In This Episode
In episode 31 of Mighty Finsights, Rory Holland interviews Mike Nellis, CEO of the Austin Community Foundation (ACF), about the pivotal role of community foundations in today’s economy and philanthropic landscape. Mike discusses how ACF serves as a “charitable bank” and community endowment, connecting people and resources to tackle issues like housing affordability.
They explore the generational wealth transfer and the skepticism younger generations hold toward traditional philanthropy. Learn why ACF is focused on trust-based giving, and how they use flexible capital and deep community knowledge to deploy capital with sustained impact, moving beyond simple transactional giving.
Key Takeaways
- Generational Wealth Transfer: A massive transfer of wealth is underway, posing a huge opportunity for organizations like community foundations to help younger generations invest capital meaningfully.
- Skepticism in Philanthropy: Younger individuals from wealthy families are often skeptical of traditional philanthropy, requiring challenge and guidance on how to use their capital and influence for significant positive change.
- Beyond Charitable Banking: Community foundations function as both a charitable bank (managing Donor Advised Funds or DAFs) and a permanent community endowment, ensuring capital is available for both today’s and future needs.
- DAFs Offer Flexibility: Donor Advised Funds (DAFs) allow donors to receive a tax deduction today while making gifts over time, offering efficiency and flexibility in charitable giving.
- Trust-Based Giving: A shift is occurring away from prescriptive giving to a trust-based philanthropic perspective, where funds are invested in high-impact organizations and their leadership, moving beyond focusing on overhead minutiae.
- Solving Housing Affordability: The Austin Community Foundation is tackling the local housing affordability crisis by providing cheap, fast, and flexible debt to developers to unlock other capital for housing production.
- Data and Future Relevance: ACF remains relevant by using data to understand regional challenges, which informs their grant-making and long-term strategy, enabling them to meet the community’s needs in perpetuity.
- Living Minimal Is Freeing: Rory and Mike talk about their experiences living in RVs on the road and how those experiences shaped them as people and shaped their relationships with others.
Transcript
EP31 – Teaser
Mike Nellis (00:00)
Like, my gosh, I’m like taking this really traditional path. And I wanted to try something new. And I just felt at some point that had become owned by my things. And so I decided that I was going to pick up and move across town. I just sold the house and sold all my stuff. And I moved into an Airstream right off of South Congress.
EP31 Introduction
Rory Holland (00:40)
Hi, I’m Rory Holland, CEO of Customer and the host of Mighty Finsights. Every year I have the privilege of talking with hundreds of fintech leaders and innovators. For this episode, I’ve invited one of these leaders to talk about the heart behind their brand and the deep motivation they have to make a positive impact. In this episode, my guest is Mike Nellis, the CEO of Austin Community Foundation, an organization that mobilizes ideas, resources and capital to strengthen Central Texas. In layman’s terms, you could think of ACF as a charitable bank. In today’s show, we’re going to cover how ACF is helping solve the housing crisis in Austin, why starting a donor-advised fund is a great idea, whether you have $5,000 to give or $5 billion, and what selling your stuff and living in an RV can teach you about what’s really important in Mighty Finsights will help you look past the headlines and the sales pitches to the human side of fintech and financial services. We’re getting curious about the courageous choices and deeply human stories that shape how we engage with money. Join me as we dive beneath the brands to learn what’s really happening.
The Billionaire Philanthropy Workshop
We had had the chance to meet earlier and Mike, you shared a really interesting story that you were sitting in the room with a number of billionaires and about how they could make a difference in the world through philanthropy, through working with your organization. I’d love to just understand how that came together and what was it like if I were to be sitting in the room with you guys.
Mike Nellis (02:21)
Yeah, it was a really interesting afternoon for sure. I was in the room, I was invited to be part of a workshop and it was probably 25 to 35 year old folks who were part of billionaire families and they were all kind of philanthropy curious about how to invest this capital in the world. We have, you know, there’s every perspective from, you know, I’ve done this a lot, I know what I’m doing, I’m really experienced, and I’m super passionate about this work, to I’m really skeptical about philanthropy, the nonprofit sector, just, shouldn’t the private sector just sort of rule the day?
And so getting to learn all these perspectives and hear about how people are thinking about investing vast amounts of wealth into communities was really interesting.
Rory Holland (03:32)
Yeah. So take me back. How did you arrive in that circumstance to have that opportunity to sit with us?
Mike Nellis (03:39)
I was invited by a family office that works exclusively with ultra high net worth individuals. The early conversations with my point of contact there were sort of built around these are folks who have an extraordinary opportunity but have had little exposure or guidance in terms of auto build a philanthropic muscle. And that’s not something that always comes naturally to folks. And we think about giving and build simplistic terms often, like everybody should do it. But when you have that kind of wealth, you’re not just, I mean, you certainly could, but you’re not just like writing a check to your local sort of nonprofit down the street. There are a lot of other variables and pieces of infrastructure that you’re dealing with, particularly as you think about family giving. So the dynamic becomes a lot more complicated. Folks were talking about how do I make the biggest impact with my money? Do I know if a nonprofit is making an impact or doing what they’re saying they’re going to do? How do I do this? Even some of the just basic nuts and bolts. Like can I give to a school? Can I give to a program that’s run by the government, just basic stuff like that. And so it was fun to not only hear, but also to ask some questions and help some of these folks think a little bit differently about the potential they have for change. And so I really encouraged these folks to kind of lean into the discomfort of their extraordinary wealth and think about the opportunity that they have.
So they can use their capital for making for sure, they can use it for impact investing, but they can also use their influence, right? Their family’s influence to make significant change in the world in a positive way. And so I tried to challenge folks to open up their minds beyond what we think about as traditional philanthropy, but more about how to use all the tools in the toolkit to make the kind of change they want to see in the world.
