[upbeat music] - Hello, I'm Nido Qubein.

Welcome to Side By Side.

My guest today operates at the intersection of purpose and profit.

We're talking impact investing with the Executive Director of the Phillips Foundation, Ms. Elizabeth Carloek Phillips.

- [Announcer] Funding for a Side By Side with Nido Qubein is made possible by: - [Woman] Here's to those that rise and shine to friendly faces doing more than their part and to those who still enjoy the little things.

You make it feel like home.

Ashley Homestore, this is home.

- [Man] The BuddGroup is a company of everyday leaders making a difference by providing facility solutions through customized janitorial landscape and maintenance services.

[upbeat music] - [Announcer] Coca-Cola Consolidated is honored to make and serve 300 brands and flavors locally.

Thanks to our team.

We are Coca-Cola Consolidated, your local bottle.

[upbeat music] - Elizabeth, welcome to Side By Side.

We're so glad to have you here today.

We've been fascinated by the work that you and your husband and your family have been doing across America through the Phillips Foundation.

I'm intrigued to talk with you today about philanthropy, what is it?

Why is it?

How is it done when it's done properly?

I know that you've studied this field so much and that you have articulated the purpose for the foundation and beyond.

I know you have other investment funds that you use for philanthropy, but what is the Phillips Foundation and what drove you to do what you're doing?

- Sure.

Well, thank you so much for having me back on your beautiful campus, High Point university always blows me away.

It's like a movie set here, and I'm so happy to join you.

Thank you for having me.

Well, the Phillips Foundation was endowed by my husband's grandfather as its charitable trust, and it was the family's philanthropic vehicle dating back to about 2002, but it was not fully endowed until he passed away.

And in 2013, we had this endowment that my husband and I were put at the helm of to steward for good.

So traditionally, a family foundation grants 5% of its endowment value to different non-profit charity causes and the other 95% is invested to sustain that payout.

And when the family asked, if I would serve as Executive Director of the Phillips Foundation, I immediately jumped at the opportunity and was so grateful to have that role and I take it really seriously still now about 10 years in as my full-time job, because it is something that is not ours, we did not earn these funds, they were stewarded to the family through this charitable trust.

So we want to maximize what we do with every dollar.

And so that's why starting out in my role, I was doing the normal philanthropic practice of donating money to nonprofits, but then I started thinking more and more about the 95% that we were investing and how could we say we are ultimately making a positive impact in the world if we don't know what the bulk of our endowment dollars are doing, and we're investing them without an eye for impact.

So that's where I started self-educating about this new term I've been hearing impact investing.

- [Nido] What is impact investing?

- Yeah, so impact investing is essentially just considering the impact of your investments, it's intentional investing.

So it's thinking about your environmental, social impact in addition to the financial returns you receive.

And for a long time, people thought you could not make competitive financial returns while also considering doing good.

But what we've found in practice is you can in fact do well as you do good since we've executed our impact investing strategy, we've outperformed benchmarks financial.

- [Nido] Really, really.

So give us an example, like what, you're talking about investing the Corpus, the funds in the foundation in companies or funds that are doing good in the world, good in America, good in the world.

What would be an example of that?

- Great question.

And I've got many examples, but I'll go back to the first impact investment we made with Corpus Dollars.

It was an enterprise in Uganda that I had been a part of as a jewelry designer.

I had started a jewelry company in high school, and that led me to East Africa, helping train women how to make jewelry so that they could be connected to the Western marketplace.

And what we've found is this company, and it started out as a nonprofit, now it's a for-profit because it's scaled so much, but they needed capital to purchase raw materials to fulfill an order for Dillard's Department Stores.

- [Nido] I see.

- So I was on the board and we're in this meeting, how are we going to get a grant and some philanthropic capital to fulfill this purchase order?

And I had just been reading about impact investing and I said, maybe it's not a grant we need, maybe we just need a bridge loan.

And that's something our foundation could be interested in.

- [Nido] So this is similar to venture philanthropy, is it not?

- [Elizabeth] That's another term.

A venture philanthropy accepts more risk and their impact investing is really a spectrum from venture philanthropy, all the way to market rate returns - I see.

