Family Philanthropy Speaks: A Conversation with Irene Pritzker and Liesel Pritzker Simmons

Liesel Pritzker Simmons, principal and co-founder of Blue Haven Initiative, and her mom Irene Pritzker, president of the IDP Foundation, have built innovative family philanthropy efforts. In this Family Philanthropy Speaks episode, hear how Liesel and Irene have learned alongside one another while forging their own identities as impact investors and change agents.

About the Series

Philanthropy is a practice borne out of compassion and commitment—and one that is deeply rooted in family. It’s also a practice that must continue to evolve to effectively meet the needs of the communities it seeks to serve. Thankfully, there are countless social sector leaders who are advancing the field with their bold ideas and unwavering enthusiasm for the greater good. The National Center for Family Philanthropy is honored to share the stories of these leaders through its program, Family Philanthropy Speaks—a series of conversations designed to feature the innovative spirit of family philanthropy. These dynamic discussions aim to capture emerging trends and solutions, share new and diverse voices in the field, and lift up the role of family philanthropy—past, present, and future—in stewarding social change. We hope you will join us to explore what it means to give with intention!

Watch more Family Philanthropy Speaks conversations here.

Transcript

Nick Tedesco: Welcome to the Family Philanthropy Speaks video blog series from the National Center for Family Philanthropy. These conversations highlight the innovative spirit of family giving.

In this episode, we feature speakers from our 2020 Trustee Education Institute. Liesel Pritzker Simmons is the co-founder and principal of Blue Haven Initiative, a single-family office focused on total portfolio activation. Her mom, Irene Pritzker is the president and CEO of the IDP Foundation. They’ve learned alongside one another, developed their own giving identities, and build bold family philanthropy efforts. I began by asking Liesel about Blue Haven Initiative. What does total portfolio activation look like in practice, and how has the approach evolved over time?

Liesel Pritzker Simmons: Blue Haven is a single family office, and me and my husband are the principals. What we do today is really genuinely try to integrate the impact of our investment work and the impact of our philanthropic work, and bring these two things together. Ultimately, every investment that we make, whether it’s return seeking or whether it’s grant capital, has an impact. And so, what we want to do as a family as stewards of wealth, as responsible asset owners, we want to number one, know what that impact is. And number two, take responsibility for it. Hopefully, in discovering what that impact is, we can make sure that it is a positive one. And that our investment work is at the very, very least not undermining the impact we want to see. And at the very best, is actually assisting that impact go forward.

And so, what that all boils down to is, we look at every investment that we make through an extra lens. So yes, we look at its financial components, but it’s got to be doing something that has a positive either environmental or social impact. And that looks different across different asset classes. There are ways, strategies to do this well in both public equity and debt, as well as across private investments and real assets as well. And so, we just take a portfolio approach. We try to look to only work with companies and managers that have strategies that have a positive impact. And then, after we make that investment, we follow up and hold ourselves accountable for whatever that impact may be. Hopefully, positive. Sometimes it’s not, and we have to pivot.

And so, really, we wanted to do this with 100% of our portfolio. It doesn’t make sense to me to say that some investments have an impact, but some of them don’t. And so, that just doesn’t make any sort of philosophical sense to me. And so, we felt like we had no choice but to do it with everything. And then what that frees up is we can really let our philanthropy at Blue Haven, not necessarily have to work as hard, because it’s not the only asset in the portfolio that is having an impact. So we can really let it be the flexible, high-risk patient capital that we talk about philanthropy really needing to be.

Nick Tedesco: I just want to underscore something that you said that I think was really powerful and I want to emphasize here, the idea that you and Ian are taking responsibility for the impact. Right? And you’re looking at all the different ways that you can address social impact using all the different tools at your disposal. I think that that’s extraordinarily powerful and something that I wanted to emphasize here. Irene, I want to bring you into the conversation.

Irene Pritzker: One of the things that I realized when I wanted to start the foundation is that I don’t want to be a check writer that is dependent upon another check writer for something to keep happening. To me, philanthropic capital has to be very catalytic. It has to be patient, and it has to be high risk. This is where we were able to bridge that whole idea of investing the corpus of the foundation with the grant-making side.

What I find so often is that investment committees never talk to the grantmaking side of the foundation. So we have utilized the program-related investment to bridge that, and we’ve done it very, very successfully. We have made money on it. The program-related investment is very often not understood well by foundations, but it came from a 1969 tax reformat. So the idea is, before that, because of the prudent investing rule, a foundation couldn’t take risk with any kind of investment or anything it did. It had been terribly safe. That Tax Reform Act said, a foundation can take fantastic risk as long as it doesn’t have a higher expectation of return. And if it fails, you can write it off as a grant. And counts towards the mandatory 5%.