Skepticism in Philanthropy: The Younger Generation’s Perspective
Rory Holland (06:00)
Yeah, when you mentioned skeptical, I’m really curious. Like we think about the younger generation because you’re talking about young people 35 and under, but that have their skeptical about philanthropy. Like, why do you think that is?
Mike Nellis (06:15)
Well, in some ways, think institutions have failed. Lot of folks who were much younger than me, they’ve come out of college and promised jobs that was challenging, they sort of promised the American dream, which has not always been available to them. And so when they think about sort of traditional philanthropy, there is skepticism.
Where I sit in my job and in my role, it’s hard for me to contemplate that and to conceptualize that. It’s all up to the right for me. Investing in communities is a great thing. Investing in these nonprofits that are doing extraordinary work and filling the gap between what the public sector can do and what the private sector can do, that’s the unique role that philanthropy has to play. So when I hear folks are sort skeptical or don’t think that philanthropy can move the needle in any meaningful way, know, like lean into that. Get in the game and start participating. Start giving it a shot. See the different ways in which you can use your dollars and your voice and your time to really make change.
Journey to Austin from the Midwest
Rory Holland (07:35)
Yeah, I wanted to take a step back and for those folks that might not know who you are, how did you get into philanthropy? And I also want to talk a little bit of how you and I both kind of traversed the United States and we’ve landed, we happen to be in Austin, Texas now together, but we both came through other states at similar times. So how did you get into philanthropy? Maybe walk us back a couple of decades when you first started.
Mike Nellis (08:00)
Yeah, I actually have never worked in the private sector. My entire career has been in the nonprofit space. So I’ve been doing this a long time. I started actually thinking I wanted to be sort of a therapist and I’m a social worker by training, but I’m really kind of a terrible social worker. Found that sitting across from people was not really my skill set and not what I was gifted at doing. And so my first gig was in a mental health hospital working with teenagers. And that was really hard work and really gratifying work. But when I realized that it was not what I was, the gifts required I did not have, I thought like I want to continue to stay in this mission kind of space. And so worked and I moved to the University of Michigan, got my master’s degree in social work and worked for Wayne County for a bit and did some work in community justice there. I was part of putting together the first program to keep nonviolent offenders out of jail. know, folks that have low level like weed defenses, drug offenses, like let’s not put them in jail. Let’s put them on a tethering program as a more effective way of working with them. And then moved out to the Bay Area.
Shortly after that, San Francisco was the height of the tech boom. was a super fun place to be. It felt like the entire world was sort of like, that was the epicenter of everything that was interesting going on at the time. My office was actually like in the Marina District, so I was looking out onto the bridge. It was just an incredible time. And I was working for a group that did kind of back office infrastructure for about 400 nonprofits across the country. Everybody was making money in San Francisco. I was not making any money in San Francisco working in the nonprofit sector. Was living in Oakland, commuting, you know, an hour and 15 minutes each way, living in like what can only be described as a tree house. And so I sort of got to a point where I felt like it was really tough for me to make a living there and to make a life there. And somebody from Austin called me, friend of a friend, said, do you want to move to Austin? There’s a really cool thing that’s happening, and you want to be part of setting it up. It was essentially like a management consulting firm for nonprofits. And I did that. I moved across the country. Got in my little Honda Civic and started driving across Texas and thought, oh my God, what have I done? I’d never been to Texas before. I’m from the Northeast. I thought like, I have made a huge, huge error. started driving into Lubbock and I thought, oh, this is terrible. This is just terrible. Got to Austin, thought I would be here for a couple of years. 25 years later, loving the work I do. And I actually married a woman from Lubbock.
So I’m going back to Lubbock more than I would ever think I would. Spent 10 years leading our community’s children’s museum. I able to be part of a really fun construction project, building a new facility for the organization. then sort of ran out of ideas and put my hand up and said to my board, I need somebody else to come in and build on top of what I have because I’m not going to be able to do it anymore. And then the Community Foundation called. And I’ve been really fortunate enough to be the CEO here at the Austin Community Foundation for the last 11. So it’s been a good ride for me.
Driving from CA to TX
Rory Holland (12:01)
Yeah, we’ve we’ve when we chatted before definitely cross paths in Michigan. You went to the I’m going to call you blue and gold because it drives Michigan people crazy. Not the maize and blue. I’ll go with maize and blue because I know we were the green and white school not too far away. One day we will have a football program.
Mike Nellis (12:18)
Yeah, you and I get along remarkably well, given our history there.
Rory Holland (12:24)
But I also share the Bay Area experience with you. I had the benefit of living out there for 13 years and meet my co-founder here, Jack Macy, and doing some really fun work downtown with like Credit.com and other brands that we’ve helped build. But I share that same feeling when I brought my family because we too drove across country and you go through New Mexico, then you end up in West Texas and you feel like you drive from when you enter West Texas before you arrive in Austin, it feels like driving from Texas to New York because it’s like hours of wide open space and it doesn’t quite have the beauty of Northern California. If you haven’t been to West Texas, I would call it rugged.
Mike Nellis (13:08)
Rugged is a good description. I had somebody actually say to me when I moved to Austin, he said, well, we’re kind of like the Bay Area. We’ve got some water here. We’ve got a bridge, a couple of bridges. We’ve got some nature. I thought, not exactly, but I appreciate the attempt. But who would have thought that now I actually desire to go out to West Texas and go out to places like Morphah and Big Bend.
