices or transparent about their practices. That may be why you might be having some challenges getting communications directors to reply to you at this current moment, because they're probably wondering, what can we say? What can we not say? And maybe the foundation hasn't quite figured it out yet.

Eric Ressler: That was my suspicion. Something that I've been reflecting on, as I've been serving the social impact space for a while now through a couple of different crises. The first real crisis was around COVID and all of the lockdowns. What I noticed in that moment is that there was a clear threat and a clear issue that had to be overcome in the social impact sector. At the time, it felt like there was a rallying in the sector to come together and to work together. Granted, a lot of that was from government in terms of new government funding coming in, which obviously is not happening right now. But it also felt like the funding arms of the sector rallied and increased spend out in a way that felt tangibly, materially real, and also in a way that felt like it was in solidarity.

In this moment where there's been another major crisis for the social impact sector with the federal government drastically reducing federal funds for social impact organizations and community-based organizations, the spend down of USAID, there doesn't seem to be a response from the philanthropic sector that matches the need and the gap that's been left in this moment. Do you agree with that? What are you seeing from your vantage point?

Jen Nguyen: One thing that's really interesting is I've been at the Stupski Foundation since 2019, so I've ridden this wave of different crises. I did notice the solidarity among funders to really want to give more during 2020 and during the COVID crisis. But one thing to note is that they didn't actually give that much more. The payout is set at 5%. In 2020, the payout rose to 6.6%. So unless you're one of those people that's like, "1.6%, that's amazing," it didn't really get that much higher.

Even in that crisis, it was enough to push out maybe more press releases and communications about what people were doing. But in terms of dollars and cents, I don't think we've seen that materialized or at least sustained over time, which is the moment that we're currently in. Because we haven't had the muscle memory as a field to really give during moments of crisis, I think that's what we're suffering from right now as a philanthropic set of entities.

One thing to also mention is that what's built into the muscle memory of foundations is this idea of saving for a rainy day. We're trying to save money for some reason to continue operating 50 years from now. But the argument that we at the Stupski Foundation are constantly trying to make is the rainy day is here. So what are we saving for?

What good is the Stupski Foundation going to be if it exists 50 years from now? And even if I exist as the director of post-secondary success, if post-secondary institutions don't necessarily exist in their current form. That's the thing that we need to navigate as a field is trying to figure out if the rainy day is here. I think it is. And what are we trying to save? Is it our institutions and our society or is it just ourselves? And what I'm noticing is the answer seems to be, whether it's verbalized or not, we're trying to save ourselves.

Eric Ressler: The Stupski Foundation is what's known as a spend-down foundation or philanthropy. You have set, I believe it's 2029, as a goal to spend down literally all of your assets and shut down shop. Can you tell us about how that decision was made and how does that feel as a team to be part of an organization that you know is rightfully, if you agree with this philosophy, putting itself out of business, so to speak?

Jen Nguyen: The Stupski Foundation has been around since 1996 in different iterations. We were operating as an education funder for nearly 20 years, shut down in 2012 when Larry Stupski passed away from prostate cancer, and then we opened up again as a spend-down foundation.

Even though Joyce Stupski is not currently with us, she passed away in 2021, her vision at that time in opening up as a spend-down foundation was, one, if we push out a ton of money, what kind of maximal and quick impact could transpire regionally in the places that she calls home, Hawaii and the Bay Area. The second reason she wanted to do a spend-down foundation was because she was deeply inspired by Charles Feeney of The Atlantic Philanthropies, who spent a vast majority of his wealth in his lifetime and passed away in San Francisco, where we currently operate. And the third reason is less of a head reason and more of a heart reason. Joyce really just wanted to make Larry proud in this last chapter of the Stupski Foundation.

When lots of folks think about spending down, they think about all those head reasons, but there are a ton of heart reasons that are legitimate as well. And I think that's the one that resonates the most with me. It's this idea of not just Joyce's legacy, but her joint legacy with her husband.