So we’ve been able to take enormous risks with philanthropic capital to actually make a profit, quite often on what we’ve done, and to provide that early seed, incredibly necessary capital that poor people have no access to. It sounds as if we knew what we were doing. In fact, we didn’t. We just kept saying, “Oh, look. Look, you can do this. Oh, let’s do that.” Then the other thing too is that, we became a corporation, and I was for a long time, the sole director. So the only person I had to ask permission to do some of this high-risk stuff was me. I always discussed it with Liesel, but she was so busy with Blue Haven that it’s only recently she has deigned to become a board member as well. Now I don’t have all the responsibility, but she has this wealth of experience and now can talk in a very educated way to tell me, “Look mom, these are the pros and these are the cons.” So I would say we both have been on parallel growth paths.

Nick Tedesco: Thank you for that honesty too, Irene. I think it’s really amazing that you didn’t and still don’t have it all figured out, right? It’s an ever-evolving learning journey, and it’s one of experience and one of patience. Both from a learning perspective, as well as putting a capital to work perspective. I want to bring Liesel back into the conversation. Liesel, I’d love for you to talk about how the learning that you did with your mom in those early years helped shape your strategy for Blue Haven.

Liesel Pritzker Simmons: Well, I think, I mean, very much what Mom was just talking about in terms of thinking flexibly of like, what her foundation has done as well is, there’s checks we write to other people, there’s things that are operational at the foundation itself. This program was really in conjunction with Sinapi Aba Trust, but also something that the foundation ran itself. So how do you think about investing in your own operations? You’ve got grants, you’ve got your program-related expenses, and then you’ve also got all of these different sorts of tools, whether it’s, low-interest or no-interest debt in order to make a program come together. And so, what I really learned from that is that, keep your eye on what the issue is and what the problem is.

The tools are tools, and you actually have way more of them. Particularly, you yourself have a lot of tools. And then when you buddy up with other funders or other kinds of finance, you’re even more powerful and have an even bigger tool belt. And so, but if you start with like, “Oh, well we’re a grantmaking organization, we don’t do that,” then you’ve already limited your scope of potential interventions. So keeping your eye on what’s the problem, what’s the thing we’re trying to solve? What are all of the different sorts of components that need to be in place? Don’t make your universe of potential tools small. You don’t need to do that. And so, that’s one of the things I think I learned early on and saw that in practice, and then was like, “Okay, well, how do you blow that out actually to the whole family office, which has different cashflow needs and has a slightly different function of course, than a foundation does, but still with an impact focus?”

And so, you can extrapolate that and just expand it out for a family office and all the different things that we can do there. And so, that’s what I think has been really exciting, and I got to see that really early on of, no one ever told my mom, “This is how you’re supposed to do things.” Just as she said, she finds it and makes it work. The eye is on, how do we help these schools help these kids? And we’ll figure out the tools.

Nick Tedesco: Is it safe to assume that in the beginning, this is probably a very unfamiliar approach to the both of you, and that it felt largely uncomfortable, and was something that you had to learn and live into, but you didn’t let that stop you?

Irene Pritzker: I would say that I felt very indignant at this situation. I think really, what it just took was fantastic determination. And to think that for 70 or 80 years, there’s been international development aid. Where are we? Nowhere near achieving SDG 4 by 2030. We already failed the eight millennium development goals. We’re so far off track, and yet, isn’t it Albert Einstein that talked about the definition of insanity, doing the same thing and all that? Well, that’s exactly what’s still going on. What I’m hoping is that eventually, eventually, and you have to believe that one day somebody is going to say, “You know what? My God, this works. We can build schools. If we subsidize schools with low-interest debt into financial institutions, and we’ll do it in local currency to so that their cost of hedging isn’t there.”

Wow, you can still make a profit, and you can make a loan affordable to very, very poor school owners. So you don’t know what you’re doing. You just have to get angry enough about a problem to sit there and just talk to as many people as you possibly can, tapping into the right partners, having a vision and being very, very patient about fulfilling it, and being incredibly flexible. You have to be able to turn on a dime, and that’s one of the reasons why I am so glad that I elected to have a corporation rather than a board of trustees. Because I would have had to wait for them to approve something which seemed impossible. They would have said I was wasting foundation resources, and all I had to do was look in the mirror and say, “Do you think you’re wasting foundation resources?” And this person in the mirror would say, “Well, maybe, but do it anyway.”