- across asset classes, at least that's the approach we take, we call it a total portfolio activation strategy.

- [Nido] What percentage of the assets are you willing to put in impact investing?

- [Elizabeth] 100% - [Nido] No.

You serious?

- Yes.

We apply an impact lens across our full Corpus, which is now at over $70 million.

And we've outperformed our benchmarks on average of 180 and 200 basis points since we took this approach and we continue to deepen our impact at every level.

So initially it starts out as a conversation about what are we going to screen out of our portfolio.

We don't want to be a foundation that says we are solving homelessness with our grants, but we're creating it with something in our investment portfolio perhaps, right?

- Wow!

- And so we scanned the portfolio to say, what can we take out?

Tobacco, nuclear weapons, there's a whole list of things you can screen out if you so pleased.

So that's called the values alignment strategy.

- [Nido] So this is so complex.

I mean, who does all of these analytics about that?

- That's a great question because it's not me.

- You it must be relying on a lot of advisors dissecting all these sectors that you're investing in.

- Absolutely.

And as I mentioned, my background is as a social entrepreneur in the fashion world, not in finance.

- Yes.

- So we inherited some financial advisors in the beginning of this process, as the foundation was coming into its endowment.

And I started asking them questions about values alignment of the portfolio.

And they started with the negative screen process I just described.

And I said, "No, I want more!

I want our money to do more.

And I want the reports to tell us the impact that every dollar is having.

We want transparency into the dollars we are called to steward, right?"

And so the advisors thought I was a crazy little millennial with these pie in the sky ideas.

And so I had to fire them.

And then we went through a national RFP process to find the right advisors.

And we landed with a firm out of Chicago who had done this for another young woman who had come into stewardship of a lot of capital about a decade prior.

So they had enough experience to guide us on this journey towards a hundred percent impounded.

- So your influence and impact as a foundation works in two ways.

One way is the grants that you actually distributed that you give to other organizations and other causes.

Plus the actual assets of the foundation that the foundation owns called the Corpus.

Those two are doing good in the way that they are invested to create additional returns on the investment.

- [Elizabeth] Absolutely.

And sometimes it's a blended approach.

So there's a tool and family philanthropy called a PRI, Program Related Investment.

Now PRI's have to be impact first.

You can't go into a PRI according to IRS rules and regulations for the financial return, but you can go into it for the impact and if the financial return is icing, that is okay.

So sometimes we appear, and PRI's qualify as your 5%, they qualify as a grant technically.

So a lot of our 5% that we distribute in grants and PRI's does make a return.

- [Nido] I see.

- So it's like a grant that gets paid back, but it accomplishes something, a grant could never accomplish.

- [Nido] Well, that's venture philanthropy - PRI's are considered venture philanthropy.

- Yes.

- And then the other term is MRI and family philanthropy and MRI is a mission-related investments.

- I see.

- And those are the ones that are expected to make a competitive return in your investment portfolio.

- I see.

Well Elizabeth, what is disruptive philanthropy?

- [Elizabeth] So disruptive philanthropy is a title that was actually put on an article about us when we started practicing impact investing, and we were accused of really being disruptive because as I mentioned, traditional philanthropy was this way.

You make your money over here, you give it away over here.

And we could not come to terms with that bifurcation.

And so what we said is we want a holistic approach and we want to disrupt this model and create something new and innovative that will resonate with our generation.

Because I think what millennials and younger expect is the opportunity to do well while they're doing good, which is the model we've been able to prove at the Phillips Foundation.

It is possible.

- So, I'm inspired by you because you went to SMU, your husband, Kevin went to SMU, that's where you met.

You come from a successful family in Dallas, Texas, Elizabeth, your parents have done well in their own, right?

You have grown in a family of success and you'll have this enormous desire to be a steward of your skills, talents, and money.

And I wanna ask you, how much do you believe your work is creating in terms of stimulation and inspiration for other people in your generation?

You are a young person, right?

You're a young leader, and yet you're doing some very, you've been entrusted with something very important, and you're doing some very important work with it.

And you're using intelligent applications to this work, whether it's disruptive in a good sense, right?