In terms of how that makes me feel as a spend-down foundation employee, on a philosophical level, it's really interesting working for an entity that is about to end because in many cases, it's about letting go. If I'm annoyed with a conversation with a colleague, I'm like, will this matter in two years when I'm not employed at a foundation? Let's let go.

That's a micro thing, but at a very macro or practices level with grantees, it also applies. When you give out a grant in a spend-down foundation, usually it's going to be one of the final grants that you're ever going to give with that particular entity. The mentality is less about compliance and more about, it doesn't matter if this thing is working in the middle of the grant or not. You've got to make it work because it's the last grant. My position as a program officer/director is less about checking in about what's not working and trying to figure out if there are numbers that match up to remove the grant. That's not the role that we take. It's really about how can we build the capacity of these organizations or help the organization succeed with the remaining resources that we have. It's a fundamentally different way of being in relationships with grantees.

Eric Ressler: This ties into a broader trend and discussion point around what's been dubbed trust-based philanthropy. I can try and summarize my interpretation of what that terminology means, but I'm also seeing it being used in a lot of different ways. To me, it feels like that term is being brought into our zeitgeist because there's been a frustration, especially from the grantee side, around very competitive grant cycles, arduous reporting that isn't accounted for in the budgets of these grants, and a feeling of a transactional approach instead of a partnership-based approach to philanthropy.

My interpretation of trust-based philanthropy is that it's done more in partnership. There's less scrutiny, there's more trust in the frontline implementer type organizations to understand what the priorities should be instead of taking the lead from philanthropists on what the priorities should be. But I'd be curious to hear, is that a term that resonates with you? How do you think about and define that? And do you think this is a movement that is gaining traction, or do you think this is a hope and a dream and a fad that ultimately will just be squashed by the bigger machine and the muscle memory of the philanthropic sector at large?

Jen Nguyen: It's a great question. Regardless of whether we understand the framework or the definitions of trust-based philanthropy, from my perspective, the simple way of describing it is that organizations should spend more time with their constituents and users of their services than with people working in philanthropy. We need to invert the amount of time that people spend with us versus the people that they are actually serving.

What that ends up translating to is a series of practices, which include things like if you write a proposal for one foundation, it should be good enough for another. When we check in, it doesn't have to be multi-page reports. It could be a verbal report, just as rigorous in my opinion, as well as another series of practices.

There is this false equivalency of trust-based philanthropy being not rigorous and not accountable. But I do find that there's a level of trust, relationship building, and accountability that just looks a little different in these practices. An example that I could give you is every year I check in with school districts that I work with, we look at data together, but whenever there's a data point that looks a little awry, my question isn't, why is that happening and what are you doing wrong and what kind of punishment can I give this grantee in terms of compliance? It's more like what's happening and how can I help you?

And what we find is, for example, when a school isn't doing very well, maybe there's a series of bureaucratic challenges happening at the superintendent level and my job is now to go to the superintendent and ask, "Hey, what can we do to help out this school because I'm noticing this trend?" That's shifted my relationship in a really fantastic way and morphed my role to something that's a lot more rewarding and fulfilling than someone who's just counting beans on the side. That's the nature of trust-based philanthropy from my perspective.

Now, is it gonna be squashed by the powers that be? One thing that I wanna point out is, philanthropic entities are supposed to be bipartisan in nature, but we know that the field has gone into different, not necessarily partisan ways, but they're supporting things that are dramatically different on one side of the spectrum to the other.

With that being said, some of the most successful initiatives like school vouchers, for instance, have been supported through long-term funding. One could argue trust-based funding of initiatives that are of a wide spectrum: grassroots organizing, parent groups, think tanks, things like that. They're engaged in trust-based philanthropy, whether or not they know it, because their eye is not on compliance, it's on this bigger goal of privatizing education.

As a public systems advocate, I would say that we need to apply those same practices if we want to protect our public systems to continue serving the people who are most impacted by bad policies. You can call it whatever you want, but really what it is, is we need people to spend more time doing the work and not talking to program officers, if that makes sense.

