For our 33rd episode, President & Chief Strategy Officer Ethan Whitehill chats with Tracy McFerrin and Maurice Watson of Credo Philanthropy Advisors about relational philanthropy, measuring impact, and why authenticity is the foundation of effective giving.
Ethan Whitehill: Hi everyone. I’m Ethan Whitehill, President and Chief Strategy Officer of Crux, the “un-agency.” Welcome to episode number 33 of To the Point. We produce this monthly podcast to bring you thought provoking conversations that get to the crux of it and help entrepreneurial brands fuel growth. Today’s guests are Maurice Watson and Tracy McFerrin.
Tracy McFerrin is a former senior officer for a private family foundation with over $800 million in assets. In that role, Tracy led the development of giving strategies in education, neighborhood revitalization and social services, and co-founded funder collaborations in education. She has been an invited speaker, panelist and moderator on issues in philanthropy and has served as a board chair for several nonprofit organizations in the areas of youth development, medical research and public television. Tracy is a graduate of Howard University and Harvard Law School.
Maurice Watson is a former partner and chairman of an AM Law 100 law firm as a lawyer, advisor and board member in education, healthcare, biomedical research, the arts, and youth development. He has consistently sought to be an independent voice, challenging leaders to acknowledge their blind spots and examine critically what is and is not working, and why. A frequent speaker on issues of equity, inclusion and opportunity for all, he comes from a working-class family attending inner-city schools in his hometown of Kansas City until winning a scholarship to an independent college preparatory school. He graduated from Harvard College and Harvard Law School. Thank you both for joining the podcast.
Tracy McFerrin: Thanks. Glad to be here.
Maurice Watson: Great to be here.
Ethan Whitehill: So, I want to start here. You both bring remarkable careers, a great background in law and philanthropy, and you put that together for Credo. So how have your personal values or life experiences shaped the way that you help others when it comes to giving?
Tracy McFerrin: For me–my past experiences working for a family foundation, being a volunteer, being on boards for nonprofits, that were trying to make a difference–influences the way we try to help clients in the fact of giving is very personal. And so, what we try to do is help them unpack, refine, clarify what it is they want to do, and we do that by building a relationship with them. So, one that we can be honest and candid with them about some of the challenges they’re going to face in their giving. And all of that is influenced by my past experiences with philanthropy.
Maurice Watson: So, the perspective that I have on this is that values matter. Values matter more than anything. And one of the things that we get to do in working with philanthropy and leaders in philanthropy, both the boards, but also the executive or professional leadership of philanthropies, is to identify and understand more deeply what the values of those leaders are. And to ensure that their priorities from the standpoint of their giving, their grant making align with those values. It is really important that philanthropy reflects the vision of the founder and the successors to the founder, which in many cases may be the second or third generation after the founder. And where we see alignment of the founder’s vision, her or his dream about how their organization or their philanthropy can transform lives and improve lives, that where there’s alignment with that vision and that commitment. There’s beauty in philanthropy. There’s gratification in philanthropy. And I know Tracy and I love doing the work with people who have vision and whose philanthropy aligns with that vision.
Ethan Whitehill: You said something really interesting that I really hadn’t thought about because I work with a lot of second and third generation businesses and times change, issues change, you know. So, thinking about second and third generation family involved in foundations and other things that that gets interesting because those values, while they can remain consistent, the world changes.
Maurice Watson: You know, it’s very interesting you raised that point because I, I’m privileged to serve as a trustee on the Ewing Marian Kaufman Foundation. And Mr. Kaufman thought a lot about how he wanted his foundation to move forward beyond his life. And one of the things he acknowledged is that those who lead the foundation going forward after he is gone, will need to reevaluate, reassess how to accomplish his vision and his commitment around support for youth development and entrepreneurship. The strategies got to change along with the times, and I think you make an important point in that we must consistently reflect back on the values, the ideals of the founder. But as times and circumstances and needs change and evolve, we’ve got to adapt our strategy accordingly.
Ethan Whitehill: Well, we’re talking to two founders right here–the first generation of your business. What was it that brought you together in the first place to create Credo and how has your mission evolved in that time?