Like we say, disruptive innovation, disruptive education, we mean it in a good way.

But tell me how your work is inspiring other young people to do similarly?

- [Elizabeth] Well, I think like you Nido, and like my parents, I have a very entrepreneurial mindset and I find that a lot of people reach out to me when they are in college or just out of college, even sometimes high school and saying, "I want to make a difference in the world.

How do I find a career path like yours?"

And I got lucky!

This landed in my lap.

Again, it's not my money, I just get to allocate it for impact to the best of my abilities.

And so I tell students to find a company that is values driven and in alignment with your vision for your life.

As you have found here at High Point University, you're so fulfilled doing this work day in and day out.

And it's for a lot of people, not about the money, but about the impact.

And I think companies and organizations need to realize that to attract talent.

They're going to have to offer that deeper meaning to the nine to five job.

- [Nido] Yes, yes.

Well, that's the whole point of traveling the journey from success to significance, right?

So success could be defined in many ways, but significance is that framing that we put around the influence and impact that we create with our life.

How does it matter that we live at all and who are we touching along the way.

William Barkley, the Scottish theologian, I think said it best when he said, "Always give without remembering.

Always receive without forgetting."

We have that mission.

Philanthropy comes from a Greek derivative, which means friend of humanity, right?

It doesn't always mean money, it means leadership, it means education, it means inspiration and so on.

But are you doing any educational programs in the foundation?

Are you reaching out to your generation or others in the community to teach them, - Yes.

- how to do what they do?

One of the challenges usually for nonprofits is that they apply for a grant, but no one, you know, ever provides for them education about how to run the organization, make it more fruitful, more purposeful, and certainly more streamlined.

- [Elizabeth] Yes.

So we do offer technical support and technical assistance to our grantees and our investees because sometimes there is a gap.

You know, I came from the privileged position of having started a company at a young age and kind of knowing the ropes from my own experience, not everyone with a dream and a vision has that.

And so we do pay it forward.

And what we've created through a program, our impact investing think tank program is what I wish I had had in the very beginning of the foundation role that I'm in.

And the impact investing think tank does speaker series events, it does case studies, it provides an aggregates materials on our website so that people can self-teach about impact investing.

There, I don't think there's a course at High Point University about impact investing, there are some schools that are starting to think about that and I get excited knowing that that is on the horizon for students 'cause I think it will be a very popular study for people wanting to combine profit and purpose in whatever career path they choose, whichever field.

And so we have the impact investing think tank we also-- - [Nido] And what is that?

Is that like a symposium people come to?

is it done virtually?

Is it done in person?

- Well, lately it's been more virtual, but it started here in North Carolina with our initial grantee pool.

And then we started inviting more foundations, more non-profits there was so much interest in this topic.

And we had the author of a book called New Frontiers of Philanthropy, Dr. Lester Solomon from John Hopkins University, come keynote this and get everyone up to speed.

It was a three hour symposium.

And then we realized we can reach more people if we have a digital format.

So that's how we ended up launching the website.

- You know, the thing about philanthropy is that unless it is, unless it's married to stewardship, it can miss the mark sometimes.

So I use the word stewardship to mean that we're all stewards of our talents and our resources and that we have a responsibility to offer them in a way that is, that has a multiplier effect.

So it's not enough to give somebody money, it's more important than, you know, don't just give them fish, but teach them how to fish.

- Yes.

- So it's all about enabling an organization to better allocate resources in the future in a manner that brings it better results that are outcomes.

Tell me how at the Phillips Foundation you measure outcomes?

- [Elizabeth] Yes.

And measurement is very important.

I agree with you on a spiritual level, you should give without tracking it and just do it out of the generosity of your heart.

But institutional philanthropy is not generosity.

It is investing whether you're giving those dollars away, expecting 0% return, or it's a PRI or MRI where you're expecting a return.

You have to responsibly track your impact so that you know if you're achieving the goals you're setting out to achieve.

- [Nido] And to help the grantees, - Right?

- Right.

- To do better.

- And so what happens is foundations have all of this data because we require reporting from the grantees and the investees to let us know what impact are those dollars having so we can know whether we want to continue that funding or scale the initiative in some way.