Eric Ressler: There's so many good threads I wanna pull on there, but I wanna start with the last thread that you introduced. Something I've been thinking about a lot and trying to tease out with some of the different folks that we're interviewing on the show. And that is: what is the right mix and balance of these different social change bodies in society? And how can they best work together to create social change effectively?

You have the government, you have the social impact sector, you have the free market as basically the three main forces. There are some people who say, if the government just did their job, the philanthropic sector wouldn't need to even exist at all. These problems are the leftover problems that the free market and the government haven't solved. And that's the whole reason the third sector needs to exist in the first place.

It makes me wonder sometimes, we're in a moment right now where the way that government is being used — or not used — is changing very dramatically, at least in America. And to some degree, it feels like it can no longer be counted on as a trusted partner, especially if your mission as a social impact organization has anything to do with progressive values or DEI or anything that's been banned or scrutinized under the current administration. To me, that feels like an obvious miss because my interpretation of the way things could have worked — or used to best work when they did work — is that philanthropy essentially got to show up and be R&D. And that when those pilot programs were proven, then the government could step up and scale those programs.

So how are you thinking about all of that right now? I don't think the philanthropic sector even has the assets to fill the gap that has been created by the federal policies right now. So are we just in a social impact recession for the time being? Like, how do we get through this?

Jen Nguyen: Eric, I'm one of those people who aligns with the first thing you said, that I believe that if the government worked the way that it should, then we wouldn't need the philanthropic field or sector. And we wouldn't need nonprofit organizations having to step in and fill in basic services. I see that every day on a school level, for instance. But then we also have to acknowledge the reality of the situation where sometimes government, and we're noticing in this administration, they're rescinding federal aid that was previously approved to states. They're making decisions very, very quickly. And so there's this question of, do you trust government to make long-term investments?

But there's a bigger question to me, which is, how did we get to this place? Whether it's the government and the current administration or philanthropy, my argument is that they're both an amalgamation of a bigger challenge, which is the outsized influence of wealthy people in this country. It doesn't matter whatever political affiliation they are, there is an outsized influence of the disproportionate amount of control that the ultra-wealthy have in our electoral system, as well as in some of these initiatives that are being funded that are impacting public systems. I'm one of those people that wonders, what can we do to tip the balance back again to the people? And I constantly wonder what that moment requires. In my opinion, it's a big tent strategy.

The way that I think about ecosystems and the way I think about philanthropy in ecosystems is we as philanthropic entities should not be constraining what we fund. I'm writing about this a lot where philanthropic entities for some reason like to put all these funding criteria on. You have to be an organization of X size serving this, serving that, but it doesn't acknowledge the interdependent nature of organizations to make change. You need everybody: grassroots organizations, think tanks, advocacy organizations, public systems, watchdogs, you need everybody to work together.

The one thing that I would call on philanthropy to do right now is to stop creating the conditions of competition. We also have to figure out how to do that by working together because we have this rhetorical analysis of, these groups need to work together. But the question I have is how are philanthropic organizations and foundations working together? The reason why we've created this crabs-in-a-bucket kind of situation is because we haven't pulled our funds together to create an amount of abundance to make sure that people get what they need from the philanthropic field. So I'm such a yes-and person for the bigger picture of how we can make sure that the disproportionate power is not in the hands of a few, but redistributed back to the people.

Eric Ressler: I love that answer and I think it feels very reflective of the ethos that I feel when I consume content that's coming from you and the Stupski Foundation. And then I also wonder, you have a limited pool of resources, you have your own funding priorities as an organization that are place-based and to some degree tied to the founders of the organization. How do you strike that balance? Because you can't just fund everybody. You have to some degree, you have a lot of resources, but they're still limited. So how do you balance that need to be intentional, strategic, and effective with your investments, but also not overly rigorous? Like, what's that balancing act look like? How do you make those decisions day to day at your work?