And I love that drive because you feel like you’re kind of getting away from all the stuff here in Austin and you can kind of let your mind drift a bit up there. It’s a pretty amazing place if you have a chance to get there.
Coffee, Colorado and the Flatirons
Rory Holland (13:50)
Yeah, Big Bend National Park. Definitely if you’re coming to Texas and you’re going to come through, come to Austin, make the time to go see it. Beautiful. So that before we jump into the Austin Community Foundation, which want to get into that for sure. You’re a coffee drinker. The flatirons are important to you. Tell us a little bit, tell the listeners a little bit about that. Say, I feel like that’s the place you go for inspiration, perhaps for to kind of gather your thoughts. Tell us a little bit about that.
Mike Nellis (14:20)
Yeah. So I, I like most Texans and sorry, sorry, Colorado folks. but like a lot of Texans, I started going to Colorado during the summers just to escape the heat for a week or two. Then I discovered that my way of thinking started to change while I was there. And it gave me an opportunity to kind of, just reflect on what I’d done in the years past and what I want to do this next year. And so I ride bikes a lot. It’s what keeps me sane and married. And I like to go to Boulder because it’s just a really interesting, cool, of just fun place. have great access to the outdoors. So I end up working there for a part of the summer and I’ll just go and ride my bike all day long, kind of waste myself and go to this great little coffee shop called Alpine Modern, which is extraordinary because you can sit on the, it’s a tiny little shop, but you sit on the sort of front porch and there’s always a spot there for some reason. And you just look up at the flatirons and you can just stare out there and think about whatever you need to and all your problems kind of disappear. But it also gives you this opportunity to think about what kind of life do I want to lead?
Rory Holland – Commentary
Rory Holland (15:49)
For those of you who haven’t had a chance to visit Boulder, Colorado and see the Rockies, it’s beyond description. But what I really love is Mike’s commitment to reflecting on his life and purpose. We get one shot at this life and you don’t have to run a nonprofit or give a billion dollars to make a difference. All it takes is a willingness to ask yourself questions like, what causes my passion about? And what’s a small step I can take toward making the world a better place?
You can only imagine the doors that open when you start down this path.
Coffee, Colorado and the Flatirons – Continued
Mike Nellis (16:22)
How do I want to serve my community, like what are the things that are important to me. And so that’s kind of why I do it every summer as much as I possibly can because it gives me a bit of a restart, it gives me a way of kind of shifting the paradigm of my everyday life. And so now I’ve dragged my my wife and my kids with me and so this is kind what we do most summers.
Rory Holland (16:50)
Yeah, I’m going to send you another bag of coffee because I sent you one. It sounds like it didn’t last long.
Mike Nellis (16:55)
It lasted about 24 hours. mean, it was an amazing touch. was like, this guy does what he is doing. So yeah, I appreciate the beans. And just even tasting it, it took me to that place. So grateful for it.
What Is the Austin Community Foundation?
Rory Holland (17:11)
Awesome, we’ll drop another one in the mail for you. So grateful for you, man, and sharing that story. So for those that might not be familiar with your organization, can you share a little bit about the Austin Community Foundation and what you guys do?
Mike Nellis (17:24)
We are a philanthropic organization that is really complicated to talk about. When I, when I first started here, I thought this elevator pitch is terrible. I’m going to need like a really big skyscraper to talk about what we do. But when we really boil it down, we boil it down to the three things. We connect ideas and people and resources to make Austin and central Texas a better place. Not only today, but tomorrow. And so that’s sort of the top line. When you peel back the onion layers a little bit, there are sort of two sides of the house here at the foundation. One is we support about 1,300 philanthropists in central Texas and beyond in doing the work that they want to do, primarily we do that through a vehicle called a donor advised fund, although we have scholarship funds and other types of vehicles that help people accomplish their goals. And so we’re helping them deploy that capital in a meaningful and effective way into the nonprofit sector, not only here locally, but statewide and internationally as well. So that’s sort of one side of the house in a real basic way. The other side of the house is kind of what the foundation itself believes in and what we want to focus on. We think that when community foundations are doing it right, they are engaged in their community. are looking at what are the biggest issues in the region that either need some leadership, need some capital, nobody’s really paying attention to. And our job is to go out and to really start to tackle some of those issues. And so we use our money.
But then we invite those 1,300 philanthropists that we’re working with to come and participate with us as well. So the Foundation is a complicated entity. It does a lot of good for a lot of people.
Rory Holland (19:32)
Yeah, so a couple of questions. The 1300, that seems like a lot of philanthropists that are choosing. Can you tell us a little bit about who those people are, individuals to organizations perhaps?
Mike Nellis (19:46)
Yeah, so we do our best to democratize philanthropy. So the idea is that anybody can be part of our organization. Anybody can be one of those 1,300 philanthropists. So we have folks here that have a fund that may be $5,000 that they’ve kind of accumulated over the years, small dollar contributions into that fund. they want to make a gift to their church or to an organization that is important to them. And so they decided we’re going to accumulate small dollars and then make that gift. All the way up to folks who have chosen to work with us instead of opening up a private foundation. So 50, $60 million funds here that we are working with. those donors are saying, hey, we want you to partner with us to help deploy our capital in a really thoughtful and strategic way. We also work with a lot of corporations in central Texas, so we help them sort of accomplish their corporate philanthropic strategy in their region. And so ACF is a little bit of a Rorschach where you kind of see what you want to see and we’re a real flexible tool for people to get the work that they want to get.
Rory Holland (21:05)
Yeah, and would you describe Austin Community Foundation as a charitable bank? Is that accurate?
