What wealthy people do with money

From health research to cheddar biscuits

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You can rely on the old man’s money

I’ve learned a lot over my career from managing rich people’s money. The biggest takeaway: financially wealthy folks expect the world will bend to the way they want it to be, and they do not hesitate to ask, nudge, badger, or rant until it happens. I find it useful to look at what wealthy people are doing now to consider whether or not I want to use their tactics in my own business growth. 

Three recent examples stand out. 

Example 1: Pivotal Ventures. Melinda French Gates took her half of the Gates Foundation money, $12.5 billion, and established a new venture fund and foundation, Pivotal Ventures. While much of her work with the Gates Foundation focused on the rights and well-being of women and girls outside the US, she’s decided to push back directly in the US on  “the enemies of progress.” Last week, she announced $1 billion over two years to be directly invested in US women’s health, equality, and business initiatives. In an innovative move, she’s awarding $20 million each to 12 community leaders to award as they see fit, including track star Allyson Felix and filmmaker Ava DuVernay. This fall, an open call competition will award another $250 million for women’s physical and mental health initiatives. Sign up here for updates.  

Example 2: Bye Bye, Beautycounter. Private equity group Carlyle Ventures killed clean beauty darling Beautycounter faster than you can say “cheddar biscuit.” Beautycounter led in lobbying Capitol Hill to remove hormone-impacting chemicals and carcinogens from cosmetics. You undoubtedly had at least one friend hawking it on Facebook. The company’s venture investors supported their purpose-driven approach. But last week’s abrupt closure left 65,000 independent sellers and 200 employees with no payments, severance, COBRA, or recourse for their backstock. Most private equity funds’ mandates are to wring profits out of maturing companies for the benefit of large funds and endowments. You may have seen a similar story around Red Lobster’s recent collapse. TBD on whether large private equity investors can become compatible with social entrepreneurship and purpose-driven brands.

Example 3: Targeted grant legal challenges. Individual dudes are setting up legal nonprofits to sue organizations that make grants to and focus their services on historically marginalized small business owners, on the basis that this injures everyone’s civil rights. Just this week, small business resource provider Hello Alice prevailed over America First Legal to provide preferential grants to help Black owner / operators buy commercial vehicles, while Georgia’s Fearless Fund lost their appeal against the American Alliance for Equal Rights to continue to give $25,000 grants to Black female small business owners. These grants represent .0001% of venture funding; Black business owners of all genders received about 1% of overall venture funding in the last ten years.

You don’t need to wait until you have astronomical wealth to bend the world. Remember that you are operating a privately-held company, you are the shareholder, and you can fight the fights that you want to fight. Social change is hard, as is entrepreneurship, but none of us is doing this alone. Every small step we take -- a social share, a public or private show of support, a purchase, an investment in people, policies, and partners --  adds a few more people who want to use their businesses to make change. 

If you want to center your social purpose as the North Star in your company, grab my free Impactful Founder’s Toolkit, which has guided exercises on defining what matters to you in your work.. Or schedule a free 20-minute Strategy Session and let’s talk about it.

What does it mean? Nonprofit

Socially-minded entrepreneurs often ask me whether they should become a nonprofit. Usually, this is shorthand for a 501(c)3 tax designation. 501(c)3s are exempt from federal tax and can accept tax-deductible donations from private foundations and public charities. Before you say, “Yay, free money!” understand some of the downsides.

Cost is a hidden burden. Nonprofits have extensive compliance responsibilities. You’ll need to retain a specialized accounting firm to prepare financial statements and file quarterly reports. You’ll also establish a qualified board of directors that must meet regularly. Administrative overhead, including your compensation, should be less than 25% of the organization’s operating budget. Guidestar is the gold standard for evaluating nonprofit operational quality.. Funds must go substantially toward the mission and not any private individual or shareholder. (Although, the HBO series The Righteous Gemstones poses some colorful workarounds.) 

If you’d like to accept the occasional grant, you can use a fiscal sponsorship. A qualified 501(c)3 can accept the grant on your behalf and provide the tax paperwork. Learn more about the range and requirements of nonprofit structures from Investopedia.

Reminder: June 13 AMA

We ride every second Thursday at 10 AM Pacific! Submit your questions now, or ask live during the Zoom session. This is an exclusive monthly event for my list. If you’re new and want a sample, our past AMAs are available on this YouTube private channel.

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Media Kit 

PC Magazine: Restarting your phone weekly. Toggling location services and Bluetooth. These are some of the National Security Agency (NSA’s) latest tips on avoiding mobile scams and data breaches. Share these policies and best practices across your team, including your consultants.

CBS Sports: College athletes effectively became pros last week, thanks to the settlement of House vs. NCAA. Past athletes will share a $2.8 billion settlement, and current ones will participate in an annual revenue share of about $22 million starting in Fall 2025. This LinkedIn post from athlete financial services firm Scout has an excellent quick guide for fans, boosters, and current NCAA athletes. (Disclosure: I’m an investor in Scout.)

Wirecutter: For your summer vacation, check out this year’s best carry-ons. There’s a reason that flight crews overwhelmingly choose Travel Pro.  

HuffPo: Turns out a little criss cross applesauce is good for your hips and your heart. Bonus: you can do it from your seat.

New Scientist: One of the best long-term health moves is expanding your social circle. But how to make and keep social and business friends as a busy adult? Here’s the latest scientifically-proven approach.

Thanks for reading! Another topic on your mind? Hit reply and send your suggestions. (Voice memos are great, too!) Or, book 20 minutes to talk with me.