Osbon Capital Management Guest Column, July 12, 2017

Meet Emily Scott, guest writer this week. Emily is a humanist, writer, philanthropist and all-around great person to know. Emily and Steve Gang of Resonance are engaged in our latest Osbon Capital project. 

To Give or Not To Give

When asked what one of the bigger personal challenges a philanthropist faces, the answer often is “saying no when asked for funding, board participation, or a time commitment.”  At The Philanthropy Workshop, where I am an alumna, we refer to this as the investment of our time, treasure, and talent.

I wrestled – and still do – with the donation question, especially when a friend is making the request.  I have made huge mistakes, have had unrealistic expectations, and have learned some of the lessons the hard way.  When I was President of our family foundation, the very first thing our new Executive Director said to me was, “I am here to say “no” for you so you don’t have to,” which provided instant relief for me, and some degree of job security for her!

As one would expect, there are multiple ways to decline a contribution request.

Here are a few insights of some wise, caring, thoughtful philanthropists:

  • “I have an allocation portfolio for my charitable giving.  Whenever a friend or family member asks for a donation to something which isn’t in my portfolio, I always give a little as I want to be supportive.  Due to my funding constraints, I rarely give the full amount that is asked.  I include an explanation, such as, “You are very important to me and I respect that this cause is important to you.  I appreciate that you believe this is a worthwhile organization and I trust you. While it is not my passion, I want to be supportive of your efforts.  I have money set aside for just this reason. I cannot give you the full amount as I want to be there for others in similar situations.  Thank you for asking me to contribute.”
  • “I now say, ‘I’d love to, but I can’t.’  It has the virtue of being true, being respectful, honoring the request, and setting a good boundary. I have found that it is as much a gift to the asker — whether it be a development person, a friend, a board member — to be clear and not squishy.  This is hard.  Some of us need to please, and this helps no one, least of all ourselves.”
  • “The donation ask is the hardest for me because we all have plenty of resources.  I have sort of a baseline contribution I will make in honor of friends.  Beyond that, when asked for something that takes me off task, I’ll generally use language such as ‘We’re fully committed’ or ‘We’re stretched pretty thin’ or ‘I can’t take this on, but I wish you the best of luck.’”
  • “I always try to remember and start with the dubiously attributed Mark Twain quote: ‘If you tell the truth, you don’t have to remember anything.’”
  • “We set aside a very small proportion of funds to accommodate unexpected requests to support ‘friends and furies.’ Since we set the rules for this process, we can always bend them, but this structure makes it easier for us to decline a request using language like ‘we are committed for this year, but tell me more so we can consider this for next year…’”
  • “I have 3 categories for my philanthropy and the third category is friends and family.  This category consumes 5-10% of my overall giving.  We lay out the budget in January and track against it so I can’t give if we are fully committed.  If a really good friend asks for $10, I give $2.  I used to fret about saying no but I’ve found that, while they may be disappointed, the friendships endure if you are authentic and responsive.”

 

In his book, Essentialism, The Disciplined Pursuit of Less, Greg McKeown writes, “Remember that a clear “no” can be more graceful than a vague or noncommittal “yes.” He adds, “Being vague is not the same as being graceful, and delaying the eventual “no” will only make it that much harder – and the recipient that much more resentful.”

A note to acknowledge the other side – the ask.  Given my extensive list of passions, I could easily ask my network for a donation to a different organization every day of the year.  I have vetted each nonprofit and know that they are of value to the area of need in which they operate.  When I was told “no,” I used to think “how can you possibly say no, don’t you care about ___?”  It took me a long time to recognize that my passion is MY passion and simply may not resonate with others.  Combine that with financial constraints, donation fatigue, etc. I now have more compassion and appreciation for those who decline my request.

Hopefully, I never get used to saying “no.”  Supporting the people in my life is one of my core principles.  My showing up with curiosity, authenticity, empathy, mindful intention, and gratitude needs to be consistent.  It is what I want when the roles are reversed.

I do know that I would rather hear “no” then hear nothing.  Silence is not always golden.

