Special Edition 7: Great Philanthropists - Jim and Virginia Stowers, Giving in Perpetuity

Welcome to another edition of “Around with Randall”, your weekly podcast making your non-profit more effective for your community. And here is your host, the CEO and Founder of Hallett Philanthropy, Randall Hallett. 

Thank you again for joining me here on “Around with Randall.” Today we delve into the next individual, or in this case, a couple, in the great philanthropist series. Today's conversation is about Jim and Virginia Stowers, and maybe a name that many aren't familiar with but one of the more creative philanthropists you're gonna find. And the legacy that they've created, while maybe not in the mainstream, is incredibly well known, particularly in the medical research community. And the manner in which they have created an opportunity for this legacy to go on and on and on, in perpetuity, is something worthy of the tactical understanding of our of the possibilities in our own communities. 

So who are Jim and Virginia? Well, Jim was born in 1924 in Kansas City. Virginia, in 1930, actually she was raised, I believe, in Wyoming. Jim grew up in Kansas City. Actually did a two-year medical degree then went off to serve in World War II. Came back, realized maybe medicine wasn't his calling even though he had a father and a grandfather who had been physicians. Virginia, in the meantime, had gone to nursing school and specialized in anesthesia, and the two of them met in Kansas City in the early 1950s at a place called Research Hospital, which is about you know midtown area in the on the Missouri side. Interesting little side light of the two - in an interview the two did some 15-20 years ago, although the old the story is that Jim was rebuffed when he saw her across her room - offered her a candy cane at a Christmas party. She actually admitted, “I was taken immediately.” For which Jim, in the joint interview said, “Well if I had known that I’d asked you to marry me right then.” The two of them married and started a company and that company originally was called 20th Century Mutual Funds, and Jim was an investor. And I think that the kids, the four children of the Stowers’, have said many different times that while dad was the business sense, mom was the chairman of the board when it came to the family, and worked part time for decades as a nurse anesthetist, even up into the 1980s when they were worth billions. So why am I telling you this story? 

Well what happened next is an interesting case that's going to lead to the philanthropy and charity that creates an opportunity in perpetuity. But outside the confines of what we would think of as a family foundation, or if we think about the big foundations in our country, around our world, they looked outside of themselves in the 1990s. Jim decided to change the company name and it became a name maybe some of you are familiar with, the American Century, still located in Kansas City. There is an offshoot of American Century, in terms of marketing and advertising, that maybe some are familiar with. They sponsor the celebrity golf tournament at Lake Tahoe in July every year that's on television, and you see Charles Barkley, you've seen Michael Jordan, you've seen football players, actors, who have been very successful at playing at this unique tournament that uses the modified Stapleford system of scoring. Those who play golf don't worry about it but at the end of the day that's kind of a known quantity. What isn't as known ,and they certainly talk about it on NBC when they broadcast it each year is that Jim found an interesting angle in the IRS code to magnify their philanthropy part of the tax code - allows a medical research facility to actually own a full 100 percent, or at least a large percentage of a for-profit company, whereas a family foundation has strong limitations, I think it's about 20 percent nowadays. And so he and his wife, in the early part of the 20th - 21st century, created the Stowers Institute, which is a medical research organization in Kansas City just off the plaza to do creative, inventive, maybe not profitable research. And the way they did it was, as they gave an enormous series of gifts from their own personal assets cash stock, but more importantly is they gave their ownership stake - nearly 40 percent of American Century Investments - the company to that institute and the profits 40 percent or more every year, then would go to that research institute, creating a funding source in perpetuity. 

Well, how big is this Stowers institute you might ask? Well their vision has become the wave of the future when we talk about endowments. This is a organization with 1,300+ employees, an endowment of nearly $3 billion. They've done research of two billion and every year hundreds of millions of dollars comes from the profits of American Century, which is a multi-billion dollar investment organization, to fund research in this nonprofit.

This legacy will last forever, and it's interesting because Virginia Stowers passed away this past June 2021. Jim had passed back, I believe in 2014. But they've begun to see this legacy take place. They have an enormous facility that they have built with this money for these researchers, a world-class, internationally acclaimed capital expenditure that was based on the idea of collaboration, open spaces, open connectivity for people. They do research that most people wouldn't consider profitable, or maybe possible. But yet they're finding discovery. There are certain kinds of worms that, when you dissect them, that they grow head or a tail so if you cut them in half one has tail one has the head, so to speak, they're able to regenerate the other part of the that they're missing. Now, the thought process is, is there something to be learned in that for things like spinal cord injuries? Or, we learned how to regenerate cells. That is a way off thought but only a place like the Stowers Institute, who doesn't put particular parameters on the research because philanthropy has allowed it to remain independent, has the opportunity to do that. This $300 million facility has partnered with various organizations around the world and now has a long lasting legacy. 