Nick Tedesco: Take risk and get angry enough, right? Two incredible pieces of advice. I really want us to move into demystifying the idea of market-based solutions as a tool to advance community. Then Liesel, you talk a lot about your experience, starting from the time you were a student at Columbia and all the way through to meeting people on the ground, a wonderful woman named Paulina that you met in Ghana. Can you share a little bit about how to use market-based solutions as a tool to advance change?

Liesel Pritzker: Sure. Yeah. When my inheritance came in, all in one fell swoop, I was 21. I was in college, and I was at Columbia, and that was right around the time when Jeffrey Sachs came and set up the Earth Institute and market-based solutions was the thing. It was micro microfinance and it was all like, that was what everybody was talking about, and it was all very exciting. I was thinking, I’ve always been interested in international development and development economics, and things like that as well. And so, I thought, “Wow, this is exciting. It opens up a whole lot more capital to address some of these problems than just official development assistance.”

Like, that’s only small relative to all of the capital markets. If you could get all of the capital markets moving towards fighting poverty or pushing forward market-based solutions, that would be very powerful. But I think one of the things though, I still think that’s exciting, but I have definitely, I think pulled back a bit on, when markets are appropriate, market-based solutions can be a wonderful force for good. But markets shouldn’t show up everywhere. There are times and instances where just markets have no business being there. And so, I think we’re seeing a lot of this around issues involving racial equity and justice and how markets actually undermine a lot of that work because of systemic racism. And that’s not a market problem, that’s a people problem. And that can’t get fixed with a debt instrument.

There’s a lot, a lot of financing that can address it, but the root of the problem isn’t necessarily a market problem. The market is just reflecting what people are doing. And so, I think what I’ve also become a little bit more just humble about is, markets are great when they’re great, and then they need to step aside when markets are actually exacerbating a certain kind of problem. And so, I think one of the tricks and one of the real opportunities of taking a total portfolio approach, I mean, that’s one of the first things that we look at with any investment in our investment committee is, is this a market problem? If it is, let’s explore that. If it’s not, let’s put on our policy hats. Or let’s put all our philanthropy hats. Or let’s go yell at a Senator. Or use one of those other tools. Not everything’s a market-based solution, and that’s one thing I think, even as, as a evangelical impact investor, I think we get overly excited about markets sometimes.

Nick Tedesco: To follow up on that question, when you think about using the different tools in partnership with each other, maybe you can share a little bit about when you choose to leverage grants versus investments. Particularly if you’re thinking about seeding an individual enterprise or sustaining that. How do you think about toggling between these different tools that you have?

Liesel Pritzker: I can take a stab at that, and then I think Mom also probably has a lot to say on this one too. We’ve been building out, particularly our catalytic capital at Blue Haven, like that in between space of, sometimes it looks like a recoverable grant to a for-profit or we’re in a blended finance facility. Or we’re coming in at a weird junction, where it’s not quite grant and it’s not quite for-profit. The way that we look at it is, is it being leveraged for more dollars for scale? Like, is there something we’re proving out? Like we helped to subsidize a mini grid developer in Tanzania because energy access is a big theme in our portfolio. And they needed someone to come in at a concessionary piece to prove out the cost of connection for 10,000 connections.

Then if they could prove out that financing model, then the government of Tanzania was going to come in and build like six more of these projects. So we were like, “That would be great.” We are taking our capital and leveraging it in a way that, if we’d made a market rate investment, it never would have been leveraged that way. And so, things like that. So can it be leveraged, or are we helping to, and we blatantly steal this kind of language from Omidyar Network around, are we helping to build a market, build a marketplace that just needs a little bit of extra investment upfront? And then it will be its own vital marketplace, but at the moment, do we just have to prove some things out, and will that need some subsidy as well? And so, that’s how we do it. It’s more art than science.

Nick Tedesco: Irene, I’d love to get your thoughts on this as well. When you look at the different tools that you can leverage. And then I want to move into a broader topic of how you look at impact more broadly.

Irene Pritzker: We’re a grantmaking organization, right? And yes, of course, I’m always looking for sustainability. I’m always looking for whatever philanthropic dollars I use, that I’m using them very carefully, very thoughtfully, and hopefully, they are going to yield more dollars. For instance, excuse me, one thing I do is, and always have done is, I will support medical research.