Mike Nellis (21:13)
Yeah, we’re a charitable bank, but we’re a lot more than charitable bank, right? The charitable banking piece is something that is a really important part of our history. It’ll be an important part of our future. When you’re helping folks with that sort of charitable banking function, it’s sort of high transactional volume. So in that way, we do look like a bank. But also we are our community’s endowment. And so when you think about the challenges today, versus the challenges of tomorrow, they may not be the same. And so when people think about, in some ways, their legacy, they’ll often say, I want to include the community foundation in my estate planning. I want to leave some capital to the community foundation because they’re a trusted advisor. They know what’s happening in the community. They’re going to be here forever in addressing these needs. So they’ll leave us. Either their entire estate or part of their estate in order to give for tomorrow’s needs.
Differentiation Community Foundations from Private Foundations
Rory Holland (22:18)
What distinguishes community foundations from other foundations and how do you find it challenging when you’re talking to like go back to these multiple young billionaires sitting in a room that are making decisions about how to put their capital work? What kind of challenges do you run into in helping them understand the difference?
Mike Nellis (22:37)
So structurally, community foundations are different than private foundations. So private foundations are not to get too wonky, but they’re a different part of the IRS tax code than a community foundation. Community foundations have multiple sources of revenue coming in. Private foundations typically have one source of revenue coming in, so one individual. So that’s the sort of wonky part. Often, community foundations are really close. They’re sort of close to the ground.
They have an overview of the community that is very, very broad. They understand kind of what is happening in particular communities. So yes, we serve as that charitable bank, but I have a team of 33 really talented people that I get to work with every day who intimately know this community and what’s happening, what the challenges are, who the key players are, and who’s making big, big change in the region. Private foundations. Can do the same thing depending on what the principles of the foundation want to do. What we often see is that there’s a real specific purpose to a private foundation and the principles of that foundation are really focused on that. But the philanthropic work they do is often not their day job. Their day job is something completely different. And so they will often lean on us and say, we want to give, we know that you know the community in a much different way than we do. Help guide us, help us think through how to deploy our capital in the most effective and efficient way you can. So we often work in partnership with private foundations and family foundations. They will sometimes use us as a way of helping them make those grants into the community. And we also work with them as peers where if we’re putting together a particular fund or a particular funding initiative and we know what their interests are, they’ll partner with us.
What is a Donor-Advised Fund?
Rory Holland (24:46)
Why are DAFs important? Like for those that might not know what a DAF is, what’s a DAF and why is that important in the work that you do?
Mike Nellis (24:54)
Yeah, I’m a huge believer in DAFs. Donor Advised Funds are vehicles that allow for an individual to make a contribution today into a tax-deductible fund. They can use cash or highly appreciated stock. Anything that essentially can be monetized can be donated into a DAF. And then that money can either be pushed out into the community immediately through a variety of different grants, or it can accumulate over time. can be invested and accumulate over time, and then it can be moved out into the community. And so it gives donors lots and lots of flexibility. It gives them a way to give really efficiently because we’re doing all the work. They get to do all the fun stuff. And community foundation, there are lots of providers at Dafts. Obviously big leaders in community foundations because one, they were the inventors of DAFS and two, they add more value than just the charitable banking part of it. They add lots of expertise, lots of knowledge and lots of vehicles and tools to help those philanthropists give in the community. So we can do a lot of things that private foundations can’t do or won’t do, we tend to move really quickly and very nimbly and without a lot of red tape.
Rory Holland (26:31)
Yeah, great. Thank you for that. I wanted to talk a little bit about some of the work that you do and I imagine there’s a lot of tough challenges that you face in your work every day and wanted to just ask you like, what is one or two challenges you might describe in being in the philanthropic space, whether that’s fundraising or putting capital use or other circumstances that you felt like maybe was unsolvable, at least at some point, but then you figured out how to move forward.
Tackling the Housing Crisis in Austin and Beyond
What do you tend to see as some of the biggest challenges for you guys?
Mike Nellis (27:04)
Yeah, Rory, mean that’s great question and one that I struggle with every day because the challenges are, you see them every single day when you do the kind of work I do and you get to see the great work that is happening in the region. A couple of years ago we went through a of a planning process, a little bit of a self-reflection process and we looked out in the community and said, what is the biggest challenge in Austin?
And particularly, what is the biggest challenge that nobody’s really addressing? And that was, at the time, housing affordability. what we saw was, if you’ve got, the math was kind of basic. If you’ve got 120-ish net new people moving to a region every single day, it becomes a massive problem if you’re not building and building and building houses for these folks to live in. And so… like a lot of times in Austin, what we tend to think of ourselves still is a pretty small town. Although we’re the 10th largest Metro, we just haven’t gotten ahead of the curve in terms of housing production because it’s just our population boom has happened so quickly. so nobody was really, at least from an institutional philanthropy perspective, nobody was really investing in housing affordability. And so we were just naive enough to say, hey, let’s get into the deep end and start to explore how philanthropy can address a housing affordability crisis in the region. When you see, I’ll go back to sort of a little bit of a Colorado analogy, which is like Austin is becoming Aspen, where you have this diamond, this gem of a city, but nobody can really live in the city. Everybody has to sort of, lots of folks have to, know, normal everyday folks have to live on outskirts of town. And we felt like we had a role to play in addressing that particular issue. And so when we, when we started talking to developers, we started talking to the city, we started talking to other philanthropists, we said, look, what do need? And that’s, think is the job of philanthropy is to ask those questions. Like we don’t know it all.
But what we do know is that there are other folks out there who do have the answers. And so being really responsive to what those experts are telling us, they said, look, we need really cheap debt. We need it really fast. And we need it on flexible terms so developers can unlock other capital and start moving the production process in a faster, more efficient way.