So the reporting is very important and it looks different for every organization.

It's very hard to get a template together for how to report impact.

And it's something that's evolving in this field of impact investing as well because different fund managers and different investments report back on the investment side of things also.

So that needs to mature as this field grows.

- [Nido] So with these measurement sticks if you will, along the pathway, are the consequences beyond, next time we're not gonna renew your grant?

- Sure.

And what we're also looking to do is work with other foundations.

We cannot accomplish as much in a silo as we can collectively.

And I'm grateful for the men and women who had been in philanthropy for decades before I came into this work who taught me so much, and it's really a learning journey.

We came into our role at such a young age, we knew we didn't have the answers.

So it required a lot of listening of those on the ground, the practitioners delivering the impact, being the hands and feet.

And it required learning from people that had been in this game for a long time.

- [Nido] Elizabeth, how old were you when you were entrusted with the Phillips Foundation?

- 24, - 24 years young and you became the Executive Director of a $70 million foundation.

And along the path you have helped, would you say how many organizations in terms of grants alone?

- Oh goodness!

I don't have a number for that.

- But scores of them - Scores, yes.

- And millions and millions of dollars.

And at the same time you used impact investing to continue the Corpus to grow so that you can help more and more.

Give us an example where your foundation combines it's energies and it's planning with another foundation to create an impact that's even greater than the sum total of the pieces.

- Sure.

So because I came into this role at 24, I really sought out field building organizations and community on this path.

So organizations like Women Moving Millions, which is a group of philanthropic women that support efforts to provide more opportunity to women and girls globally was hugely helpful connecting with those women with foundations, or they may just be individual donors.

Learning from them, amplifying impact by coordinating on strategy and funding.

Then also the national center for family philanthropy was something hugely helpful in the beginning and still to this day by connecting me with other foundations and other philanthropic families who have similar challenges and that has made all the difference in the world.

On the impact investing side, it has been an organization we co-founded called the Impact, a group of families, it's global from Korea to Germany to, - Really.

- all over the world.

And we get together and talk about how can we make more impact investments more effectively?

And it helps with deal flow, it helps with learning from each other on the journey, but our foundation supports field building organizations like that as well outside of our place-based strategy, because it's made all the difference for us in getting smarter quicker.

- [Nido] You don't necessarily combine your funds, you you just talk globally and universally about ideas and how we could do it better.

- Yes, but in some situations we form coalitions to address a certain problem or to create a fund that serves a certain purpose.

We are scanning the field for what are the gaps, right?

And so with that entrepreneurial mindset again, where can we serve as catalytic capital, where there may not be creative financing for something otherwise, because a lot of startups, social entrepreneurs, nonprofits, they can't go to a bank and get a loan with no credit or track record, right, for what they're doing.

And so I really believe that philanthropy is the best and highest use is as risk capital.

The government can not gamble with taxpayer dollars.

So they're not going to be as innovative as we would all hope, right?

That's never going to happen.

So we can be the risk capital to prove something and then take it to tap those larger public budgets - I see.

- and make a change.

- Give us an example.

Let's take a state like North Carolina, give us an example of a project that you exceptionally proud of the work of your foundation in North Carolina.

- There are so many, I think a good example of what I was just describing as far as proving something, then scaling it out statewide would be a grant we made to youth villages.

Youth villages is the safety net for children in foster care.

And they had an initiative called Lost At 18 because a lot of kids were aging out of foster care and then not finding success on their own.

And so we were approached to fund the gap in Guilford county, North Carolina, where this High Point University sits.

And we were able to write the full check for what they needed to scale their programming out county-wide.

So we took that pilot and we got the metrics on the impact, on the cost, and then took that to the state of North Carolina, youth villages has lobbyists who go and sell this to legislators.

And when they saw the math that you actually save taxpayer dollars by serving this demographic, instead of them getting lost at 18, then we had a moment.

And so youth villages was able to scale out - I see - statewide.

- So the seed that you invested with a local organization multiplied itself across the state.

