The CEO’s Guide to Giving: Working to Solve World Problems

William J. Holstein

philanthropy

Guide to Giving Part 1 - How a former investment services exec created a supporting foundation

From creating a legacy and introducing family members to philanthropy, to ensuring that donations are used effectively, there are lots of reasons that families associated with successful businesses are opting to take an active role in giving back. In this three-part series, Chief Executive spoke with philanthropic business leaders to gain their insights on supporting foundations, private foundations and donor-advised funds. This is Part I.

AssetMark co-founder Ron Cordes sold his privately-held investment business to Genworth Financial in 2006, and having traveled extensively in developing parts of the world, he and his wife Marty understand some of the tough challenges that millions of people face.

They created the Cordes Foundation with the goal of helping to “solve the big problems of the world with innovative solutions,” says Cordes. The Cordes family chose to create a supporting foundation, a philanthropic vehicle that operates in a similar fashion to a private foundation but is classified as a public charity because it is linked to and makes grants through one.

“As an entrepreneur, I liked the idea that I could build companies that solved problems.”

The structure gives the family the ability to be have a say in how funds are disbursed while also getting a more advantageous tax treatment than a private foundation would allow.

“Like many entrepreneurs, we funded our foundation with stock in a closely held company,” explains Cordes. “If we had chosen a traditional private foundation, the charitable deduction for our contribution would have been limited to our original ‘cost basis’ in the stock, whereas with a supporting organization we were entitled to a charitable deduction equal to the fair market value of the contribution. This favorable tax treatment allowed us to maximize the portion of our stock we contributed to supporting our charitable mission.”

The Cordes Foundation has its own board and its own endowment of about $10 million but is connected to a larger public charity called Impact Assets, which provides administrative oversight and other services. However, family members are able to take an active role in grant decisions.

That’s key for Cordes, who was keen to invest in entrepreneurial approaches to attacking societal problems. Cordes seeks to deploy funds to foster businesses that advance social causes.

“You can use business models and the capital markets as a way of solving problems,” he explains. “As an entrepreneur, I liked the idea that I could build companies that solved problems.”

In 2007, he provided seed funding for a group of widows in rural Uganda to make their first 20 microloans to other women. Today, The Women’s Microfinance Initiative (wmionline.org) has made 12,000 loans to women in Uganda and three neighboring countries. Altogether, Cordes has made grants or investments in 20 countries.

The Cordes’s 27-year-old daughter, Stephanie, is now vice chair in the foundation. Just 16 when her parents created the foundation, she took part in board meetings and decisions throughout high school and college but was not “super-engaged,” says Cordes. Instead, she pursued a career in fashion and media for several years. In 2013, however, she had an epiphany.

“Dear Mom and Dad,” she wrote in a letter, “I thought I had my dream job, but I now realize I want to work in the foundation.” “We wanted it to be her decision,” explains Cordes, who says he and Marty resisted urging Stephanie to take a role sooner. “We didn’t want her to feel we were pushing her into this. But we were thrilled when she made this decision.”

William J. Holstein

William J. Holstein is a journalist, consultant and speaker. He is the author of, "The Next American Economy: Blueprint For A Sustainable Recovery." For more of his work, visit www.williamjholstein.com.