Rory Holland – Commentary
Rory Holland (29:56)
As an entrepreneur and strong believer in free market capitalism, I want to take a moment to applaud what Mike and the ACF chose to do here. Anyone who lives in Austin, or Aspen for that matter, will tell you that the market and local governments haven’t been able to solve the housing crisis. It takes a concerted effort by everyone to make a dent in what is arguably a very complex and nuanced public issue. We need the private and public sectors to work together. ACF shows us that it’s possible.
Tackling the Housing Crisis in Austin and Beyond – Continued
Mike Nellis (30:29)
Most philanthropists in the region, and I think probably nationally with housing, they go either one, it’s somebody else’s problem, right? And so the private sector should take care of it or the city or the county should take care of it. And two, it’s way too capital intensive for philanthropy. And in some ways they’re right. There’s no amount of philanthropy that can solve for an affordability crisis in the region. But there’s a role to be played for sure.
Rory Holland (30:59)
And do you see other community foundations in other cities that are growing perhaps maybe some compliments to Austin stepping in to fill that role too? Because that seems like a meaningful problem that needs to be solved. And we’re living in here, Mike, for those of that don’t live in Austin. The boom, I’ve been here for a decade from the Bay Area too. And it’s remarkable how worn the path is through West Texas for the vehicles driving from California to Austin. But it seems to me like, you know, as folks move further out, just like a lot of major cities, it’s too expensive to live in major cities. And Austin went from really affordable to really expensive really fast. So are there other community organizations that you guys align with doing this type of work or is it pretty unique to ACF?
Mike Nellis (31:46)
So other community foundations across the country are really getting into housing affordability. we are kind of on the early end of that. And so we’ve been able to, for better or worse, sort of iterate some of the offerings that we have. And so we’ve made some mistakes, and we’ve had some big successes. And so other folks, we have a real collaborative field. And you know, Fort Collins and Chattanooga and other kind of what I would call mid-market kind of cities are saying, hey, if we can figure out how to address this issue now, we can avoid becoming Austin or we can avoid becoming the Bay Area. It’s sort of like we’re the cautionary tale, unfortunately. But we’re all a really collaborative group. And so we want them to beg, borrow, and sort of steal our work. Yeah, they can learn from it. We’re glad to give it to them.
Rory Holland (32:44)
You know, I wanted to ask you a question about, do you feel like you have solved that problem? And I want to ask you a question on top of that, which is, you know, we as entrepreneurs, business people tend to spend a lot of, we solve problems every day. And I love some of the moments when I get home at that day and I feel like, boy, I really solved some problems today and feel accomplishment. do you ever like perhaps with the accelerator fund that you’re talking about for housing, was that a circumstance or there other circumstances you feel like you got home that day like, boy, I really killed it today. I solved some problems. I’m feeling good.
Mike Nellis (33:24)
It’s rare that I get to do that Rory, but you know, so the answer on the accelerator fund is no. I we have not solved that problem and when we talk about housing affordability, you know, it seems really simple, just build more, right? And it’s not quite that simple, you know, and so we, our position is we want to take a really thoughtful approach of how we’re deploying capital because we know that our capital can’t do it all. And so we have a real specific niche around land acquisition, around pre-development costs, and around interim construction. That’s where we lend. We lend at 1 to 2%. And we feel like what we do is complement other types of capital that are out there moving forward. What we’ve done really, really well in Austin as a community is we have brought the sort of cost of, call it workforce housing, way down. And so because we’ve built so much multifamily housing, what we really continue to struggle with is sort of on the lower end of what we call the AMI scale, the area median income scale. our neighbors who are one, unhoused currently, and two, kind of living on the threshold of poverty, folks who really struggle to make it work here, we just don’t have enough options for them. And so that’s where we have to push in the philanthropic and really cheap debt to make that work. Yeah, so it’s a tough, complicated problem. But every day I do another deal, make another investment, feel like we’re chipping away, we’re chipping away, we’re gonna get there. And I think that that’s the, really in terms of philanthropy, that has to be the mindset, which is, it’s taken us a long time to get here.
And there’s not a magic solution to get us out of this thing tomorrow. So patience and sustain investment.
Supporting Artists and Cultural Preservation
Rory Holland (35:26)
Yes, so much interesting stuff you’re doing and perhaps we can come back to it in another episode. But the idea that an individual with $5,000 that they have saved up can create their own DAF fund to billionaires, it’s such a unique vehicle and I love what you’re doing. so I hear what you’re saying. I do have a friend, I’m just gonna throw his name, I’m not gonna throw his company. Jason Johnson in town that I definitely want to connect you with that is trying to help sustain artists in Austin who are playing at the bars and restaurants and places we love to go that part of what makes Austin so fun is the music scene and the food scene. And it’s really sad to see that a lot of these starving artists literally can’t afford to live in the city that they’ve been playing in for years. And gosh forbid they get injured and need healthcare, which a lot of them can’t afford. His organization is supporting that. So I’d love to connect you with him.
Mike Nellis (36:23)
I would love that. It’s incredible. I mean, that’s part of the evolution of our community, which is, yes, that we have prospered and the economic engine here is super hot. But a lot of the, a lot of the reasons that people have moved here, right, for the culture, music, art, those folks aren’t able to live here anymore. And so they’re moving out to Bastrop and to Lockhart and other places that are more affordable. So what we’re doing unintentionally is sort of culturally strip mining our community, which sort of everybody moves here and then they go, wait a minute, I thought this was an amazing place and then it starts looking like every other place in the country.
Rory Holland (37:02)
Yeah, it’s remarkable how fast it’s changed. Came in, the first time I came here was in 97 and a completely different place. And the town I live in now, I don’t think you call it a town. Just a half hour from downtown Austin. There was nothing here. There was a gas station. It’s not like that anymore, as you know. Yeah.