Jen Nguyen: It's very difficult. And it varies from person to person at the Stupski Foundation. I think there was recent communication from our organization that we're deploying maybe around 70-ish percent of our remaining assets this year. We've balanced both how to extend our remaining grantees to the very end of our spend-down trajectory, at the same time trying to figure out how we're going to leave a big financial hole in a lot of our grantees' organizational budgets. How do we fundraise for them? That's the more traditional program officer role of trying to support the grantees on our portfolio.

But then there's this other question of sector influence. We're on the way out. I'm the kind of person who I don't think I'm going to work in philanthropy after this. I think I've had a great run thus far. I'm a person without a lot to lose. My organization is going away. I'm going away as a program officer and director, and I probably won't be in this field anymore after two years.

What I'm thinking a lot about in organizational mortality is what kind of sector influence can we be a part of in an effort to make the philanthropic field better? And in my opinion, better to the extent that the field doesn't need us anymore and philanthropy won't exist. So I'm writing a lot. I'm trying to speak a lot. And I'm trying to progress this idea that we should give up control and give up constraints on organizations in an effort to deploy more money that's needed right now. But you're right, Eric. It is a really difficult juggling act, and we haven't quite figured it out yet. I would be welcome to additional conversation about this, because it's a nut that I haven't yet cracked.

Eric Ressler: I think it's one of those problems that doesn't have a solution. The solution is in the everyday work that you're doing and the learning of that. But I am curious to hear, what does a better way look like in the sector? You guys are leading by example in your own way, but if you had the opportunity to wave a magic wand and reinvent the philanthropic sector specifically from the funding perspective, what are the big moves that you would make to change it for the better?

Jen Nguyen: The first thing right off the top of my head would be that the 5% mandated payout needs to be a lot higher. There was a move to 10% in California a few years ago, but that was shot down, unfortunately. The thing that I would advocate for is it needs to be 10% or higher. We need to also have a cultural shift and not put the perpetuity of our organizations before the existence of the public systems and the general systems that we deeply care about. So that would be number one, having a higher than 5% payout.

The second thing that I would advocate for is on a practices level, for us to be less controlling over grantees and really give grantees the creative runway to be able to serve their communities. What I'm imagining is, of course, more general operating support for grantees to make the best decisions for their organizations, but also for us to not just fund basic programmatic services that we think are valuable. That's great. But at the same time, to be able to have our grantees figure out how they can best serve their current constituents. One concrete example is we have grantees who are saying people love in-person services, but we also need to make more technological hybrid offerings for students who feel more privy to chatbotting it, for instance. As difficult as that is as an in-person college counselor, it's something that I have to be more open to at the moment.

The third thing is trying to figure out what are sector-wide incentives for collaboration that get funders in the same region or in the same field to work together more, not just at this learning level. Foundations tend to spin around learning. How much more can you learn? Everybody knows lots of stuff. We need to actually give money out. I do wonder if there's some kind of incentive structure that could be applied field-wide to get more people to come together, because that creates more conditions that are less competitive and more about abundance.

And I also think there needs to be a move for foundations to do more lobbying. There's only one type of lobbying that we can do, and that's about the existence of foundations. We need to see more people trying to change the Tax Act of 1969 that puts us in this 5% mandated payout bind. If we can get more people to lobby because we're legally allowed to do so, I think that would be so helpful not just for philanthropy in having more transformative practices, but for more money to be with our nonprofit organizations.

Eric Ressler: I want to press on a couple things that I hear from our clients who are often at the whim of funders, not like you exactly, but just funders at large. Two of the things I hear a lot, the first is that institutional philanthropy likes to tout that they're very rigorous, evidence-based in their funding practices, research-oriented, learning-based, but often it feels like at the end of the day, funding decisions are still made because of personal relationships and personal networks. What is leading to that? Do you agree with that, first of all? Obviously, it's different for different orgs, but that's what I hear on the front lines a lot, is that they could be qualified, they can do the grant application, and they can send 100 of them out and not be successful, but if they know someone at the org and they can get a personal intro, that's gonna obviously increase their odds. What leads to this dichotomy of saying one thing, but acting a different way in this sector?

