IN THIS CHRISTMAS SEASON: PRAYING FOR YOUR SAFE RETURN, MY FRIEND

Working for a nonprofit organization (“NPO”) gives people an opportunity to make a positive impact. However, identifying the right cause and creating a NPO is a different story, though. Entrepreneur is someone who is willing to launch a new venture and accept full responsibility for running the organization. It will be a rewarding experience if everything goes well as planned. 

NPOs are generally supposed to improve quality of life for others at a community, local, state, national, or even global level. A big difference with a profit corporation, though, is that NPOs are not attached to private or financial gain, but dedicated to public interest or the betterment of society by and large. It means that there is no monetary gain or financial upside for the founders of NPOs. 

Solomon Song (aka Solnamoo Song), a friend of mine from elementary school days, is a flutist by training. He has been featured on various professional music labels and TV shows as a composer and instrumentalist. He is a prolific presenter and inspirational performer at finest musical events and also Christian missionary gatherings around the world. Song has been in Ukraine ever since the Ukraine war began, first, as a musician to comfort kids evacuating from Ukraine at the brink of war at a train station in the Polish border town, but now as a leader of humanitarian relief efforts driving into 220 cities in Ukraine by carrying in relief supplies and transporting out refugees. 

Solomon Song is now traveling to Kherson (Херсон), one of most conflicted areas in Ukraine where he and his crews are fully exposed to life threatening events at any moment. Christmas is a time for family unwrapping gifts and sharing laughter in comfort. However, this winter, Song is in a duty of great responsibility that he has created by himself in compassion for the people in Ukraine going through the most difficult time in their lifetime. He is driving for 10+ hours, unloading heavy boxes in severely cold weather in Ukraine and looking up at the sky with a feeling of unease if there is any sudden attack. Friends and family are in prayer for his safe return and the end of the war in Ukraine. 

Gary Haugen is an attorney and the founder of International Justice Mission (“IJM”). Gary Haugen used to work as a human rights lawyer at the Department of Justice. He left his job and started IJM in his small kitchen along with his 2-3 friends 25 years ago with the vision, but no money, to fight against modern-day slavery. Since early days, IJM has effectively mobilized people and resources and tightly worked with senior leadership of law enforcement and criminal justice in the developing countries to rescue children in sex traffiking and bring justice where there is oppression. 

What Haugen and his team does is a difficult job. IJM has even lost its people as IJM was an easy target from criminals who see IJM’s work inhibits their profit-making opportunities out of law enforcement. IJM is an extraordinary global organization that works with local justice systems to protect the poor who are exposed to violence and oppression. Unbelievably, it could still happen in all countries and any cultural context and children account for almost 30% of those who have been trafficked. Haugen once defined and said “justice is about the use of power and the use of power with moral excellence.” After quitting his decent job at the Department of Justice, he could have gotten into a 6 figure salary job at any top law firm with his pedigree. However, he has no regrets about starting off IJM. He is more dedicated to his conviction than ever.

Now, the war between Russia and Ukraine makes women and children extremely vulnerable to trafficking. We need an immediate and collective response to solve this problem. IJM works on it, too. We don’t know when the war will end but it must end soon. Prolonged negative impact for children who have lost their land and family during the war would be significant. A lot of mothers have been kidnapped and also traded into the sex traffiking chain and kids have no where to go. I am also stuck with sadness and my thoughts go out to all those who have lost their family and hope and all field workers and their families who try to support them.

Conviction does not pay their bill. Like profit-making businesses, NPOs are also facing rising costs. NPOs should stay focused on how they can transfer their conviction and motivation to inspire others. Good nonprofit leaders should inspire their staff and volunteers to act but also find resources to scale up and continue their mission. Sustaining nonprofit causes during economic downturns and finding resilience is a daunting task even for those who are committed. Money is still out there but NPO leaders should turn their mindset for donors as donors won’t bless those NPOs that are not effectively and efficiently running. 

Nonprofit leaders will continue to make an impact during an economic downturn, given that more people would need services and public benefits from NPOs during this difficult time. It is also possible to increase awareness by serving its community in a greater way during a recession. NPO leaders shall prioritize their efforts based on efficacy and exercise caution around their major capital investments, unnecessary staffing, and the cost for fund-raising.

Nonprofit causes are not a nice-to-have. My friend who risks his life on the ground to serve humanitarian efforts once challenged me saying that you wouldn’t even imagine what the war zone would be really like qnd what is really needed there unless you witness it with our own eyes. Oftentimes, it is not about money or supplies. Timely and tactical support that solves the most critical problem during the war is much better than just dumping out overstocks or flowing money into quasi international organizations that have huge overhead expenses, but no direct impact.

