“Why you should think strategically.” With Jason Hartman & Lawson Bader

Think strategically — Investment decisions are not made overnight. It is imperative to set aside the time to think about who, what, where, when and why you want to financially support causes, initiatives, and organizations. This means making a plan and sticking to it. As a part of my series about “Investing During The Pandemic”, […]

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Think strategically — Investment decisions are not made overnight. It is imperative to set aside the time to think about who, what, where, when and why you want to financially support causes, initiatives, and organizations. This means making a plan and sticking to it.

As a part of my series about “Investing During The Pandemic”, I had the pleasure of interviewing Lawson Bader, president and CEO of DonorsTrust.

Since 2015, Lawson Bader has served as president and CEO of DonorsTrust. Before coming to DonorsTrust, he amassed 20 years’ experience leading free-market research and advocacy groups, including the Competitive Enterprise Institute and the Mercatus Center at George Mason University.

He began his career in Washington, D.C., as a special assistant at the U.S. Senate Committee on Veterans Affairs, then worked as a legislative analyst/paralegal with Pierson, Semmes & Finley, and managed government relations at SRI International. He is a former weekly columnist with Human Events and serves on the governing boards of the Atlas Network, State Policy Network, and Oakseed Ministries International.

Lawson earned a BA in political science from Wheaton College (IL) and an MA in public policy from The Johns Hopkins University.

Thank you for joining us! Can you share with our readers the most interesting or amusing story that occurred to you in your career so far? Can you share the lesson or take away you took out of that story?

I’ve spent thirty-three years engaged in the Washington, D.C. world of politics and policy. Shifting to the funding/philanthropic side of that same coin has been illuminating. Every annual report I read, every museum or musical theater I walk into, every hospital waiting room or rebuilt park I find myself in, I always locate the inevitable list of benefactors. My wife laughs at me for doing this, but I do it not to recognize names, but rather to search for the inevitable “anonymous” listing. Why? Most of us have no idea about the generosity of our neighbors and acquaintances, and the majority of us are clueless about large gifts that have come from modest sources. “Anonymous” to me is not false piety or humility, but an ingrained part of our American giving experience. I celebrate generosity of all types, publicly known or not, but I have a special appreciation for the individual who walks to his or her voice, backs up beliefs with dollars or time, and then quietly moves on.

Are you working on any exciting new projects now? How do you think that will help people?

We at DonorsTrust recently launched the Growth and Resilience Project as a direct response to the COVID-19 outbreak. This is a program meant to leverage the financial resources of generous donors who appreciate that policy is not only a necessary ingredient in dealing with this crisis but a compassionate response as well. This fund provides rapid grants for catalyst projects focused on regulatory, fiscal, budgetary and other changes that all levels of government can make to help with employment and job creation, healthcare and education access, increasing innovation, and the mobility of goods and services. I find that governments have been planting a lot of grass lately when in reality, they might first try moving all the existing rocks off the current lawn to get people and businesses moving again.

Our goal with this effort is to provide individuals and foundations a simpler method of addressing the crisis by allowing the project advisors to identify and leverage appropriate solutions. Those who are interested can learn more about the program here:

None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story about that?

When I was fourteen, a high-school teacher made it possible for me to spend time behind what was then the “Iron Curtain.” It was the first of what would be multiple trips to East Germany, Hungary, Romania and (what was then) Czechoslovakia over the subsequent six years. I have stood on both sides of the former Berlin Wall and witnessed terrible violations of the human spirit. Those experiences greatly affected my world view which, in a nutshell, is that no institution, public or private, has the authority to control the human conscience. No economic system is as averse to human flourishing as that which destroys our innate sense of worth and stifles our incentive to experiment and grow. If I had become a hockey player, I would have fought for those ideas. If I had pursued oceanography or was talented enough to be a concert pianist, I would have believed in these ideals. It so happens that I pursued a world of policy and philanthropy where these ideas are debated, challenged and reproduced. But it started with the opportunity given to me by that High School German instructor.

Let’s shift a bit to what is happening today in the broader world. Many people have become anxious from the dramatic jolts of the news cycle. The fears related to the coronavirus pandemic have understandably heightened a sense of uncertainty and loneliness. From your experience, what are a few ideas that we can use to effectively offer support to our families and loved ones who are feeling anxious? Can you explain?

First and foremost, this is an extremely difficult time for our nation and the entire world. Now more than ever, we need to be pillars for support for our families and loved ones, even though we may be physically apart. It is incontrovertible that the social fabric of our respective “routines” has shredded, and it is extremely disconcerting for many people. On the other hand, we are lucky to have modern-day technological tools that enable us to communicate, see each other virtually, and provide support. Such tools were nonexistent during most “national” crises the past thirty years. Also, parents can now encourage their children to spend significantly more time just playing. My wife and I have noticed many more forts being built in the woods along and around our house — an activity we haven’t seen much of in 15 years. This is very important to the “local” part of our communities. We are all in this together.