Jen Nguyen: Not to get wonky here, but the philanthropic due diligence processes are very flawed. A due diligence process is just trying to do your research about the landscape of organizations to potentially fund. And a lot of times funders just end up talking to other funders. Then that propagates the same organizations over and over again. We've noticed the inequity of funding that goes to very large organizations versus small organizations. At a very concrete level, I'm trying to figure out how we could have better due diligence processes and how program officers don't just talk to other program officers, but they develop a political and community acumen where they can do due diligence with community partners that's not extractive in nature. So that's one really challenging part of the field.

The second thing, Eric, that's really interesting is this idea of rigor. The framework that I try to use for myself is I don't think my job is hard. I think the work is hard. The idea of making sure that every single child in America gets a high-quality education is hard work. My job as a program officer or director is to give out money. That is not hard.

We need to separate those two things and stop putting false rigor, which is basically just barriers to grantees, and stop trying to make this job more than what it is. We just need to give out money more quickly. We need to do so in a thoughtful manner. And again, that requires better due diligence processes. But without those two things, Eric, you're right. People are making decisions based on relationships or as Gen Z likes to say, making decisions based on vibes, quite frankly, which is not a great way to enact social change. It's just vibes.

Eric Ressler: One comparison that I've used before — and people have criticized me on it, but I'm gonna continue to use it — before working in social impact, we were based in Santa Cruz, near Silicon Valley. We did a lot of work in the startup space for B2B and B2C startups. In that world, funders are venture capitalists, and they're looking for a return on an investment. They're looking for exits, IPOs, et cetera. The thing that I noticed though (and I have plenty to criticize for venture capitalists as well) but there was this sense of shared success where they were rooting for their investments. They were doing everything in their power to fund ideas that they believed in and then to support the people that they funded with money, yes, but also with networks, with relationships. And the idea was that they would find these startup organizations when they were really small, and there's a whole subset of venture capitalists that are looking for founding teams and wanting to scale them all the way through IPO.

There doesn't seem to be the same support system and trajectory in social impact. In the B2B and B2C space, you have angel investors, seed investors, A, B, and C round venture capitalist rounds that come in. There's a whole ecosystem and framework and playbook on how to go from an idea to an IPO. Do we have anything like that for social impact organizations? It doesn't feel like there are these clean handoff points where if you're a tiny org, you might be competing for a $15,000 grant to prove out an idea, but then if you prove it, you're back to square one trying to find the next round of funding. Or if you're at $2 million a year, but you really need to be at 15, you have to cobble this together on your own. There's no sense of a round coming together. I know this metaphor isn't perfect, but it feels like we could learn some things from the venture capital world in terms of how we support organizations, not necessarily the incentives behind why we're supporting them.

Jen Nguyen: Eric, I actually think it's a really great analogy because I was thinking about it recently. One of the challenges in philanthropy is our definition of sustainability. I live in Oakland. I don't live that far away from Uber or Lyft in their headquarters. What's really interesting about those entities is they haven't turned a substantial profit yet, but they're still dependent on venture capital to continue operating. But what they've done is cultural change. They've changed the way that we have traveled and what we see as transport that's not taxi-like, which is highly successful.

If you want to take that model, what's interesting is we don't apply those same practices to a social entity. For example, we give one grant and we're like, "Hey, the ultimate indicator of success is if you're able to sustain this money after three years." It's like, if we don't apply those same practices to Uber and Lyft, how are we supposed to apply that same definition of sustainability to an organization that by definition does not make profit? How are they supposed to sustain themselves?

Your analogy offers this idea that we should have more patience and grace for organizations in the same way that society has offered some level of patience and grace to an Uber or Lyft that still hasn't been able to turn that profit, but has been able to transform practices for better or worse on how we travel.