Now, the way I support medical research is to give these very unsexy grants. Which is to buy research time over clinical time, so that the researcher has more time to spend on his research. To buy him a post-doc so he can get in a grant request to NIH, NCI. Again and again, and again, we have used, which is straight check writing, but then I asked for a report on, how well leveraged was that? So there’s that kind of thing.

So there are so many different ways in which you can employ these tools in philanthropy. They’re not all the same. Some of them are alike, the ones I described with the IDP Rising Schools Program. Some of them are other PRI and dead investments. So some of them are actually writing a check to let somebody get on their feet, where they can actually even go to friends and family for the initial support. So we examine every single request that we get extremely carefully. And if we see that potential, then we probably will go for it.

Nick Tedesco: That’s really helpful. I want to expand on the idea of tracking impact. This has been a topic certainly, that a lot of people are talking about in 2020, and has been a topic of discussion for many years in philanthropy. But Liesel, let’s start with you. How do you think about impact, particularly across both your investments and grant opportunities?

Liesel Pritzker Simmons: Yeah. We very much like the language that impact management project has been putting forward in the impact investing space, which is really around thinking about impact, not just in terms of outputs and outcomes, but actually, are you managing towards impact? It’s not just about getting a static report every quarter or once a year, but what is the process by which you’re actively engaging on what those targets are? And so, that’s the approach that we try to take. The first step with, whether it’s a grant or whether it’s an investment, is always in the due diligence process. So we love to see, generally speaking in our investment portfolio, is the impact that this company or this fund is trying to get, the actual impact metric, embedded as a business model? Are those two things tied together?

If it is, then we think a for-profit investment is a good tool to use towards that intervention. And so, those are the things we look at right up front. That way, with a for-profit investment, we can track our impact as we track the financial performance as well when those things are tied together. That’s not always the case, and then things slide into that catalytic category as well when those things are out of whack, which is fine too. That’s okay. But it’s just, you want to put it in the category that it should be in. And then, but just on the for-profit side, we then work with the company and the fund manager, and we set like three targets. We want things to be clear and crisp, and get to the point of what we’re doing. That’s the targets that we measure towards, but again, all of it is in conversation and dialogue. And then it’s also in things and how the company or the fund is managed itself.

What is the diversity of the board? How do they go about decision-making? How does the management team think about the connection between their impact and their business model as well? How aligned are we with co-investors. All of those kinds of things as well, because we want to set this up for success. And so, the upfront due diligence is where we spend a whole, whole lot of time. Then the management is really a series of managing towards those targets that we’ve set with companies and with fund managers. We also, for our direct investing, for our venture portfolio, we actually tie our managing directors, Carrie, is tied to her impact targets, as well as financial performance. So we do that internally, and it’s similar on the grant side in terms of working out what we’re managing towards. But one of the fun things about being a single-family office is that we don’t have to produce a glossy report for anyone. We want to stay honest about what it is we’re doing, but also not overburden our investees and our grantees.

Nick Tedesco: I want to revisit in the last five or six minutes here, the notion of family. Liesel, from an early age, you were made aware by your mom and your larger family that great responsibility comes with wealth. I’d love for you to reflect on your upbringing and how that helped inform your perspective of the world and of yourself.

Irene Pritzker: Be nice.

Liesel Pritzker Simmons: I mean, I think that one of the things that I saw and learned from an early age was just my mom’s own actions, and what she was doing and how she was a part of her community and giving back and worried about this. All those things you see day-to-day, and they’re important. Also knowing. I come from a well-known business family. And so, always hearing that also reflected back, and wanting to understand that I know how lucky I am, first of all, I know that the odds of getting born in this position are insane, therefore it’s up to me to take that seriously. And how do I engage with the world in a way that doesn’t exacerbate privilege, but actually might do something good with it?

And so, what I should do is learn from my mom, learn from my family and be as creative and thoughtful as I possibly can be around how to do that effectively. And so, I think that was a big part of it, of seeing in action growing up my mom live those things out. And so, that made a big impression on me. And then I also think, I mean, one of the things that I’ve also learned and when I’ve spoken with other peers who are also inheritors, I understand and I get that there’s pressure associated with that. And sometimes it can be a little bit paralyzing of, you know you’re really lucky, you know you’re supposed to be lucky, you know you’re supposed to do… There’s a lot of pressure around that. And sometimes I see peers retreat from that, or don’t want people to know their last name, or don’t want people to know their net worth.