The Guadalupe Floods in the Texas Hill Country
So I wanted to turn for a quick moment. I think with media these days and our attention spans, things pass so quickly, but with the floods here we had in central Texas in Kerrville and the Guadalupe River, our hearts were heavy and they still are. A lot of people still struggling. I wanted to ask you to tell our listeners a bit about how ACF played a role in that and where that stands now and do you guys need any help?
Mike Nellis (37:48)
Yeah, just an incredible tragedy. our hearts are with all those families and folks who have been impacted. This is the unique role of a community foundation, which is when tragedy hits a community, people want to give. You’re sitting here asking, can we still help? Is there still need? And community foundations act as that pivotal point where
They essentially say, we’re on the ground here. We know what the needs are. We know the nonprofits. So they typically will open up a fund. And that fund then helps to support those needs, not only today, but tomorrow. The communities that have been affected are in the Texas Hill Country. And there’s a community foundation there that has really taken a lead on raising those funds. We think and believe that local community foundations know their communities best and so it’s incumbent on us to say is it our job to take the lead or is it our job to follow who is really doing the work and who is local. And so it’s the community foundation of the Texas Hill country is the group that’s taking the lead there. They’ve raised an incredible amount of money and it’s not enough. This community has been devastated, the camps have been devastated, the people have been devastated, lives are changed forever. And with the sort of, I’m glad you ask, is there still need? Because there’s a lot of adrenaline that happens at first when these kinds of tragedies happen. Everybody wants to flow in with capital and like, yes, please accept.
That money needs to be, like the deployment of that capital needs to be sustained over time because you have different waves of need. You’ve got the immediate crisis. Then you’ve got some rebuilding work that has to happen. Then you have like, do we address this trauma as a community? And so there is still need, give, we tell all of our folks, there’s 1300 philanthropists, like keep this top of mind, because this is a community in need.
Rory Holland (40:11)
I think the media cycles things come and go so fast, but the reality is it takes time to heal and there’s so much work that needs to be done to help not just those people, but you think of Asheville, North Carolina with the hurricane, they had their issue. We’ve got, you know, Southern California with the fires and with the media cycles and everything going on, it’s like people drop in like you’re right. think the adrenaline rush, you’re right. Like we got to jump in and help. But I’m not that far. You and I aren’t that far from where this happened. So
We’re likely, know I am in my case, I know some people that have lost people as a result, lost children through that whole thing. So, and they’re still healing in a really meaningful way.
Mike Nellis (40:51)
But I would also say, Rory, you’re right. That healing takes a long, long time. what we really try to help folks understand is that you want to see that money get out the door as quickly as it can, but the conditions on the ground change over time and needs change over time. And so you want to have resources available to families all along the way.
And that to us is that sort of idea of patience and just taking one step back and thinking about, okay, what do folks need now? What are they telling us they need now? What are communities saying?
Selling Everything to Live Down by the River in an RV
Rory Holland (41:32)
Yeah, I wanted to, I’m going to shift gears a little bit here as we go. I’m going to make a, I’m trying to grind the gears. This is a completely different question, but you had shared that you had sold everything to move into an Airstream. I found that so awesome because when we talked, I told you my son was, a professional athlete and I spent a number of years with him as a very young person up until his early, you know, being an 18 year old living in an RV. So like an RV down by the river, I’ve literally done that for a number of years. I was fascinated by your choice, and I don’t know if that was pre-marriage or you’re already marrying that kid.
Mike Nellis (42:06)
No, was, oh my God, my wife would kill me. Yeah, it was. I, in my life, I have always taken a really traditional path. I sort of started working and was very eager and ambitious and became the CEO of our local children’s museum at 29. Somebody made a big mistake when they gave me that job. And so I just got to this sort of point in my life where I was like, oh my gosh, I’m like taking this really traditional path and I wanted to try something new and I just felt at some point I had become owned by my things. And so I decided that I was going to pick up and move across town. just sold the house and sold all my stuff and I moved into an Airstream right off of South Congress and, to be honest, it was an amazing experience.
Rory Holland – Commentary
Rory Holland (43:10)
There’s a kind of clarity that comes from a choice like this. When you live and travel light, it’s easier to see what really matters. Your relationships you build, the experiences you have, the unexpected adventure that is waiting for you around every corner. I’m not saying wealth and possessions are bad. I’m just saying that when you make them the end goal, life starts to lose its meaning. Money can’t buy happiness or purpose, but once you understand your purpose, money can do a lot of good.
Selling Everything to Live Down by the River in an RV – Continued
Mike Nellis (43:40)
It was so great because I could just be super lean and nimble. I could like lock up the Airstream and go wherever I wanted to go at any point in time. And so it was a super fun experience and a great handful of years. then I met my wife who, and we started dating and she looked at me and was kind of like, you’re okay, but like, I’m not staying in that thing. So like get your stuff together, and go and get an apartment and get it together, man. And so knowing that my wife is, like, I’m punching way above my weight class with my wife, I just sort of said, okay, I better try to figure out how to lock this down. And it worked. But I gotta say, if there are young people out there listening who are like, this guy’s a lunatic, just lean into it a little bit and give it a shot. You will not regret it. It is so fun.