- Yes, and it took about $800,000 of our philanthropic capital to tap millions of dollars from the state of North Carolina when they saw what a win-win, this was.

- I see.

Sort of as public private effort to make something good for the state.

Tell me what's next for the Phillips Foundation?

More of the same, are you working on some unusual venture money we've learned from you today about, you know, venture philanthropy, impact investing, disruptive philanthropy, all very interesting terms and all terms that are extensions of literally centuries of philanthropic efforts that families have done.

Now, there are new ways of doing things and more impactful ways, more influencing ways.

So what is it that lies ahead for - Yes.

- Phillips Foundation?

- Great question and something it's my job to think about every day.

Right now, it's still what I said, serving as catalytic capital, identifying gaps in the field.

And one thing we have done recently with a lot of nonprofits, having a hard time doing in-person events is go to people wanting to help and connecting them to those nonprofits who can't have their lunch in at the moment, or, you know, we're trying to think outside of the ballroom gala.

And so it's called Reality Check It, and it's initiative that's all on social media.

And we're focused right now on the Dallas, Texas community.

And it connects people on social media to nonprofits and causes they care about in real time.

- [Nido] I see.

So if someone is on social media and has a certain need, you connect them with an organization that can meet that need.

- Yes.

And so we have featured about 400 nonprofits today in the Dallas community, and it's a great way to mobilize and amplify the impact we can have as one foundation versus what a community can do when there's real need, as long as they understand what the need is and how to respond.

- I see.

- So that's one thing.

Another thing we're doing is continuing to deepen the impact of our investments.

ESG screening, Environmental Social Governance screens on the portfolio is a baby step.

We're trying to peel more and more funds from ESG into deeper impact strategies as those opportunities arise.

And so we're not a foundation that says, "We are focused solely on environmental climate issues or solely on X, Y, - Is see.

Yes.

- and Z social problems."

We're opportunistic in the investments where our capital can be catalytic, can make a difference where we can measure impact and know, and sleep at night that we are doing the best we can with this platform we steward because it was intended for philanthropic good and we need to be sure that that's what it's accomplishing.

- [Nido] So you were blessed to have a father in law who left significant funding with which you can do that.

What is it your personal view about how an individual, perhaps without such resources or even a family with very limited resources, can they be philanthropist?

And if so, how?

- Everyone can be a philanthropist.

And that's also a big focus of our foundation through our Give As We Grow Initiative.

We want to democratize philanthropy.

You don't have to have an endowment to practice philanthropy.

As you said earlier, philanthropy is the love of mankind, it's helping humankind and the world we live in.

And so anyone can do that.

And Give As We Grow offers a platform where parents can start educating their children about philanthropy from the age of three up, and we're creating an up for it.

Now it's a demo website at this time, but we came across so many families who were saying, "We want to raise the next generation of generous citizens.

How do we do that?"

So it starts with Elmo teaching kids, financial literacy, and then it grows with the child and the family.

They can track their giving over time on this platform.

And they have educational resources as well, so that they are growing up, understanding philanthropy for when they do have whatever platform they're given down the road.

- [Nido] And That's really what it's all about.

It's a, it's an evolutionary process that we have to plant seeds of greatness in the minds, hearts and souls of young people, so that they grow with a sense of responsibility for the world in which they reside.

We've all been given so much in America and we need to appreciate it and be grateful for it every day and to show that in multiple ways like philanthropy.

It's so good to have you on this program.

- Thank you.

- I'm glad you were Side By Side with me.

I wish you and Kevin and the Phillips Foundation the best ever.

Thank you so much.

- Thank you.

What a pleasure.

- [Announcer] Funding for a Side By Side with Nido Qubein is made possible by: - [Woman] Here's to those that rise and shine to friendly faces doing more than their part and to those who still enjoy the little things.

You make it feel like home.

Ashley Homestore, this is home.

- [Man] The BuddGroup is a company of everyday leaders making a difference by providing facility solutions through customized, janitorial, landscape and maintenance services.

[upbeat music] - [Announcer] Coca-Cola consolidated is honored to make and serve 300 brands and flavors locally.

Thanks to our teams.

We are Coca-Cola Consolidated, your local bottler.