The second thing that's really interesting about what you're saying, Eric, is people are dedicated to the organizations that they fund from the VC side because they see a profit on the other side. They're trying to get to the idea that they could profit at some point and become really wealthy. I'm not going to make a judgment on that. But on the social impact side, we need to have a framework that's similar, that we're so dedicated to these organizations, not because of profit, but because we know the payout is going to be so good for the social good that we care about it. That needs to be a value system that is on par with the idea of a VC trying to profit. They need to be at the same level. And I really don't think that foundations feel that way. They're trying to find the quick hit to move on and say that they solved the problem, even though it hasn't been solved.

Eric Ressler: Totally agree. And it is kind of a head-scratcher. You would think that that would come intuitively. If you're going to be a program officer at a foundation, you would think that you would be largely influenced and motivated by that impact. And you would think that you would understand that these are the most difficult problems in the world that we're trying to solve. To your point, there is no profit model in most cases that's going to make an organization self-sustaining. It's just confounding to me that there doesn't seem to be, when there's such a need and an opportunity for solidarity, emotional support, looking at things in a bigger picture, especially when these orgs are often touting how rigorous and evidence-based and researched they are, you would think they realize that social change takes a long time.

Jen Nguyen: Absolutely, and you use the keyword there: solidarity. We need to be able to value that solidarity.

The other challenge is the philanthropic field is set up to reflect capitalism, competition, to find the best thing, the one intervention that's going to solve everything. It requires a mindset shift of really believing that solidarity is at the level of a VC who's after profit. And I don't know if we're there yet. I wonder how we can get there to know that all of us are working together to envision a community that works for all people.

Eric Ressler: The other thing I want to touch on briefly that I've also heard from clients that we've worked with and just observing the space is that there's also some deeply entrenched, unconstructive norms in the space that have basically been a result of this broken funding ecosystem, at least in part. And those are things like the scarcity mindset, which is more than a mindset. I think that term is a little bit of a misnomer. It is true that a lot of these orgs are underfunded and under-resourced. The mindset is valid because they are actually scarce in resources and overhead and time and energy to do their work.

But what this leads to is this growing crisis of burnout of people being unfairly compensated, working on these important causes. Orgs not having what we call overhead, which is really just sustainable business funding to be able to do the work they need to do, to invest in things like marketing, communications, being able to pay their team and their staff fair wages. Even if you want to look at it from a free-market standpoint, to be able to compete for the world's brightest people who we need on these issues and not on tech and AI. We need to be able to compete with those sectors for talent, at least a little bit more closely than we're able to right now.

I think that some of this does come back to funders not wanting to fund overhead, not wanting to provide general operating support, and this entrenched viewpoint that if you're going to work in the social impact sector, you're going to take a pay cut and that's just the way it is. I'm curious to hear how you all are thinking about that.

Jen Nguyen: The overhead conversation super annoys me because any kind of standard on overhead saying you can't charge 15% on overhead on this grant... do we put the same standard on foundations? Do we have the same stipulation? We don't. And if we don't, then I don't understand why we put that on grantees. There are some exceptions. I totally understand why people would put an overhead cap on an institution that is really large. But for small or mid-sized nonprofit organizations, the overhead is what runs the organization, quite frankly. It doesn't make sense, especially if we don't put those standards on ourselves.

I don't know if a lot of people know this, but that 5% payout that I mentioned earlier, that foundations are mandated to spend out every single year, you can count some overhead from foundations towards that 5% payout, which makes it even more absurd that we want to put some standards on nonprofit organizations but don't put those standards on ourselves.

There's a strange dynamic I can't quite figure it out, where people are annoyed with things like executive director salaries, for instance. It happens here in the Bay Area a lot, where a nonprofit organization says an ED is making $200,000 a year, and people have this pitchfork mentality that it's a lot of money. But one thing that socially we haven't quite figured out is valuing the work that those people are doing relative to, say, an AI executive who's making $250 million. It's this crabs-in-a-bucket mentality without keeping in mind that there are people who are making an absurd amount of money.