Rory Holland (44:40)
I mean, I’m feeling free just thinking about dissing all the stuff that we have. You know, coming off my son’s motocross, one, we had an RV. I was really grateful to find a gentleman that needed it when the floods happened in Kerrville and so I was able to put it to use. But you know, the stuff that we have and my dad told me when I got married, he goes, look, here’s what’s going to happen. You’re going to buy a house, which I already own. Then you’re going to get married and you’re going to get stuff, and you’re going to have kids and you’re getting more stuff and then you have so much stuff, you’re to have to get a bigger house to put your stuff in it. He’s like, his bottom line, don’t get stuff. Now, I’m living proof that we have lots of stuff and it felt so good in the years that I was able to move into the RV with my son because it’s small. Like you don’t need a lot of stuff or you don’t have any place to put your stuff.
Mike Nellis (45:29)
And did you guys just travel around in the RV and have like the bikes on the back and go or what like how did y’all do that?
Rory Holland (45:36)
More or less, we had one of those big giant, if you’ve seen the Amazon Sprinter Vans, we had one of those built out with all the graphics on it, of course, for his sponsors and his career. So the bikes fit in there and then we pulled a 25 foot lightweight travel trailer that was home for, yeah, a number of years, literally reach out and touch someone. It was my son almost every night because he had bunk beds in the back and a queen bed in the front and it was one of those Murphy beds that folded down. It was super liberating to have just to live out of it because you go outside all the time because you don’t want to be inside. And I ran my agency from there for a number of years.
Mike Nellis (46:16)
Did you really? Yeah, yeah. That must have been tricky and amazing all at the same time.
Rory Holland (46:22)
That was a lot of stuff, yeah.
Mike Nellis (46:23)
Yeah, well, was not my, I mean, my mom would tell you that it was not my finest moment and maybe she wasn’t quite as proud of me as she had been in the past, but I seem to have done okay and I told her, I told my wife, said, know, someday, we’re going back to that, we’re going back to the trailer. Like when the kids are off and gone, we’re going back and, know, of course she rolls her eyes, but it’s gonna happen.
Rory Holland (46:48)
Gotta happen. it man. It’s gotta happen. One more thing on this and we can get back to a couple of questions I really wanted to ask you before we part. I convinced my wife that we would do spring break when we living in Northern California in one of those RV Americas or whatever they called one a hitter RV where you ran an RV. This was my very first experience that we had young kids. We decided to pick it up in Sacramento, drive all the way up to the Redwoods and go all the way to LA to go to Universal Studios.
I loved it. My wife hated it. Coming through downtown San Francisco because of course I had to go over the Golden Gate and through downtown. Pots and pans flying everywhere and stuff sloshing around in the back. I wouldn’t recommend it for people unless you really like that lifestyle.
Mike Nellis (47:38)
Yeah, I but those like those like I watch you and I look at the smile on your face, right? Those are the good days. Those are the days that are fun. Like that’s when you’re making memories going. That’s the good stuff, man. That is the good stuff.
Rory Holland (47:51)
Even when your wife says that was the worst, at least the kids thought it was awesome.
Mike Nellis (47:54)
All of a sudden you’re the really cool dad. That’s right, that’s great.
Rory Holland (47:59)
Alright, sorry, coming back to ACF and some of work you’re doing. Thank you so much for going down that path. So cool. I’m going borrow your Airstream someday.
Mike Nellis (48:10)
No, I actually got rid of it because I just, know, I was just like, okay, I got to start anew. I got to do something else. I like, like, oddly, I moved from that into a really nice condo right on like Riverside and Lamar there. So extremes, extremes.
The Wealth Transfer and How to Make an Impact
Rory Holland (48:30)
We can revisit that maybe one day. So, kind of zooming back out, we talked about people tending to be skeptical about philanthropy and the younger generation, think particularly, has been disenchanted with finance. And we’ll talk about a financial system, we’ll talk about a government too and like economic. There’s all kinds of things that people are finding a challenge challenging to trust anymore.
Where do you see philanthropy going in the next five, 10 years?
Mike Nellis (49:05)
So there’s a couple of kind of big meta trends that are really interesting to me. One is there is a huge transfer of wealth that has sort of been initiated and is starting to happen. And so as boomers retire and pass, they are transferring enormous amounts of wealth to a next generation. And oftentimes, organizations like community foundations are so well positioned, one, to sort of help capture that wealth for communities, but two, help a younger generation think about how to invest that capital in a meaningful and thoughtful way. So what you’re seeing is that younger folks are coming into huge sums of and they’re going, I don’t know what to do. Like, I don’t know what to do with this. Like, and so our job is not to help them necessarily grow the, grow the pie, but essentially how do you meaningfully shrink the pie? Like we want you to get that money out into the community. And so that big transfer of wealth, poses a huge opportunity for philanthropy and a huge opportunity for young people who are going to, who are we’re going to take over those decision making roles. that’s the first. The other big shift, a couple of other big shifts that I’m seeing is one in the 90s, 80s, 90s, even sort of early 2000s, philanthropists were particularly prescriptive about how their dollars should be used. Probably you’ll remember hearing about like only an X percentage should be used for overhead, you know, if any organization has a percentage over that particular, you know, percentage point, it’s, it’s, they’re wasteful, right? And I think what we’re hearing is, that, that, that is, is shifting to more of a, what we call a trust-based philanthropic perspective, which is, if you see a high impact organization that is really moving the needle, invest in them, invest in them significantly. Don’t worry about the minutiae, worry about the impacts, right?
