Interview: Alex Buffett Rozek and Ellie Mudge

Alex Buffett Rozek and Ellie Mudge

Alex Buffett Rozek works in investment. He is heavily involved with the Learning by Giving Foundation and a trustee of his grandmother Doris Buffett’s Sunshine Lady Foundation. He sees the key role of philanthropy as finding great people to support and doesn’t practise impact investing. He is not, he insists, a philanthropist himself. Caroline Hartnell talked to him and to Ellie Mudge, Online Platform Director of the Learning by Giving Foundation, about how Learning by Giving operates and what his role is.

I understand the Learning by Giving Foundation programme began as part of the Sunshine Lady Foundation in 2003. Where did the idea come from and why is supporting the development of philanthropy so important to you?

Alex: The Sunshine Lady Foundation was started by my grandmother and it runs through what are called ‘Sunbeams’, basically friends and family that she relies on for help with finding ideas to fund. The Sunbeams would look at something that made an impression in a community, usually a community-based organization, and submit a proposal to the Sunshine Lady Foundation. Every Sunbeam was given the opportunity to make grants worth up to $10,000 a year.

In 2003, there was a version of the programme at Davidson College where five students had been selected as Sunbeams. One of the professors said that philanthropy and non-profit studies wasn’t taught there. Given its importance, he thought it would be very worthwhile to teach undergraduates in finance and the sciences, to open their eyes to philanthropy and to give them the skills to do it. He suggested that, instead of giving $5,000 each to five students, we could give $10,000 to an entire class and encourage them to participate in the same type of careful thought and evaluation in the distribution of money as the Sunbeams do. So Learning by Giving was born. Ten years later, we have over 35 schools and we have just completed a massive open online course (MOOC). We thought that if we could encourage more credit courses at universities and colleges around the country, it would both expand the education on this important topic and at the same time distribute money.

Could you tell me a bit more about the MOOC?

Ellie: We began to reaEllie Mudgelize that a lot of information was coming in but nothing was really scalable. So we decided to create a fully interactive website that allowed all the professors to upload all of their content. From there we thought that, if we can create this online platform to share information, why not create an online course that would be available to everybody, not just to students in a bricks-and-mortar classroom.
Alex: Right. We had this concept that you could do it in a scalable way and reach a much broader audience. The mission of the foundation from day one was to expand education in philanthropy and non-profit studies and to distribute capital in communities where it can be used best. And I think the MOOC has an ability to do that on a scale that is really unprecedented.

How does the MOOC course work?

Alex: The actual classes can distribute $10,000, with the supervision of the professor. Students elicit proposals from community organizations, develop their own system for analysing them, and then come together and set criteria for distributing the money. The challenge with the MOOC was to preserve as much of that experience as possible where there was no face-to-face interaction. With the MOOC, there’s the opportunity to take the class as a learner – take the quizzes, participate and get a certificate if you complete a certain percentage of the class – or as a giver, which is much like taking part in our university and college classes. You submit an organization to be nominated, then you review your own submission against what you learn through the MOOC and you review others. Through that peer review process, we got over 700 nominations screened down to the top 40. From there, the recipients and amounts are decided.

Dealing with the proposals and deciding how the money is to be distributed sounds like a time-consuming process.

Ellie: Yes, the peer review process is the key because there’s no way that we as the foundation could go through 700 proposals. We scaled it by making it part of the course. Students took what they had learned the week before and applied it to the process for reviewing their own nominations and the nominations of at least two of their peers.

How do the two of you work together in the foundation?

Ellie: We come up with what’s working and what’s not working, in terms of creating a usable platform for our students, both our MOOC students and our faculty state colleges and universities, and really try to oversee that whole process.

Alex: My full-time job is managing an investment partnership in Boston. This is a labour of passion; I made a commitment to my grandmother to continue to develop her programme. I think this could be a game changer as a way of distributing large amounts of money. What gets me excited about it is that small community-based organizations do not have access to capital in the same way that large organizations do. For givers, it’s harder to do the analysis necessary to make thoughtful grants of $10,000 or less to these community organizations, and they just don’t do it. And it’s not because it’s not a good cause, or because there aren’t good people running those organizations or because it wouldn’t have the desired effect. The traditional method of making grants would necessitate hiring lots of people and creating big organizations to do all this work. We have a very big organization and the workforce is free. It is the students. They are motivated, they’re passionate, they’re intelligent, and they’re encouraged and supported and supervised by some of the best faculty out there. Working together they can achieve fantastic results in the way they distribute the money.

Can I ask you, Alex, about your role as a trustee of the Sunshine Lady Foundation and, more generally, whether you would like to see your involvement in the family philanthropy develop further over time?

Alex: The family foundation is designed to give all the money out and then there will be no foundation. I think my grandmother is on record as saying she wants the last cheque to bounce. That’s her goal, so when that last cheque bounces that will be the end of my role in that foundation.

But I assume that won’t be for some time. In the meantime do you see yourself becoming more involved in your role as a trustee in the family foundation?