I wonder how can we as a social sector control the narrative on the idea of how much is enough to have dignified work, to have talent, and that what is currently happening right now in the nonprofit field is limited and operates on a scarcity mentality. But we don't put those same standards on tech companies. So why are we putting them on nonprofit organizations? And at another level, why aren't we putting them on philanthropic entities?

Eric Ressler: We could talk all day about the shortcomings of some of the structures around funding. I do think it's worth mentioning, there are a lot of really good people in the field who are stuck within these structures, who are doing their best within them. Not to say we shouldn't challenge them, but also worth acknowledging there's a lot of good people who are inheriting some of these long-held structural issues.

I also want to see as we wrap up today if we might be able to help some executive directors and leaders on the practitioner side who are vying for funding, who need funding to do their work. How should they be thinking about attracting and building relationships with funders, especially trust-based funders, in a constructive way so they can escape the scarcity mentality and this cycle of chronic underfunding that tends to happen for some of these organizations, especially when they're first getting started?

Jen Nguyen:

Eric, I know you're asking me to speak to the executive directors of nonprofit organizations, but if you don't mind, I'd like to speak to foundations because I think it's their practices that are causing executive directors to stretch themselves thin in order to fit into the funding requirements of foundations. I'd like to speak to foundations first and then we can come back around to executive directors.

The first thing for anybody starting at a foundation that feels problematic is I think any thoughtful person entering a foundation space should try to stay as sane as they possibly can. That was the best piece of advice that somebody gave me before I started and I would want to offer that advice more widely.

But the second thing is that if you are a CEO of a foundation or even a director or program officer and you want to figure out how you can deploy more money more quickly, one thing I would recommend looking at is spending authorization policies. Those are policies that dictate how much a staff can deploy on their own without board approval versus what the board needs to approve. If there are ways to expand the authorization of the staff, I think that is a good first step.

The third thing we could potentially do here is really ask our boards how much do you need to approve? Can we give most of the authority to the staff? Because what happens at a board meeting is the board ends up approving the slate of grantees that's presented before them anyway. That's a good reflective question to pose to boards.

Finally, it's for us to rethink what a relationship with the board looks like and what boards should be doing. The idea of reading a huge packet of information that's been extracted from grantee time for a board to simply approve a slate doesn't seem like a good use of time. What does a board actually want to do? Is it supporting grantees directly? Is it helping them with their communications, amplification? There are so many more interesting roles for boards. I want to offer that to our field because whatever we do here impacts what executive directors do as well.

For the executive directors, what's interesting is that there's this multi-trillion dollar wealth transfer that's happening over time and it's written about a lot. I wonder if diversifying who you reach out to—that it's not just the institutional philanthropy organizations anymore that's going to be holding the wealth. A lot of it is individual donors who are going to be not starting their own foundations but still writing checks to causes. I wonder if it's time to stack a board full of people who have those networks to be able to answer this concern of this great wealth transfer.

The second thing that executive directors could potentially do is to continue talking and building relationships with foundations, even when that foundation says no, because those nos can become yeses over time. I know it's frustrating because there's so much that executive directors can do other than talking to foundations. But it's happened to me multiple times where somebody stuck around and was like, "Hey, I want to keep talking strategy." And that person eventually became a grantee, to their credit. It does require this level of dogged resilience, which is unfortunate because again, we need to change the philanthropy side so that the executive director doesn't have to do that sort of headhunting of a foundation person. But I wonder, Eric, if there are other questions or other thoughts that you have about what executive directors can potentially do here.

Eric Ressler: Those are great answers. We are seeing a lot of our clients who have traditionally been funded either through the government or philanthropies, who are becoming more competitive, lean in to major donors. That's a whole other set of funding. It's not an easy transition. In my mind, there are some overlapping skills required to solicit funding from those different types of institutions, but there's also a whole different set of skills.