We need to grow wonderful nonprofit causes. Though, like I exchanged a short goodbye to my friend in prayer, those committed leaders should survive first. We are getting into a severe winter. We can’t let people down who are directly exposed to life-threatening moments. No matter what the circumstances are, I look forward to my friend’s safe return. Be well, my friend.

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Idea is Cheap. Execution is Expensive. 

There is no shortage of remarkable ideas. Real work always comes with timely execution. Ideas are just theories if entrepreneurs do not spit them out. What makes the difference is an entrepreneur’s will to execute and carry it on no matter what the circumstances are.

The market is tough right now. Valuations have come down. There are no glorious venture exits in the pipeline. Startup entrepreneurs tend to lower the size of their next funding round. As a consequence, it lowers pre-money valuations. In addition, it is not only Twitter that has signaled a huge wave of layoffs and hiring freezes in the coming weeks.  

Entrepreneurs are facing headwinds. Ventures would take a few years until they are fully mature to go public or become an acquisition target. Any formidable venture exit would come back when the economy becomes more vibrant a few years later. When it comes to startup funding, a default option is a failure. Why do you even bother creating a business profit if there is no sufficient funding? As a matter of fact, winter might have already come. 

College endowments in the U.S. posted biggest gains last year. But, this year, college endowments marked biggest losses since the last major global financial crisis, owing in part to double-digit losses in the U.S. equity markets during the first half of 2022. Harvard and other elite universities were no exceptions. Harvard University endowment lost $2.3 billion, blaming the loss on the global market downturn. More than one-third of Harvard’s annual operating revenue comes from contributions from the endowment. Hence, these losses are significant and adversely affect nearly every aspect of the university’s work. 

In contrast, Yale University is the only school in the Ivy League that reported a positive return on its endowment in the last fiscal year. All Ivy League universities saw endowment slides. Yale’s 0.8% return is its lowest since 2009. It is a toothpick return compared to its incredible investment result in 2021, which marked a whopping 40.2% in return. Like other elite universities, Yale saw huge volatility in its portfolio construction and declining market’s effect. Though, Yale’s positive result is unique among eight elite universities in the Ivy League. Gain is always better than loss. 

What makes a real difference? Yale was the first major university endowment to fully embrace the concept of alternative investing. The Yale model follows broad diversification of assets in principle, allocating less to traditional U.S. equities and bonds while investing more in alternative investments like private equity, venture capital, hedge funds, and real estate. 

Over years, Yale has established strong relationships with the preeminent alternative investment managers, providing Yale with a durable and long-term advantage. With that, Yale has once again produced investment returns that can only be rated as excellent in the context of the rough market volatility and uncertainty. 

Venture capital has turbocharged endowment returns. Historically, high-performing university endowments have religiously backed venture capital and enjoyed unprecedented levels of returns thanks to the growth of technology and innovation adoption, which are encompassing every facet of a business and the economy.

Particularly, Yale’s interest in venture capital has been persistent. 22.6% of Yale’s endowment was allocated into venture capital in 2020. The target allocation for venture capital was even set higher at 23.5%. On average, the U.S. university endowments have approximately 7.7% in venture capital. So, Yale’s exposure and enthusiasm for venture capital is quite significant. At Yale, the venture capital portfolio earned an annualized return of 21.3% for the ten years ending June 30, 2020.

It is a challenging time for venture capital. Venture funding in Asia sank to its lowest level in many 4 years. Global venture funding for the third quarter in 2022 was also down by 53% year over year, hitting the lowest in many quarters. Despite this slow-down, there is yet significant dry powder that is already committed to venture capital, raising over $150 billion to date this year. It shall be deployed in early stage companies in various forms in the coming months. 

To weather the economic downturn, entrepreneurs ought to focus on execution, customer acquisition & retention, and unit economics. Every customer counts and every single dollar matters. Venture capital is supposed to offer valuable advice to entrepreneurs simply beyond cash. Venture capital needs to bring relevant experience, extensive business networks, and critical managerial support to the table when the market significantly slows down and the funding landscape is not promising. Entrepreneurs should put every sweat on execution demonstrating a path to profitability and early maturity. 

Venture capital with lasting support from backers like university endowments certainly adds value to entrepreneurs through its own business acumen, often providing decades of experience in founding and scaling businesses that could be used to develop strategies for success at every stage of the venture lifecycle. The reputation of venture capital that goes along with investment, therefore, should not be under-estimated. Such associations for startups early in their lifecycle with reputable venture capital can be a valuable resource for them to cut through the noise and establish their firm ground in the industry.