Tracy McFerrin: Great question. So, I left a position that I really valued in 2016 because I moved to Canada. My husband is from Canada. So, I moved for love, and I was thinking about what I wanted to do going forward and thought that I could be of service doing something similar to what I did for a single family foundation but opening it up to other entities. And in just an act of serendipity, Maurice called me in, I think June, 2017 and said, “hey, I’m getting ready to retire.” Maurice and I knew each other from being on boards before in Kansas City. He said, “I’m getting ready to retire. What do you think about doing something in philanthropy together?” And I thought–this is perfect. I was just about to hop on a plane to go to Kansas City to talk to someone about doing consulting on my own. And so, I had this wonderful phone call that just kind of opened up the avenues for both of us having an interest in education, having an interest in the arts, having an interest in just trying to make the world a better place and have philanthropy work better and have a bigger impact.
Tracy McFerrin: And so, it was just a great fit. And we’ve been going since officially what, 2018? 2019? Yeah.
Maurice Watson: You know, I will say, so when I decided back in 2017, after serving six years as chairman of Hush Blackwell, I really did have a sense that I wanted to do something that I’d always dreamed of doing. And I have always seen philanthropy, private philanthropy in America. And it’s really special. I mean, there’s no other country in the world that has private philanthropy investment in the way we do in America. I mean, the size of our foundations, the engagement of families and the persistence of foundations over generations and period of time is really unique in the world. And I believe, and I think Tracy agrees with me, that private philanthropy has an opportunity to take risks in terms of approaches to solving some of the most serious persistent problems that we face in education, healthcare, you know, safety and security, neighborhood development, housing, all of those areas that are critically important to a high quality of life.
Maurice Watson: Philanthropy can study and take some risks in approaches to solving those problems. And so, I just found that very exciting having worked with a number of not-for-profit organizations–as Tracy has just mentioned, some of them, we work together on the board–we really do get to see how nonprofit organizations with a vision and the right leadership can transform communities and institutions to benefit individuals and communities. And that really was what excited me. But I’ve got to go back to this whole, you know, I’m really thinking very hard about this concept of, you know, what do we value? What are our, what are our norms as individuals and organizations? And I would not have wanted to partner with anybody who did not share some of the same values and, and perspectives and commitment to service that Tracy and I share. And I think I can’t say that too often. And I’ll also say–and I think Tracy will share this perspective as well–when we look to work with clients, new clients, our focus is on whether or not we kind of share the same values and beliefs as our prospective clients. And I think if we did not, there would not be a good match, good fit.
Ethan Whitehill: So, I’m curious now, did that happen organically between the two of you? Or did you say, okay, let’s compare values, let’s talk about what’s important?
Tracy McFerrin: That is such a great question, and I think it was very organic. Yeah. I think it was us being very trust forward with each other.
Maurice Watson: But we knew each other.
Tracy McFerrin: We didn’t know each other well …
Maurice Watson: I knew you! I admit it Tracy. I had no reservations whatsoever. So, I’m sure now she may have trusted me.
Tracy McFerrin: Right, right, right. So, I’m hearing this for the first time. I was trusting that Maurice was on the up and up and that we could do this.
Ethan Whitehill: All right. Well, I like that you did your research. That’s good. So, we talked a little bit about sort of guiding foundations, helping them stay true to their values and what they’re doing. There are a lot of worthy causes out there, and there are a lot of beyond individuals and foundations, there are a lot of companies that are trying to figure out how does philanthropy fit into their strategy, you know, in terms of corporate responsibility and giving back. What advice do you have for companies that might be looking at their own values and trying to decide, “okay, where do we focus?”
Tracy McFerrin: Right. I think that’s a great question for companies to think about. First off, I would say we are in an age where authenticity for companies matters. And so, I would really, really recommend that a company think about its “why.” If the “why” is to sell more products and more services, I would proceed with caution. Because people will understand that your philanthropy, your giving strategy is dressed up basically to sell more. So, I would really interrogate your “why” and get to that, to let everything from there flow. And think about, you know, synergy with companies like it’s one thing, it works well when lawyers are giving free legal services. Architects are helping homeless shelters build, you know, that, that there’s synergy to be had. But really thinking about not dressing it up, you’re giving up as something that you’re really just using as a marketing tool. That’s the first step.