Independence shapes investing strategy / Emily Scott Pottruck doesn't let marriage alter her responsibility to manage her money

written by Carol Emert, Chronicle Staff Writer

This article originally appeared here on sfgate.com, Sunday, August 18, 2002

Emily Scott Pottruck with her dogs, Boomer and Andy at her home in San Francisco. A look the investing strategy of Emily Scott Pottruck, a former Wall Street professional who is now married to David Pottruck, CEO of Charles Schwab Corp. PHOTO BY LEA SUZUKI/SAN FRANCISCO CHRONICLE

Emily Scott Pottruck with her dogs, Boomer and Andy at her home in San Francisco. A look the investing strategy of Emily Scott Pottruck, a former Wall Street professional who is now married to David Pottruck, CEO of Charles Schwab Corp.
PHOTO BY LEA SUZUKI/SAN FRANCISCO CHRONICLE

 

Emily Scott Pottruck learned at a tender age that women need to be financially independent.

As a child in the 1960s, she watched a department store clerk confiscate her mother's credit card after her parents were divorced.

Today, Scott Pottruck is married to David Pottruck, co-CEO of San Francisco's Charles Schwab Corp. She lives in a Presidio Heights mansion and no longer works for a living.

But Scott Pottruck -- who started investing at age 15, earned an MBA from Cornell University and worked on Wall Street for nine years -- doesn't take anything for granted. She manages her portfolio, which she keeps separate from her husband's, as if it's all she'll ever have.

Scott Pottruck, who sits on the boards of KQED, the Jewish Community Center of San Francisco, the Pottruck Scott Family Foundation, the UCSF Medical Foundation and her alma mater, Simmons College, sat down with The Chronicle last week to share her investing strategy in these volatile times.

Q: What is your role in the family finances?

A: From a management standpoint, I help keep the books for each of our individual accounts and for our foundation, and I do lot of tracking of my own investments. David makes his own investing decisions. Both of us use professional money managers and mutual funds, which are obviously managed by professionals, but we do our own as well.

Q: What are your investing goals?

A: I have a couple of different accounts because I have a couple of different strategies. Now that I'm 45, capital preservation is one element of one of my accounts, which I call my "I don't want to be a bag lady" account. I have bag lady syndrome big time. I didn't get married till I was 38, so I was self-sufficient for the majority of my life. That's something that doesn't leave you quickly. I very much believe women should be accountable for their own money.

The bag lady account is from before I got married. Nobody touches it but me.

It's mine, all mine (laughing). When David and I got married, he said, "We need to do a prenup," and I said, "Absolutely." My mother was funny, she said, "Good, because you earned that money and nobody should take that away from you. "

Q: What did you get in the prenuptial agreement?

A: I got nothing in the prenup. I didn't have a signing bonus (laughing). David's been very generous since being married to me. If we got divorced tomorrow, would I get something from him? I believe that I do, but I don't know.

The assumption I go on is that I have what I have and can't count on more. My parents got divorced in the '60s, before women had their own money. I was with my mom in a department store when her credit card was taken away because she wasn't Mrs. Peter Scott anymore. While she never pushed it on me, I wanted to have my own life and be independent, and that means having your own money. So nobody says, "You can't have that, I won't pay for it."

In Case of Emergencies

Q: How big is your rainy day account?

A: I am proud to say that it is a seven-digit number. I came into the marriage with a seven-digit account and that's really important to me. I've been investing for a long time, and I've saved a lot of money along the way and put it in there. When David has given me money, which he has, I've put it in there.

Q: What is your second account?

A: I am still young and there are growth opportunities, so I can afford to be a risk taker. So I have a second account that is very growth oriented. It's riskier, and while I try not to eat into my principal, that can certainly happen. I look at how much I can afford to lose, what is my lifetime plan. They are two very different philosophies.

Q: How has your allocation changed during the bust?

A: I try to stay allocated by percentage. To be perfectly honest with you, I do fall in love with some of my positions. I am definitely a long-term investor, but as much as I would love to tell you that I'm very good about keeping X amount here and X amount there, those are really more guidelines.