Last three months in 2022 will offer a good proxy for what the new normal would look like. Slow investment activities over the past summer would likely result in a much slower season because it would take longer to get up to speed into the deal pipeline. Full-year VC activity would finish strong, though, well above the $200 billion mark in 2022. However, the narrative for the venture capital industry continues to change dramatically. 

This current down period is like only two seconds in multiple sequels of drama. Innovation isn’t correlated with the markets. VC returns are not highly correlated to public equities, either. The market will bounce back, and investors will continue to direct funding to early stage companies with proven business models, strong market dominance, and compelling value propositions. We often forget it when the market is good. Therefore, it is time to challenge the business execution, not the venture capital model itself. 

Strategic Decoupling in Key Tech Sectors: Another Pressure Point

Decoupling literally means the separation of previously tightly linked systems so that those systems could independently operate. In layman’s terms, decoupling refers to an economy that would be able to grow or shrink without corresponding external factors or other economies. 

What has been correlated with others in the past no longer moves in-step according to expectations. The renminbi (“RMB” or Chinese yuan) has broken its traditional ties with the U.S. dollar (“USD”), which has been followed by much visible divergence in recent months, for example. Currently, uncertainties reign. What complicates assessments of potential USD-RMB decoupling is, though, the prolonged impact of pandemic uncertainties, geopolitical tensions and wars, and central banks’ monetary policies and rates hike under inflation pressures. These are not just about economic issues anymore.

Global supply chains are so complex. The whole global supply chain is tightly interlinked together. As we’ve seen from pandemic to war, supply chain disruptions have a huge negative impact on global industrial production, trade, inflation, and so forth. Supply chain is supposed to be more resilient without sacrificing competitiveness, economic interest, and national security. 

However, global geopolitical tensions, economic and techno nationalism strain weak links especially in global tech supply chains. Development, reach, and success of emerging technologies are highly dependent on tightly linked global supply chains and research networks. Efficiency under tight coupling has begun to diminish and been replaced by pursuit of resilience under loose coupling in global supply chains. Supply chain decoupling will further accelerate in the wake of superpower rivalry. 

To further these changes, decoupling of the U.S. and Chinese technology supply chains is well underway. The U.S. presidents have committed to rapid decoupling without knowing what consequences would really follow. The Chinese Communist Party (“CCP”) is pushing its policy agenda, “Made in China 2025” and “China Standards 2035” initiatives, with intention to shore up China’s plans to proclaim independence and dominate in cutting-edge technologies and future industries. This techno-nationalism is on an unprecedented scale, putting $1.4 trillion on a digital infrastructure and public spending to advance this policy agenda. 

The U.S.-China competition has already reached a tipping point. It has also morphed into a new technology cold war. There should be the high cost as extensive trade and commercial ties would continue on uncertain terms. This is not ideal and, formidably, global technology supply chains are at risk. The consequences of a technology cold war are negative for any companies which depend on foreign technologies as well as their global suppliers and R&D networks. Ultimately, it is bad news for consumers. Local technology companies could gain from rising nationalism and domestic substitution to a certain extent, though. But, it is a lose-lose game at the end.  

Tensions between the U.S. and China have sparked calls for policies to decouple the multifaceted economic ties that have connected these two superpowers for decades. Advocates in Washington D.C. have argued that such policies should ensure the U.S. economic leadership, reduce its dependence on Chinese technologies and strategically important materials, and ultimately limit any potential vulnerabilities in key sectors that are important for national security and intelligence activities. 

The U.S. past efforts to decouple supply chains in satellite technology is a good example. Lately, policymakers have also pushed export control and trade policy for A.I. related technologies. Only a few days ago, the Bureau of Industry and Security (“BIS”) under the Biden Administration announced new extraterritorial limits to China on the export of any advanced semiconductors, chip-making equipment, and supercomputer components. 

Decoupling is likely to continue even if it might be a lower priority for the Biden Administration at least on the surface. Given that China and the U.S. mutually see potential risks as they are overly dependent on each other, there is a momentum that won’t disappear easily in the short-term. Trump’s rather erratic and scattershot regulation and public statements offered little clarity to participants in the global supply chain. Biden’s actions are supposed to be more systematic than Trump’s, but long-term U.S. goals have remained largely hidden underneath bureaucratic opacity, business of politics, and rhetorical platitudes. Semiconductor export control policy is only a tip of the iceberg. 