Maurice Watson: I completely agree. I mean, I really think we are at a critical moment around the whole issue of business investment in diversity, equity and inclusion. And to the extent in the past investment or support through philanthropic or other marketing dollars for that work has been performative. Which is to say, we are doing it because everybody else is doing it, and we don’t want to look like an outlier. That’s a bad reason. And if your support for diversity, equity and inclusion is purely performative, rather than reflecting your values and beliefs as an organization, I think it fails. And we’ve seen that happen as people have quickly abandoned as there was pressure from external forces. If you don’t really believe when tested, you’ll abandon the work that you’ve done in an area like support for diversity, equity and inclusion. And I would say, you know, we see who’s real and who’s been pretending.
Ethan Whitehill: And that’s actually a really good connection to the next question. You know, what differentiates truly impactful philanthropy from well-intentioned but ineffective giving?
Tracy McFerrin: Well, I think there’s a couple of things. Doing your homework beforehand on the problem that you’re trying to approach on the issue you want to address is essential. And I think a lot of people entering philanthropy give that research part very short shrift. And the research should include the nature of the problem and the ecosystem around it. So, for instance, if you take something like homelessness, we know that there are many, many drivers of homelessness. You can look at housing, you can look at wages, education, mental health addiction, so many things. So, thinking about knowing your problem inside and out and thinking very carefully about where you can apply your assets, your time, skills, ambassadorship is really important. And too often people don’t do that kind of work. The other work that you need to do is kind of a mindset shift. You cannot do anything by yourself in this space. If you’re taking on a big social problem. You have to have partners. And so, knowing how to work effectively in relation, in partnership with others who may not look like you, who may not, you know, come from the world you come from, is critical too.
Maurice Watson: One of the things that Tracy and I both understand deeply–because we didn’t just decide to do this work without doing a whole lot of homework before we began–we did a lot of study of the sector, the areas impacted by philanthropy over the last probably 30 or 40 years. There’s been a lot of scholarship around effective philanthropy and effective grant making. And there’s a lot to know and a lot to understand, assuming that your objective is to have impact to resolve or address or solve an important societal problem. You know, there’s a lot to be said for feel good philanthropy, which is to say it just warms your heart to give your extra change to a homeless person on the street. That’s one kind of philanthropy. But in the end, if you want to create a system or an organization that makes it unnecessary for people to stand on the street corners for money and support, that takes a whole lot of thought. As Tracy mentioned, it requires collaboration. It requires understanding what are the reasons that people are houseless, for example.
Ethan Whitehill: So, when you talk about investment, that sort of leads to: what is the return on that investment? And I know sometimes it’s a little hard to measure. We’ve used the word impact, like what does impact look like? How do you define that? How do you measure it? We talked about an impact report the other day, actually. So ,what, what’s important in, when it comes to measuring that?
Maurice Watson: You know, it’s really important because I think we’re in a time and a place where the assumption is if you cannot measure something with numbers, then you have no way of demonstrating or quantifying impact. And I think Tracy has a very good insight on this. So much of what can be accomplished may not be measurable in a numerical way, but you can assess impact qualitatively. And that’s a legitimate way of evaluating impact as well. It is tricky. I think increasingly though, people who are working in the area of philanthropy begin with a model, part of which involves determining what are some of the outcomes that they believe will reflect success or impact. And that becomes the performance indicator. And I, I actually like that terminology better than metric. Because metric denotes something numerical or something that necessarily is evaluated by the numbers and sometimes it might be more qualitative.
Tracy McFerrin: And I like the idea of learning and evaluation and continuous improvement. And a lot of foundations are employing that kind of language now as opposed to language like accountability and metrics and performance. Because we’re in the social sphere. The human sphere. Humans are messy. Humans are unpredictable, disappointing and crazy. So, to try to impose on that messiness numbers and metrics, if you step back and really think about it, it’s ridiculous. It’s absolutely ridiculous. So, I have been so gratified by working with some foundations recently that are using that language. We want to learn, we want to see what is better from when we started. I had this example when I was a program officer with a foundation and this group was a community development group and they wanted to reduce crime. Again, one of those issues, multiple factors, you know, you can’t control for all of the things that go into a high crime rate. And so of course after our three year grant, “hey, the crime rate hasn’t been reduced.” But what was reduced, people in this particular neighborhood said, and I’ll never forget this, and they said lots of other things, but they said, “I sit on my front porch more.” The crime rate has not reduced, but people feel safe. That’s something.