It feels like the gap that is being left by the federal government and to some extent the philanthropic sector is now putting the burden on these organizations to raise money either through individual wealthy people or more and more everyday people who have the capacity to give a small amount, but even that small amount is disproportionately a large gift for them. Often these are people who need the services of these nonprofits. It feels to me like a deeper unfortunate symptom of the same intractable societal inequity that we see around very wealthy people getting more wealthy and everyday people struggling more financially, and then also being asked to foot the bill for the services that they need just to live in a sustainable society.

It seems untenable long-term. I do hope that we see some sort of social and economic correction in more evenly distributed wealth again, but it doesn't feel like we're naturally going to get there based on what I'm seeing.

I'm hoping that conversations like this, and why I was so excited to have you on today, will help. A lot of this gets talked about behind the scenes and not really brought out into the sector, at least enough in my opinion. I was really happy to have you on the show today to talk about that. And before we do wrap up, how can people best follow you, learn from the ideas, see the good work that you're doing, either you personally or at the Stupski Foundation, how can people get involved?

Jen Nguyen: Yeah, Eric, and if you don't mind, I thought of another answer to the previous question. You inspired me, and it's kind of a non-answer in many cases, but what you inspired me to think about is I think we all kind of know what the vision that we wanted to see in the world, which is less wealth inequality. I mean, indeed, there are grander visions of course, but let's say that that's sort of the north star here.

What is the bigger question right now is what do we do in the interim in this messy period of time? And one thing that I want to depend on is the thoughts of people who are in the field already who are doing the messy work.

And so there's this idea that I have of really wanting executive directors to create that visionary space for themselves to be able to dream into the future and to be able to protect that imaginative space as much as possible. And I know this feels really philosophical, but I think it's really, really important for folks to be able to operate on the day-to-day, but also hold that space to strategize in the moment. And this is a call for philanthropy to fund those spaces, to give people sabbaticals and weeks to be able to dream. I think that's required for us to make it to the other side of this current moment. And one thing that working at philanthropy has done, it's given me the time and the space to be able to do that dreaming as well.

To answer your other question on where you could follow Stupski Foundation's work as well as my work, you can go to the Stupski Foundation website, stupski.org. There's a ton of links to all the different communications that Glenn, our CEO, puts out, as well as a column that I write called "Philanthropy Confidential," where people can submit confidential or anonymous questions, and I'll candidly answer them through email on a quarterly basis. It's been a lot of fun seeing all the different questions. Both Glenn and I have Substack accounts that you can also follow. But in general, we're on all the social media platforms with the exception of the platform formerly known as Twitter. You can find us on most social media platforms at the moment. And we hope to continue to be in conversation with folks, including yourself, Eric.

Eric Ressler: Awesome. Jen, this was so great. Thank you so much for coming on today.

Jen Nguyen:

Thank you so much for having me. I really appreciate the conversation.

Key Takeaways

The "Rainy Day" is Now: The sector's tendency to save for a future crisis ignores the urgent needs of the present moment.

The Goal: Let Nonprofits Do Their Work: The core principle is simple: nonprofits should spend more time with their communities and less time with funders.

"False Rigor" Creates Barriers: The job of a funder is to give out money. Complicated processes and "rigor" often serve to create unnecessary barriers for grantees and make the funder's job seem harder than it is.

Decisions are Based on "Vibes": Despite claims of being evidence-based, many funding decisions come down to personal relationships and networks, not objective analysis.

Rethink the 5% Payout: The mandated 5% payout is insufficient and should be raised to 10% or higher. Foundations should also lobby to change the laws that lock this in.

The Overhead Double Standard: Funders impose strict overhead limits on grantees while not holding themselves to the same standard.

Fund Visionary Space: Philanthropy should fund sabbaticals and protected time for nonprofit leaders to dream and strategize for the future, which is crucial for navigating the current reality.

Stupski Foundation: spend-down foundation where Jen is the Director of Post-Secondary Success.

The Atlantic Philanthropies: The foundation founded by Charles Feeney, who Jen mentions as a major inspiration for Joyce Stupski's decision to create a spend-down foundation.

Correction: Joyce Stupski passed away in 2021.

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