Special Edition: Great Philanthropists - John and Laura Arnold, Using Data

Welcome to another edition of “Around with Randall”. Your weekly podcast on making your nonprofit more effective for your community. And here is your host, the CEO and founder of Hallett Philanthropy, Randall Hallett. 

It's a mini version of “Around with Randall,” a follow-up to a previous podcast that we discussed, talked about the origins and history of philanthropy. A client who had heard that podcast had asked are there any learned lessons from philanthropists and I had someone else reach out and asked me a little bit more about some of the philanthropists we don't know much about. So, my goal over the next year is every so often to splice in an additional mini version of “Around with Randall” to talk about some philanthropists and how they are viewing their philanthropy. Then what are the lessons we might learn from them.

I appreciate your time. Let's jump into it. Today, the first version is probably someone most people don't know or have not heard of and that's John and Laura Arnold, current day philanthropists. Quick background -- John grew up in Dallas, Texas. His wife actually grew up in Puerto Rico. John is an investment banker. Actually, he was called at one point, the “King of Natural Gas” as a trader when he worked for Enron. He started his own hedge fund in 2002. One day in 2012, announced he was shutting it down that he'd made enough money. Laura, his wife grew up as mentioned in Puerto Rico, a graduate of Harvard, Yale Law School, and has her MA in Philosophy from Cambridge. John graduated from Vanderbilt in Mathematics in three years, a little background on them. 

Why did this couple and their philosophy on philanthropy interest me? And why might it actually be interesting to you? Well, since 2012, they've taken their philanthropy and they were amongst the first to do something called Philanthro-Capitalism, meaning they took their money out of a foundation and created an LLC. There are naysayers about that process that it reduces their responsibility for disclosure; that it's a little more hidden. They would argue it gives them more freedom. We're not going to get into that today, but just as a context. They have over the last several years, given away hundreds and hundreds of millions of dollars to things that are centered on criminal justice and education during the government shutdown. In 2015, I believe they gave an immediate $10 million to ensure Head Start would continue.

They are interested in gerrymandering and in healthcare and not hospitals, but about root causes, like what's causing healthcare issues and epidemics. All of that is related to what I really want to talk about is their fascination, their driven passion, their I almost would venture to say intellectual honesty, when it comes to research integrity. They've taken it to an extreme that it drives their philanthropy.

I watched a Ted Talk by Laura Arnold, where she talked about this, but before getting into that, as well as some of the research that they do to figure out what charities and causes they want to support, I think it's also important to quote her and identify the rationale of why they do what they do as philanthropists. Her direct quote was, “We became philanthropists to change the world”. Whatever we learned about the detailed specifics of any philanthropist as we go through this series on an ad hoc basis, I think we're going to find that people who do and engage in philanthropy do so because they want to help people.

They want make the world a better place and that's a driving force. The question is how do they do it. 

On the Ted Talk and in everything they put out publicly, John and Laura, talk about how important research is in this process. In fact, Laura is quoted as saying that they view their philanthropy as R and D meaning research and development is critically important and that development and research has to be done with a sense of integrity, meaning openness and being honorable and things of that nature. They're very concerned about studies, research studies that are not providing all of the evidence that occurred. An example she uses in the Ted Talk is she says, you know, if they were looking for a study for blue M&M’s and their correlation or connection to prostate cancer. They did the study 19 times, and there was no response or no connection, but on the 20th, for some reason, there was. People will tend to report only that 20th study and ignore the previous 19. She goes into great detail as to why that's true and that's political forces and that's money, and that's all kinds of other influences. But what I find fascinating is the intellectual honesty of which they are talking about how they research, what they want to engage in. They spend an immense amount of time looking at the detail of what organizations pitch to them. They look at it from a macro. I mean, they're dealing with policy decisions by the federal government or by state governments by foreign powers. They're looking at intense level of research process.

What they are most interested in is finding a way to get better results with less money. To do so, there needs to be an honest conversation about the type of research that is done. What I found interesting is that they comment that they want to be dispassionately analytical. That data should drive decisions on where to invest. Both talk about their upbringings and that there were challenges in both, but those upbringings, they have purposely put into a box emotionally when it comes to making their philanthropic decisions because that emotion could drive decisions that aren't actually logical and that we need to get more out of philanthropy.

John and Laura Arnold were amongst the first kind of the original group to sign up for the giving pledge. The giving pledge for those who don't know was that about 2007, 2008 effort of Warren Buffet and Bill and Melinda Gates to press people, to give their money away during their lifetime, not to sit on it, to use it, to make the world a better place. They've given away overall, billions of dollars. What do we take from this? Well, much like what we see in fundraising circle, and you've heard me talk about the analytics and the data that should drive our decisions, whether it's why major gift philanthropy is probably a better investment because of return on that investment or better ROI than special events or whether it's the up and coming drive of artificial intelligence, helping us to predict likelihood. To the ability for us to help metrics and data drive gift officers and where they should spend their time and with whom. Data has a way of, as they are commenting, and I said earlier, being dispassionately analytical. The causes that we're after should be the emotion. The way in which we do our business, the way we present the case is to have some analytics about impact. 

The other thing that I think is really important for us to realize from the Arnolds is that they're pressing non-profits to show results. The days of, well, we'll just do the best we can with your money and your donations -- those days are over. And so being able to steward analytical pieces, data to the donors, to those philanthropists and be able to demonstrate use and demonstrate good and demonstrate outcome is just more and more evident. That means we need to continue to work with our leadership, whether it's an education or healthcare, social service about outcome. What is it we're trying to accomplish? And how are we going to prove we did it or can do it? The Arnolds are driving a conversation amongst many philanthropists about data driven decisions. The takeaway here is if you're not doing the same on the nonprofit side, you're going to miss out on opportunities. The Arnolds are a fascinating case of evolution of philanthropy – data, dispassionate analytical research, driving the decisions of what they engage in to make the world a better place. So, your takeaway, your tactical -- get analytical. You can have the emotion in there. The impact's great, but how you prove you did it is going to be the name of the game. 

As mentioned, we'll do this series every now and again, and see if we can pick up some tricks and traits of those philanthropists who are driving opportunity. Don't forget in your community, it would be great to have, but you don't need the Arnolds. There are people locally who genuinely want their community to be a better place. Your ability and all the other podcasts, blogs, or the education that I do are the ways to do that in terms of relationship building. But the key is to get out and talk about what it is your organization is trying to accomplish. If you can find those five or 10 people that want to make a difference, and maybe they have the resources of someone like the Arnolds, maybe they don't, maybe they just want to give everything they have to make your cause the one they believe in their passion, then that's a win. That's only going to be done if you build relationships. As we learned today from the Arnolds make sure you've got the data to prove what you're trying to accomplish and that it's honest, open and sourced to ensure credibility.

The special edition, short version of “Around with Randall,” I appreciate you joining me. We'll look forward to you joining me on the next short edition or the full edition of the podcast of “Around with Randall”. Make it a great day!