Ethan Whitehill: That’s a leading indicator.
Tracy McFerrin: That’s a leading indicator. And you can’t put a number on that. All you can do is a qualitative kind of survey. More people are sitting on their porches in this neighborhood than they did before this grant was made.
Ethan Whitehill: Yeah. And that builds community. You have people that are together, and they have eyes on each other and they’re taking care of each other.
Tracy McFerrin: You can get excited about that. The crime rate isn’t reduced, but you can get excited about that, and you can keep learning from that and trying to improve forward. That’s what philanthropy can do.
Ethan Whitehill: One of my favorite quotes is not everything that counts can be counted. And I think that’s a perfect example of that.
Tracy McFerrin: That’s Einstein!
Maurice Watson: Well, you know, the other interesting point is that when you hear someone who’s a very effective communicator, it is sometimes said that an audience will remember more how you made them feel than what you said to them. And I think that is very important. So as part of the work that Tracy just mentioned in evaluating impact is to what extent has the grant maker or the philanthropist gone out and solicited feedback from those who were intended to be the beneficiaries of the grant? And how do they feel about the outcome? Do they have a sense that their conditions have improved as a result of the investment that was made? And again, Tracy referenced earlier on the need to have a longer vision for when you expect to see an impact. Because philanthropy can be shortsighted and impatient in many cases, and it’s important to really emphasize the necessity of patience. Waiting to see what happens over time. There should be a natural skepticism for quick positive results or quick negative results because that may not tell the full story. It may be misleading or unreliable.
Tracy McFerrin: And you see this all the time. There’s this tendency to want to put business methods on top of philanthropy. You are not philanthropy. A mission is not on a quarterly business cycle. You’re not going to see things within a quarter. You need to be looking, thinking decades. I think, and I can’t remember who it was, but I know there was a former mayor of Kansas City who was quoted as saying nothing worth doing in the public sphere happens in less than 10 years. And I think that that is true. And that’s the kind of mindset that philanthropists who want to have impact go into it thinking “I’m in this for the long haul.”
Maurice Watson: Well, what’s interesting about that perspective is that I think there have been some cultural shifts in that there was a point, I think in American business culture where there was a longer-term perspective with the expectation that it took time. We wanted to evaluate performance over time rather than having a short-term quarterly evaluation. And I think that concept of looking down the road is especially important in philanthropy. And it is challenging in philanthropy because the same cultural shift in business that requires accountability on a short term, quarterly or less basis, drives some of the people who are taking that business mindset into philanthropy because they’ve been very successful in business. They’re using the proceeds and the assets they’ve developed through a success in business to invest in improving society. And it could be challenging or problematic to bring that same mindset.
Tracy McFerrin: Yes. There is not a one-to-one correlation between those two things. Yeah. It’s just not.
Ethan Whitehill: You need to adopt the Ernest & Julio Gallo: serve no wine before it’s time. I honestly see that in business as well with branding where people just want the silver bullet. They want a, “if you build it, they will come.” And it doesn’t work that way. It takes time. Even on the business side, it takes time.
Maurice Watson: Well, your concept of “build it and they will come” reminds me of the fact that some of the easiest philanthropy involves giving buildings a bunch of money building and build a beautiful building.
Tracy McFerrin: Think about the metrics! Oh, right. The building is built = success.
Maurice Watson: And if it’s on time and on budget = success.
Tracy McFerrin: We did it! Impact. The easiest thing to do is to build a building.
Maurice Watson: But in the end, if you don’t have great high value productive programs that come out of that building where problems are really solved, the world has changed, communities are changed, what have you got but a mausoleum or something
Tracy McFerrin: Or a vanity metric? From the tech industry, a vanity metric.
Ethan Whitehill: Yeah. You need to add some kind of sustainability measure to that too. Like, “How long does it last? How long does it work?”