I think one of the benefits that I had early on of being relatively public about all of this is that that just blew that out of the water. I didn’t have time for that. You can Google me and you know how much money I … I’m aware of it, and so now what I want to do is I’m going to say, “Okay, now that you have that information, let me tell you so much more about what we’ve been doing and what we can do.” Once you can break through that, and I get that that can be a scary thing. I’m not yelling at anybody about that. I’m not judging people around that, but the quicker you can be like, “Oh, whatever, the cat’s out of the bag,” the faster you can move forward with the actual work that desperately needs to be done. We need all of the creative, smart, thoughtful, responsible asset owners to be out there on the forefront. We don’t have time anymore. Yeah, I think that’s part of it too.

Nick Tedesco: Well, well done, Mom. Irene, you raised an incredible daughter, who has gone on to change the world. And no doubt will continue to do so. We’d love to hear any advice you have for the parents out there that are listening about how to raise responsible children. In part the same lessons that you embodied in your raising of Liesel.

Irene Pritzker: Well, I think an awful lot depends on the family values, the values of the parents themselves. The fact that Liesel embraced the path that she did was sourced maybe in what she saw me do, but not all parents hold the same values by any stretch of the imagination. But I think that it’s really important. You can share what you think is important, but I wouldn’t shove it down a kid’s throat. I think it’s better for them to just take a quizzical look at, what is she doing? Find your own passion.

Now, ours weirdly overlapped. I am very proud of Liesel. I’m incredibly proud of what she’s accomplished, and I think she has taught me a whole lot about how to responsibly invest the corpus of the foundation, how to measure it. I think I’ve taught her a whole lot about having passion, trying to do the impossible, and not giving up, and being persistent. And, don’t let obstacles become anything other than opportunities. Somebody said that once, I thought it was a rather stupid thing to say, but on the other hand, appears to be popular so I’ll say it. But actually, some of those obstacles do turn out to be opportunities because you have to find another way of doing things. All in all, I’m really proud of Liesel. I’m a proud of the adventure we have had together, the journey we’ve taken together, and each one of us following our own dreams and our own passions, but yet helping one another with each others.

Nick Tedesco: I’d love for you to share some words of advice, some reflections.

Liesel Pritzker Simmons: One thing I think is interesting, and particularly for the next gens out there who maybe want to do impact investing or want to do it with the corpus of their foundation or family office, and might be hitting a barrier, whether it’s with family members or financial advisors, one of the things that I found to be really interesting, and it’s clear from this conversation, is sometimes if you position impact investing as this new thing, or you guys have been doing it wrong all these years. I’m the young, next gen here to tell you how we’ve all been terribly irresponsible, and now we need to take responsibility, that doesn’t tend to go very well.

But one of the things that I have seen, and when you start talking to next gens, the reason that they want to do impact investing is because of the values their parents taught them. It’s because of the older generation and they want to activate it in a new way with new tools that weren’t around necessarily 20 years ago. And so, I think threading the needle between impact investing and catalytic capital with actually what you’ve been taught. Of course, you’re going to want to use these new tools. Because you were raised by parents with values. And so, I think that’s one thing I’ve seen work effectively in terms of getting into impact investing when you’re working with multi-generations and lots of different personality types. So yeah.

Nick Tedesco: Thank you, Liesel. Irene, would love for you to share some closing thoughts and advice.

Irene Pritzker: Well, I think perhaps, if you see something that troubles you, don’t work in a bubble. Find out who else is doing this sort of thing, and whether or not they’re doing it well. I always remember when I first started with this thing, and I’m like, “These low-fee schools. This is troubling me, and I don’t know what to do.” And Liesel said, “Be a joiner, join everything. You’ll never learn unless you trundle off and join everything, and hear what everybody else is saying.” I’m like, I don’t want to trundle all over the place and sit in conferences.” And she said, “Well, then, you’ll never learn.”

Now, I’m the one that speaks at the conferences. For all of you out there that aren’t sure what to do, be a joiner. I think, use your network. You have a much bigger network than you think you have. Believe me. I didn’t think I had any kind of network, and then I discovered that I quickly through being a joiner developed a network. And so, I think you just have to be really flexible. Don’t cling on to these rigid beliefs that you’ve held for so long. Show flexibility, listen. Above all, listen to what people say. Those are my best words of advice, and don’t ever, ever give up.

Nick Tedesco: I just want to thank you both. I think we’re all leaving with full hearts and really open minds, and inspired by this conversation. So thank you both for your time.

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