Additionally, each of us is a giver — a philanthropist. There is no donation too small, especially in times of uncertainty. There has been an outpouring of money and volunteers focused on assisting with eldercare services, food banks, free online educational resources, etc. Being a “donor” can also mean adding an extra tip when we use Instacart, UberEATS, or any of the other myriad of delivery services.

However, let’s also focus our giving to produce actionable results. What are the scalable, practical ways for getting all of us safely back to the office, retail store, factory, or airport? I’m encouraged by the number of think tanks and citizen education groups who recognize that shaping policy at the national and state levels is our most effective tool. Donors need to invest in and support these groups to take action via policy. The ultimate goal here is to repair that social fabric and return all of us to the economic interplay that creates value, innovation, and opportunity.

Ok. Thanks for all that. Let’s now jump to the main core of our interview. As you know the stock market and the economy in general have become extremely volatile and uncertain. Many people “dollar cost average” and put aside a monthly sum into a long-term savings plan for retirement, college, or a home purchase. If a loved one or a client came to you and said, “I have been saving and investing $500 every month in an S&P 500 index fund. Over the next few months until the dust settles, should I be doing something else with my money?”, what would you say to them?

It’s an old adage, but what you need to keep in mind is that the market is always a long-term play. My kids are relatively new to the workforce, and I advised them to take a small piece of those first paychecks and contribute to a 403b, 401k, or IRA. And then just forget about it and whatever the stock market is doing. People should also invest charitably, especially during short-term periods of stock market volatility. How would they do this? One way is opening an account with a mission-driven donor-advised fund. Donor-advised funds are one of the fastest-growing charitable giving tools and increasing in popularity. I would ask the individual what they care about most. During these uncertain times, everyone has a cause they are passionate about, and a mission-driven DAF could be the right tool to implement their philanthropic goals.

Eventually the economy will recover and rebound. Certain sectors, like travel and hospitality might be hurting for a while. But other sectors, like technology and healthcare, might do very well. If someone wanted to prepare today to take advantage of the future recovery, what would you suggest they do?

It’s all about the definition of “rebound” and “recover”. If you look up what the top 10 global airlines in the early 1980s were, you will realize how many are no longer in business. The same will be true over the next few years. Often these types of changes are necessary to how healthy economies evolve. Our current reality is closer to what economists call the “broken window” fallacy: the danger that a destructive act is seen as paradoxically “good for the economy” because the recovery will be an improvement. The changes coming to the travel industry will be painful. The economy may recover in the sense that there will at some point be “growth”, but certain sectors will be changed permanently. Their “rebound” will look different.

We need hotels and airplanes in a modern economy, and while coming changes will be painful for them, these industries are not going away. But what may be changing is the realization by some that utilizing technology, like video-conferencing, will replace the need to always hop on a flight to visit a client. Businesses may see greater value in conducting business virtually, which will have ramifications for brick-and-mortar shops and physical office spaces. Architecture and homebuilding will adapt to allow for the next stay-at-home order.

Telemedicine across state lines will have ramifications for how health care delivery systems improve their services. There will also be significant disruptions to future education systems, especially now that parents are seeing first-hand from home how their children have been learning. Some parents may rethink the best means and environment for their children to learn and grow. There will also be greater demand for vocational schools and training, as this pandemic has helped reveal how critical plumbers, electricians, auto mechanics, welders and machinists are to the economy.

I suggest individuals take notice of the companies and organizations that have strategically and consistently communicated with their communities, donors, volunteers, etc. throughout this crisis. For example, I’m not sure Macy’s will make it, but I am confident Nordstrom will survive because of the superb customer-oriented reputation they’ve built. Companies that don’t skip a beat and can proactively respond to this pandemic show they have the flexibility and freedom to take advantage of opportunities once the economy returns to a growth pattern.

Are there sectors that provide exciting and lucrative investment opportunities today, specifically because of the volatility and uncertainty?

During volatile and uncertain times, the philanthropic sector needs donors to step up and help re-establish local and national efforts to rebuild the economy and help those most in need. The only way to ensure all industries become as lucrative as they once were, is to rebuild the economy and get communities back on their feet. Investing in charitable giving now will pay off immensely for opportunities to support more lucratively in the future. This is a different kind of “return” than what you perhaps intended, but rebuilding our economy and addressing that ripped social fabric will make it possible to move to the positive aspects of creative destruction that do, in fact, provide lucrative investment returns while creating broad societal value.

Are there alternative investments that you think more people should look more deeply at?