Maurice Watson: And a building will last a long time except a building that you don’t continuously maintain over time, nature will overtake it. And I don’t care how much you invested initially, if you don’t continue to invest and improve it will fail as well.
Ethan Whitehill: Yeah. Been there, seen that happen. So, Tracy, I read that you co-authored an article on relational philanthropy. In the Stanford Social Innovation Review. And I’m wondering if you could talk a little bit about that and what that concept meant in terms of trust building and giving.
Tracy McFerrin: Sure. And I touched on it a little bit just from our conversation, like the importance of relationships, the importance of trust. So relational philanthropy is the idea that relationships be the center of mission driven problem solving. As I said, you’re dealing with human beings–messy, awkward, unpredictable human beings. Having some skill sets around how you build relationships and build trust is critical to getting anything done. My writing partner Kathleen Boyle Daylin and I feel very strongly that transformation happens with inside, within relationships. That’s how change actually happens. And so how do you nurture that as a funder, as a fundraiser, as someone working in the nonprofit community? So, we decided to outline a process for it. And one key part of the process is the notion of repeating steps because things get messed up. You make mistakes and also repair that is something that you don’t see a lot of people embracing in philanthropy and in other areas when you mess up, say you’re sorry. Make an apology. Philanthropy has messed up and it’s rare that you get an apology. And so, the relational framework is trying to help people in mission-driven work as opposed to profit work. Although I think it could work there too. Giving them the tools, the inspiration, the process to, to make those resilient relationships. And you can learn more. Can I do a plug for our Substack? At wepracticewe.substack.com. Lots of free materials there to help people in this world who want to center relationships.
Ethan Whitehill: So, I probably should say something about federal funding and how that affects nonprofits because it does, it’s a reality. And I’m wondering if you can share any observations you have on the trends in fundraising and what nonprofits are doing in the light of current events.
Maurice Watson: Well one of the things that I do want to elevate and raise up is that philanthropy is responsive and attempting to be responsive to the needs of nonprofits who are facing some crises as a result of substantial changes in federal funding and support for nonprofit organizations. So, I know that both Kauffman Foundation and other foundations locally are dispensing funds more quickly now to a lot of organizations. And instead of doing payouts over installments or over the life of a grant they are accelerating payments to provide the bridging funding that some not-for-profit organizations need as a result of the loss of federal funding and in some cases state funding as well. So, I think that’s very important to recognize. What is important for everyone to understand is while philanthropy in America is substantial, very large it is not sufficient to close the gap left by the loss of federal funding. And so, unless there is a recommitment at some point–and some point soon–to federal funding of a lot of nonprofit activities that policy makers have historically seen as valuable, a lot of organizations will fail. We will see a lot of possible restructuring as organizations are faced to maybe merge with other organizations or just close their doors. And philanthropy just does not have sufficient resources to solve that problem or to close that need.
Tracy McFerrin: It’s a time for resiliency, creativity, fearlessness. I’ve heard a lot of people on the nonprofit side who are very concerned, very worried. And really, my heart goes out. This is such a self-inflicted wound, it feels like in the United States right now, but I couldn’t agree more with Maurice. It’s such a big hole that might be coming. Philanthropy cannot fill it. It’s not going to fill it. So, we may be looking at a very changed landscape and even more of a call to center humanity in how we respond to it.
Ethan Whitehill: So, I’m going to ask you to do a little more prognosticating here. Knowing that there are new ways to give new tools for giving, like donor-advised funds, impact investing, giving circles, what do you see as the next frontier in philanthropy?