Alex: I wouldn’t be more or less involved than I am now. The programmes that the Sunshine Lady Foundation offers are run by incredibly capable and intelligent people and they are very defined in terms of their goals. We have board meetings and I speak to my grandmother more regularly about the different programmes she’s working on. The money will continue to go to the causes and programmes she wants to support, so I don’t think there will be much changing of direction or deepening of programmes. I will continue to be a trustee as long as I’m honoured to be asked to do so, but I don’t see that role expanding materially. The reason she spun off the Learning by Giving Foundation was because she wanted me to focus my efforts on that. So if I were deepening my role, it would be by deepening it somehow with Learning by Giving.

Do you see significant differences in attitude between you and other members of your generation in the family, in the causes you’re interested in, for instance supporting social businesses rather than NGOs or wanting to be more hands-on?

Alex: Actually, I would invert that and say that I don’t see differences but I see incredible similarities. The only differences might be the tools that we use. What I’ve learned from the older generation, my grandmother’s generation, is that they primarily view their role as finding great people to distribute the money and to do great things. Warren Buffett [Alex’s great-uncle], for instance, gave the money to the Gates Foundation because he thought that they would do an excellent job. He also gave some money to his children’s foundation and some to my grandmother’s foundation. My grandmother, too, essentially outsources the work through the Sunbeams, and at the Learning by Giving Foundation, we outsource the work to students.

I’m not a philanthropist. I’m not giving any money away; it wasn’t my money to give away. What I’m doing is creating a system. My grandmother always says, ‘the younger generation has the time and energy and I’ve got the money. How can we work together?’ That attitude is really the initial idea behind pretty much everything that we have done.

Philanthropists nowadays seem increasingly to feel that donors know best, often wanting to set up their own organization rather than support an existing one. What do you feel about this?

Anyone who wants to roll up their sleeves and get involved should be applauded. But if someone is passionate about ‘xyz’ cause and wants to start a non-profit to help it, it makes sense for them to see if there are existing groups working in the same area, towards a common goal, and if there is an opportunity to improve a specific link in an existing value chain rather than recreate the entire chain themselves. Our amazing students have studied organizations that popped up and essentially competed with existing outfits doing the same work, with no extra outcome. But where new organization ‘A’ says to existing organization ‘B’, ‘Hey, let’s work together’, the outcome has been orders of magnitude greater.

In your day job, you manage an investment partnership. Does your interest in philanthropy influence the way you do that? Are you interested in impact investing, for instance?

Alex: It doesn’t influence it in terms of influencing me to take one particular investment over another. Where it absolutely does influence me is in terms of giving me a broader set of tools to use when thinking about the businesses that we’re partnering with, using web-based platforms, for instance, like we are using in our education system. That can be directly applicable to a number of other businesses in which we’re engaged. But it doesn’t in any way direct investments. When we’re thinking about investments, we’re not looking for a specific social impact.

How important is it to be able to measure the impact of what you’re doing? I’m thinking here about the Learning by Giving Foundation program and most recently the MOOC.

Ellie: It’s so important that we have actually created something called the Grant Map on our website that shows where all the money distributed through our courses is going. You can see exactly who gets the money and how much and what their organization is about. You can also see the size of the organizations. We’re not putting money into huge organizations. We’re giving to much smaller organizations that, as Alex said, don’t have as much access to money as some of the others do.

Final question for Alex – do you see philanthropy as an integral part of your life, or do you see it as somehow separate?

Alex: It’s absolutely integrated into my life. My biggest epiphany, so to speak, from being involved with the foundation, and why I’m still thankful to have been involved, is that there are no silos in terms of how you think about the world. I think that had I just gone along focused entirely on my business, I would unquestionably have had a far narrower vision of the world and of the community that I live in and my place in it. There’s no question that it’s affected my perspective on everything – on what matters, what to spend my time on, how to think about the allocation of that most precious resource, which is time, and what you’re really trying to accomplish.

You talk to private wealth managers and they say, ‘We have a client who has worked in their family business their entire life. Now they’ve sold the business and want to do something meaningful with their money but they don’t know what.’ That pattern creates a lot of unnecessary problems, because they will potentially go out and hire someone to do the grantmaking or support something that probably already exists. You don’t see those kinds of inefficiencies in the capitalist model because a business wouldn’t survive, whereas with the non-profit sector it often seems like you can duplicate efforts in the exact same area, with the exact same desired goals, and there’s no way of measuring outcomes for a very long period of time. There’s no market base and also no reason to stop and wonder if you are duplicating something that’s already out there.

If you offer people the opportunity to learn about this field earlier and to think about it critically, you will engage people much earlier. I’ve certainly been enriched by being engaged this early in my life. I know what I want to do with my philanthropic capital. I want to continue to support the projects that I’m working on right now. I love the people I work with and I see tangible results through the grants that are made and through the grant map. I think that there are a lot of other people that want to do that, too.

Alex Buffett Rozek

Alex Buffett Rozek, great-nephew of Warren Buffett, manages an investment partnership in Boston. He had his first experience of philanthropy through the Sunshine Lady Foundation, founded by his grandmother, Doris Buffett. From their experience developed the idea of the Learning by Giving Foundation, of which he is president and chairman of the board. Since it was set up in 2003, the foundation has developed very practical classroom-based courses in teaching philanthropy through funding community projects. In 2013, an online version – the MOOC – has been developed, which has opened up the course to potentially an unlimited number of users.

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