The tongue-in-cheek side of me would invest more in distilleries, given the rising demand for alcohol, which nearly every state has declared essential. And some of them are making hand-sanitizer, so it’s a two-fer!

As I am not a financial planner, I encourage individuals to look beyond traditional ways of giving. Modern technology and the growth of alternative charitable giving tools like donor-advised funds have made giving easier and more efficient. Platforms like GoFundMe allow anyone to become a philanthropist with just a tap on their smartphone. My church live-streams its services and uses embedded QR codes on the screen to assist with the weekly offering. But donor-advised funds cater to individual donor intent and put the control in the donor’s hand as far as when they want to give and where they want to give.

If a person in their thirties and forties came to you today and said that they have $10,000 that they want to put away today for a long-term investment what would you advise them to do with it?

If this person is interested in investing in their charitable giving path, I would introduce this individual to the Novus Society, a DonorsTrust project that is meant to help grow and nurture the next generation of philanthropists. Those eligible to join are donors under the age of 40, and these ‘charitable savings accounts’ can be opened with just $1,000. Once the account has reached $5,000, donors can begin recommending grants. All contributions are fully tax-deductible, and those funds can be invested. This allows a younger person to accumulate a charitable pie that can grow until that moment when the person wants a larger bang for his buck.

Ok, thank you! Here is a more general finance question. You are a “finance insider”. If you had to advise your adult child about 5 non intuitive essentials for smart investing what would you say? Can you please give a story or an example for each?

Here are my tips for smart investing as it relates to charitable giving:

  • Invest at one time — pick a time that is within your schedule and slot it out to invest and donate appropriately. Whether it’s after the Q4 earnings have been announced, or once that tax return comes through, pick a time and stick to it.
  • Invest in one place — Pick a destination for your investing and giving and put your focus there. If you are at least able to determine where you want to invest, you have determined what’s important and what you care about.
  • Invest using a tool — Put all your investing and charitable giving dollars in a single place in a routinized way and give from there to the cause or causes you care about at a time convenient for you.
  • Think strategically — Investment decisions are not made overnight. It is imperative to set aside the time to think about who, what, where, when and why you want to financially support causes, initiatives, and organizations. This means making a plan and sticking to it.
  • Know your passion/goal — At the end of the day, it’s your investment and it’s your money, so it should go to the causes creating the changes you want to see in the world.

Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?

I live by this axiom: “Laugh to survive.” Life is unpredictable, and much of it you can’t plan for. DonorsTrust had its most successful year in 2019 in terms of new accounts, contributions into those account, and grants that we made to charities. It capped a five-year growth pattern. At the same time, a tree fell onto my house and literally spliced it open. There was a lot of displacement, building permits, insurance conversations and general disruption.

Fast-forward twelve months to the present day, and I am spending a lot more time now in a home that is far more pleasant to live in than before that tree fell. In addition, because of last year’s success, DonorsTrust is now well positioned to address client concerns and ensure grants get to groups that are doing good work and fighting to retain their staff and pay their bills. Yes, I laughed at the absurdity of an 80-foot oak tree lying in my living room, because that’s what one does after shedding a tear or two. I even chuckled at our recent board meeting when discussing 2020’s projections because of how things can so quickly change. There is an absurdity ever-present in our lives that we need to recognize. Yes, our lives and livelihoods have a serious purpose, but we cannot let that seriousness distract us from the overall joy of the journey.

You are a person of enormous influence. If you could inspire a movement that would bring the most amount of good to the greatest amount of people, what would that be? You never know what your idea can trigger. 🙂

I would fund a nationwide movement in which every child received three airplane tickets. The first would be a come in late elementary school and would require the recipient to fly somewhere at least 1,000 miles from home — for an entire week. The second ticket would be granted during freshman year of high school and require an overseas visit to experience another culture/region. The third ticket would come Junior year and include a tuition check that enabled the student to study in a completely different region of the U.S. than where he/she grew up. Long car drives across the country can be illuminating, don’t get me wrong. But there is nothing like the perspective of being on an airplane. Oh, and in all three cases, parents are not invited nor allowed to accompany the child.

I’d call it the Placelag Project. Jet lag is what we commonly experience when our bodies pass through different time zones and struggle to adjust to the local hours. But placelag eliminates the idea of a time zone entirely. For example, we’re able to start the evening in Washington, DC and begin the day with breakfast in Paris before ending it in the desert of Morocco. For the traveler, it’s the healthy contrast of the journey that is both discombobulating and wholly energizing. The more placelag we experience, the more patience and perspective we develop. Children’s lives today are dominated by so much “noise” — from parents, social media, technology, and peers. The Placelag Project would be an opportunity to kids to push pause. I have been fortunate enough to fly nearly 2 million miles over the course of my life, domestically and internationally, and the experiences those miles have brought me is now engrained in my DNA.

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