The reason this is important, and maybe the tactical for you, is we think about philanthropy in the here and now, and every once in a while we find a donor who might look at it from the perspective of endowment and what it might mean in the future. But, most of the time those are are stagnant things like scholarship funds, which I’m not saying aren't important, but they're not uniquely novel. There's not a continual revenue stream. If someone gives the money the only revenue stream you have is whatever you can invest in and and see gains from the markets. What was interesting about this is think about the fact that you have a non-profit organization who has two revenue streams, number one is the investment, which many organizations do. But the second is because of the uniqueness of the way that Jim Stowers thought about it, was creating funding on an annual basis. So, they could continue to reinvest that money, the stock or the ownership of American Century, and now with that golf tournament that I mentioned, you hear that NBC broadcast team talk about the amount of money that comes out of American Century that's doing good in terms of medical research. 

So they've created various aspects to promote the idea of the value of the non-profit, the medical research community. They also, and this was very much up his alley, wanted to make sure as mentioned that researchers weren't stagnated by things like profit, that the idea of, well, you only have two years to find the solution. No. If the breakthrough takes 20 years but can change the world that's worth it. That was a mantra that both Jim and Virginia talked about many times, about the long-term effect of medical research. And this was a value to them because they're both cancer survivors, or were cancer survivors. Three of their four children had cancer. They wanted to find solutions, no matter the time or depth. 

So the tactical piece for you is, who are the people in your community that look much and creatively beyond themselves? Who's looking for interesting ways of finding answers to your community's problems? Who can help you put your organization on the map and create funding in perpetuity? We dis-incentivize much of the time the idea of what I’ll call estate or planned gifts because most organizations are looking for cash, they're looking for, “we need money today to pay for this or to pay for the employees or to balance the budget or whatever the particular circumstances are.” And, thus, we create metrics much of the time that incentivize cash giving or cash pledged giving maybe over three to five years, and yet we know that the biggest opportunities are in estates where people may not want to give away today their assets but when they pass could leave a large percentage, or companies, or investment vehicles, or things of that nature that can grow and continue to provide income. One of the more creative ways along the same way is, I have a client who I’ve worked with who has a long time annual fund owner of $10,000. You might think well, you know, $10,000. But it's a big deal. This organization, and they're concerned because this this donor is getting older, and I said, “Why don't you approach them and say would they consider a quarter of a million dollar gift to endow that gift?” So it gives $10,000 every year because you've become dependent on it for an operational perspective. These unique opportunities are things we need to talk about more often instead of just worrying about cash. I’m not saying give up cash. But I am saying unique opportunities, and that's what the Stowers’ story is really all about. Finding uniqueness in philanthropy to generate ongoing opportunity. And in their particular case it was about medical research. It wasn't just the $1billion or $2 billion, whatever. It was that they gave originally to create the Stowers Institute, it was the creative mechanism which we all have options for to create funding in perpetuity, to breathe life, to give hope, and to grow something that's going to make a difference in the world forever. And that is worth thinking about. Jim and Virginia Stowers, our great philanthropists for this podcast. 

As always, if you want more information about Hallett Philanthropy www.hallettphilanthropy.com. And certainly you can check out the blogs there, recommended 90-second reads on different things that are going on in the world - leadership issues, non-profit issues, things that happen to me personally, and I think they have a relevance to maybe the way in which the world works or my connection to it. And then also if you want to email me, feel free. That's podcast at hallettphilanthropy.com, podcast@hallettphilanthropy.com - be glad to respond. the Stowers represent a part of my favorite saying, some people make things happen, some people watch things happen, than there are those who wondered what happened. They were people who wanted to make things happen and they had, in moments in life, and they were very honest about it in interviews and different stories, they had moments where they were wondering what happened - cancer bouts, loss of a child, but they kept going on the premise that they can change the world and they have the resources and the creativity to do it and that's what this profession is all about. That's what we should be aiming for. We want to be people who are trying to make things happen for the people and the things and the entities that are wondering what happened because they need help, and that's the value, that's the the glorification of the true thought of philanthropy. Love of mankind. Not about money, but how about helping others. And if we can all do that, this world can be a better place, and it starts with you and me and everybody else individually, and we'll grow from there. Appreciate your time on this special edition of the great philanthropist. We'll see you next time back on the regular podcast subjects right here on “Around with Randall”, and don't forget, make it a great day.