And so I have yet to see, I have yet in 20, 30 years of doing this work, I have yet to see a nonprofit that is spending 50 % of their dollars on overhead. Sure, that’s maybe there’s an outlier here or there, but the lion’s share of folks are really, really strategic, working really hard, and they should be trusted to do that work. So if we want really high performing organizations, they need high performing people, and we need to incentivize them to create extraordinary results for our community. So we’re seeing some of those kinds of trends in terms of getting how folks are investing their capital. the last I would say before you jump in, the last I would say is that getting money as close to people in need as possible. seeing that, how do we get, for example, if folks need a loan, let’s get them a small business loan. they don’t have access to traditional types of capital, let’s get them a low interest loan so they can grow their business, so they can do things that maybe they couldn’t have done to help get them out of poverty and growing, as an organization, as a family. So that idea of trusting an individual, trusting a group to know what is best for them, what is going to get them out of poverty, what is going to help their family advance, I see that as a real movement and we should be supporting.
Rory Holland (52:56)
And how do you find those people? When you say getting it in the hands of the people that need it more or less and like talking about skepticism about philanthropy, there’s a lot we could unpack in that. But for the sake of right now, I’m just curious, like, how are you vetting, finding and vetting these opportunities to put capital to use?
Mike Nellis (53:19)
So that’s again, like I’m going to keep singing the Community Foundations like playbook here, which is that’s what we do. We wake up thinking about this. And so if you have a question about who’s doing this kind of work in our community, this is what a Community Foundation does. So we find those organizations, we know about those organizations because we’re deeply embedded. And we say, OK, there’s an organization that has a model of providing capital to individuals based on what they need. If they need tuition to go to night school, to go to nursing school, and that’s what’s gonna get their family out of poverty, amazing, let’s give it to them. If they need 500 bucks for a new set of tires because they’ve got one flat tire and they can’t go to work because of it, let’s give that to them. Let’s get those charitable dollars as close as possible. So we know who those partners are in the community.
And if we don’t, we know who does. And so it’s that network effect of just being a local partner that really is a benefit.
ACF and the Future of Philanthropy
Rory Holland (54:29)
How do you see ACF helping shape the future of what you just talked about? As Austin grows, how do you guys see yourselves remaining relevant and making that impact as we’re looking to the future? And does technology play any role in that? Because we’re so much about AI these days and you you and I have been around long enough to know the internet came along and everybody talked about, you on the internet? That it was, do you have a website and are you doing these things?
And as things have evolved, now we have AI and everybody’s talking about those two letters together, AI. I see a future where we’re going to stop talking about it because it’s just integrated and everything. But how does technology play a role in making your work better and helping more people and driving more impact?
Mike Nellis (55:13)
So the first thing I would see is data. are an exceedingly, we use data a ton over here. And the idea is using that data to help inform what the biggest challenges of the region are. And as AI becomes more sophisticated, that data becomes much more available to us in real time to understand where pockets of challenge are in the region and where we can deploy capital most effectively. When we think about
ACF shaping the future of Austin, nobody knows what Austin’s going to look like in 30 years from now. But the community foundation is still going to be here 30 years from now. And so as a institution that is here for good, here forever, we use that data to say, is the glide path for us to deploying this money, to making grants, investing in organizations that are going to have the biggest change to move the needle?
And then having that community endowment sort of concept that we talked at the top of the show. Having flexible capital where it’s not just the charitable checking account, but having an endowment ourselves that we can meet the needs of not only today, but future needs in the region. Other foundations are going to do what they’re going to do. Other governments are going to do what they’re going to do. The city’s going to have policies that change, but we’re here to essentially meet the needs of the region in perpetuity. And so when it comes to shaping what tomorrow looks like, our job is to help folks today get out of poverty, build wealth, assets for their family, to have a better and brighter future.
Closing Remarks
Rory Holland (57:02)
Wonderful. Feel like that’s we’ve covered a lot of ground today, Mike. I really appreciate it. For folks who might want to learn more about ACF or Community Foundation or DAF funds, all the kind of interesting things that we talked about, what’s the best way for people to connect with you and ACF?
Mike Nellis (57:07)
This is for, I love getting to talk to people. Give me a call. Visit our website, austincf.org. Go to our socials. Just check us out. And we’re pretty accessible folks over here. So just give us a call and we’d love to visit. Talk about how we can help you achieve your goals.
Rory Holland (57:36)
Awesome. I love that. And we got to take an Airstream trip at some point. It works. We’ll take our wives with us because they’ll love it so much.
Mike Nellis (57:42)
Let’s do it, man. It would be amazing. It would be amazing. We’ll drive out to Lubbock and then on our way out to West Texas.
Rory Holland (57:50)
You and I will have fun at least. Thanks brother. pal. Yeah. Awesome.
Mike Nellis (57:52)
Great. Rory, really appreciate it.
Rory Holland (58:00)
There are more than 900 community foundations in the United States, but I would bet that very few people have ever heard of a community foundation or can describe what they do, at least before listening to Mike Nellis. I see a lot of parallels here with community financial institutions, organizations that go beyond the spreadsheet and make life better for everyone. I think we need more people like Mike, his staff, and his 1,300 donors working at the community level to solve real-world problems.
It’s not flashy or arrogant, it’s about serving needs and getting out of the way. Whether you’ve inherited a billion dollar estate or just want to make sure your donation has the maximum impact, community foundations are a great place to start. I’m reminded the old story of the widow’s mite, where her tiny gift outweighs the gifts of everyone else in her community, simply because of her heart posture. If you take one thing away from this episode, let it be this.
Rory Holland (58:57)
Purpose matters more than possessions. And generosity is about attitude, not doubt.
Thank you for listening to Mighty Finsights. You’ll find all of our episodes on our website, cstmr.com, including more one-on-one interviews with fintech and financial leaders and deep dive episodes on topics like branding and marketing. This show is produced and distributed by CSTMR, a digital fintech marketing agency, all rights reserved. Our production team includes Zach Garver, Becky Dombrowski, Brad Jerger, Romina Gómez, and Belén Ancurio.