Stocks versus bonds has changed in the last 18 months because of what happened with the economy. 9/11 broke my heart, but it doesn't change my investing strategy. I really do believe in the equity market. I did believe a crash was coming, so I was sitting on a large cash position; I had sold a lot of stock nine to 18 months ago. I wasn't sure what I wanted to do with it. Then the world came crashing down and I waited even longer to see if the world would pick back up.

Now I have a larger cash position than I'm comfortable with, but that is changing as we speak. Now it's at 15 percent. At the peak it was 20 percent and I want it to be more like 5 percent.

I'm still over-weighted in equities because that's what I know. It's probably about 45 percent equities, 15 percent cash, 20 percent hedge funds and alternative investments and 20 percent bonds.

I'm looking more at international, more at alternative investments and hedge funds.

Mutual vs. Individual Stocks

Q: Do you invest in individual stocks?

A: Right now, I'm weighted about equally between individual stocks and mutual funds. I enjoy doing the research (required for stock picking).

There are pieces out there that make sense to me. I've done extraordinarily well with Starbucks. When I moved here (in 1990), I never drank coffee. But people were all talking about Starbucks, I started going there and I fell in love with it.

I get in and out of it, paying attention to its trading pattern, the resistance level on the stock, which is very clear with Starbucks. I still own a piece of it, but not a huge position. I always ask, have they saturated the market, what kind of opportunities are there for them?

Q: Is this a good time to buy stocks?

A: What I am finding tough right now is that what used to happen is the market would take a hit and then it would bounce back. Even in 1987, it didn't take that long for the market to come back. What's happened now is a confluence of events that makes me unsure of what to do. I don't trust my own instincts, which is psychologically moving me more toward mutual funds and money managers.

The market will go up only when people say, "I want to go back in and buy." I believe that's what's going to happen, which is why I'm not keeping this huge cash position. But there is no Starbucks, no Dell out there saying "My God, buy me!"

A look the investing strategy of Emily Scott Pottruck, a former Wall Street professional who is now married to David Pottruck, ceo of Charles Schwab Corp. PHOTO BY LEA SUZUKI/SAN FRANCISCO CHRONICLE

A look the investing strategy of Emily Scott Pottruck, a former Wall Street professional who is now married to David Pottruck, ceo of Charles Schwab Corp.
PHOTO BY LEA SUZUKI/SAN FRANCISCO CHRONICLE

International Outlook

Q: What is your approach to international investing?

A: It is something I'm looking into, although I have been in the international area before and did very badly. Once was in the mid-'80s and once was three to four years ago.

I understand the intellectual argument that you need to invest internationally. It's not that the American economy is unstable or not a good place to invest, but there are other places in the world I should probably take advantage of. But when I talk about the international market, I'm repeating what other people have told me, and while I respect their opinions, I haven't truly embraced it.

It will never be a big part of my portfolio, but I am doing research in international and I need to do more, honestly. And I question whether there will be a time when I've done enough research to get it. I can't answer that.

Q: What is your approach to mutual funds?

A: I've always believed in mutual funds. Always, always, always. And they are where so many investors should be. If you believe the market is going to perform well, an index fund certainly takes care of asset allocation for you.

I look at the fund managers' performance -- one year, five years and 10 years. One year scares me. I've done really well in one year and the next year you wouldn't want to know me. So I look at how long the fund manager has been there and whether the philosophy of the fund has changed.

I look at how Morningstar rates it. Because of the Schwab connection, I research all the funds through Schwab. And I only consider no-load funds. I dismiss loads right out of the box.

I think of the Schwab 1000 index fund as a money market fund. Your capital can go down, but if you have a long-term time horizon, then you're OK.

Q: Do you own real estate?

A: I have several real estate investment trusts in my bag lady account that one of my independent money managers put me in. We have a house in San Francisco and one in Colorado that are owned by David's trust. I do own my parents' condo in New Jersey.

Q: How much do you and your husband compare notes?

A: I tease David that the three stocks he told me about he doesn't have a good record on. He and I both bought Dell at the same time. He sold at a loss and it was my most successful investment ever.

We did giggle about that at the dinner table, but that said, I would absolutely put him in the top five people I go to for advice. We talk about Wall Street a lot, I worked there for nine years, so it's a big part of my life.