Maurice Watson: I don’t know whether the instruments will change, but what will be interesting is whether or not policy makers, including the federal government, will begin to reexamine and reevaluate the way we treat certain of these giving vehicles, including particulary the donor-advised funds. And the capital markets and financial services institutions have expanded a lot to create these donor-advised funds. The Greater Kansas City Community Foundation is one of the leading community foundations in the country. And I think it was on the leading edge of using donor-advised funds as a re vehicle for philanthropy. That concept has grown exponentially. And now you have Fidelity Charitable that I think has more than $40 billion in assets under management, which is made up essentially Fidelity’s DAF. And while the DAFs itself, are charitable, they are managed by a for-profit organization. And so, the question is, to what extent should government be reevaluating and imposing new regulations on DAFs? Because currently, they are minimally regulated. Once the transfer is made into the DAF, there really are no obligations of when grants must be expended or donations made from that DAF. And people raise questions. Ethan–I don’t know if you’ve got an extra a hundred million dollars you want to donate to a DAF–theoretically you could make that a hundred million dollars donation today and take the charitable deduction today for that donation, but never give any direction that gifts be made from that. And it could grow, you know, indefinitely. Now that raises a lot of concerns for policy maker. So, I think there will be some reexamination in the future of how we treat these different vehicles. And of course, tax policy generally affects people’s charitable giving and philanthropy.
Tracy McFerrin: I would also add to all of that is we have seen at Credo–I haven’t researched the numbers, but I feel like–we’ve seen an increase in prize philanthropy. So, it’s the idea of giving no strings attached funding to individuals under the theory that it’s the people who change things. And if you can give them the opportunity to expand their platforms, expand the resources that they’re working with as individuals, that they will make change. So, I think that that is one of the leading trends that are out there and that more philanthropists are looking at, “well how can I do that?”
Maurice Watson: And Tracy, you know, am I missing the plug! This is an opportunity to make a plug for the work that we do, what our clients are doing in this area. What we want to especially call out is the work that Credo has done for over five years with Ann and Kenny Baum and their family establishing a prize for emerging leaders in the Kansas City community who are through their efforts, transforming lives and communities and improving the quality of life. So that is The Pinnacle Prize. And every year the Baums give a $100,000 prizes without stipulations on how they are to be used to two emerging leaders in the Kansas City community who are nominated by leaders in our community who are doing great work with impact to transform lives. And it is really investing in those people who really are, through their work, changing lives. It has been incredibly gratifying for our client Ann Baum and her family and for Tracy and myself. We’ve been happy to work with Crux in telling the story because that’s the other thing we can talk about. It’s important to tell the story around philanthropy, too. Because that’s what gets people excited about the work.
Ethan Whitehill: And it inspires others too. Learning those stories and hearing about what other individuals can do is inspiring. And you talk a lot about creating a ripple effect. That’s kind of the point. Okay, so in the spirit of getting to that a hundred million dollars for my donor-advised fund, I’m going to ask you a hundred-million-dollar question. This is my mystery question. Here are the rules. I have a 20-sided die. I am going to roll it. Whatever number comes up. That’s the question I’m going to ask. I’ll, I’ll ask you each an individual question. And Maurice, since you’re on my left, I’m going to take you first. And I rolled a 16. And if you could spend a day as any celebrity, who would it be?
Maurice Watson: Warren Buffet.
Ethan Whitehill: Oh yeah! Who just retired!
Maurice Watson: No, he hasn’t retired yet–don’t push him out too soon. I really do revere wisdom. I keep talking about the importance of values. People who stand for something, who believe in something, and who have lived their lives and followed a path that conforms to their values and their beliefs. And I think there can be no better example than Warren Buffet. I’ve just been reading some of his writings in his reflections and he really is inspiring. So that’s, that’s my answer.
Ethan Whitehill: I love that answer. All right.
Maurice Watson: Ask her a hard one too.
Ethan Whitehill: So, I roll to five. She’s got an easier one. I think. What’s a song that always puts you in a good mood?
Tracy McFerrin: Oh gosh. You asked me a music question this year! I made a promise to myself that I wanted more music in my life. I sing, I have written songs, some people have heard them, so I love music. So, what always puts me in a great mood, I think I’ve got to say “Kiss Me” that song. Kiss me beneath the silky twilight. I love that song.
Ethan Whitehill: Well, this has been truly a joy to talk to both of you. How can listeners learn more about Credo and the things that you’re doing?
Tracy McFerrin: www.CredoAdvisors.com. Credo with an “O.” There’s lots of information on our website. You can also find us on LinkedIn at Maurice A. Watson and Tracy McFerrin on LinkedIn. And as I said earlier, you can also find some of the work on relational philanthropy at wepracticewe.substack.com.
Ethan Whitehill: Thank you both.