Technology is the engine that powers economic prosperity and growth. Many are worried about if America is prepared to defend or compete in the A.I. era. America has been technologically dominant for such a long period of time during and after the cold war, where we witnessed competition from political, economic, ideological, diplomatic, military, social, and technological dimensions between the U.S. and then the Soviet Union. 

In this past superpower rivalry, emerging economies like East Asia, India, Latin America, and Africa were adversely affected in many ways. The situation has not changed much for the betterment in the emergence of the new technology cold war. This domination has been characterized by the process of globalization, largely led by the U.S., in virtually every sphere of our lives. 

Now, multinational companies face situations where they need to make a more difficult decision. The U.S. will continue to reassess whether and how to remain in their technology leadership, interdependent from its major rival, China. Semiconductor export control may strengthen domestic innovation and hobble its chief rival, China, but would that be enough to protect core national security interests or retain hegemony by any means? 

We should not take it for granted, including all those innovations and technologies that we have enjoyed over decades. A strong contender of global tech leadership, China, has already emerged. China is moving fast with such astonishing speed while we are all still staring at it and trying to understand the true implications. Both the U.S. and China’s tech sectors continue to benefit businesses, universities, and citizens in countless ways, providing skilled labor and highly value-added business revenue opportunities to sustain the global economy and relentless efforts to advance R&D. But that same technology leadership could also power wrong persons building upon unfair trade practices, repressive social control, or even military forces with wrong intentions. So, we shall take it all in stride and make the right next move. 

License to Die: Life with Dignity

The death of Queen Elizabeth II brought condolences from global leaders and people from all walks of life. Her death has prompted the memories of her majestic influence that had finally come to the end after 70 years of her reign. Her legacy will remain strong. Like all others, we will miss her. What makes it sad, though, is that it is only a few months after Great Britain celebrated the Queen’s Platinum Jubilee with many spectacular events to mark 70 years of her excellent service to the nation. Life is too short. Hence, we should not brag about it. The Queen’s funeral teaches important lessons about death. Death is fair to all. Death can not be cheated. We send our best regards to those who lost their dear ones this year. 

Miu Kakiya is a prolific Japanese novelist, who wrote a book called ‘The Death of 70-Years-Old (七十歲死亡法案,可決.)’ In her own imagination, Kakiya created the context where ordinary families live under the bill that enforces mandatory death at the age of 70 as the government wants to solve many societal issues around the aging population. Kakiya talks about life and society with her ingenious imagination, sharp gaze, and pleasant sense of humor. Her work has been widely praised for broadening understanding of real-world problems. Entire plot of her book is quite crazy, though. We can’t imagine the world that the government determines the moment of our death. Fiction is fiction. However, Kakiya subtly touches on social issues that Japan is already facing at the moment. It will be burdening to take care of very aged populations. 

Chie Hayakawa, a Japanese film director, raised a similar issue in her short film, ‘Plan 75’ as part of the omnibus feature film called ‘Ten Years Japan.’ Set in the near future where increasing elderly populations have become detrimental to society, Hayakawa also imagines a nation where retired seniors or other citizens deemed unproductive are systematically eliminated. In Hayakawa’s dystopian short film, the government’s ‘Plan 75’ encourages senior citizens to be euthanized to fix the problems of an aged society. It can be interpreted as a political commentary with her own view, but that is what Japan may face in the coming decades if they don’t plan for the worst. Certainly, it shouldn’t be done that way, but what if the value of human beings is measured by the bottom line of the society when there is slow economic growth and the shortage of young workers and helpers who can take care of very aged people.

East Asia is aging faster than any other region. Japan’s super-aged society is top of the league, ranked as the oldest country in the world with 29% of its population being 65 or older. By 2035, it will grow to be one third of the population. There are now more aged adults wearing diapers than babies in Japan. China is second to none. China has one of the fastest growing aging populations in the world. By 2040, the population of people being 60 years or older would reach 28% of the population. Currently, 60 years or older accounts for more than 267 million. This phenomenon will shrink the workforce and increase public spending, posing risks for public finances and necessary healthcare delivery. As a result, it increases the challenges to sustainable economic growth.

​​Managing an aging society at a scale requires sophisticated policy design addressing issues such as child care, education, employment practices, health care, and pensions. That is why effective preparation for an aging society calls for strong leadership that can build social consensus and make challenging political decisions. Policy change for the elderly requires a paradigm shift primarily in the ways that healthcare and pensions are delivered and also financed. It should be done without burdening the next generation. For example, in the U.S. alone, the nation is spending $250 billion, taking care of Alzheimer patients. That’s going to surpass $1 trillion by 2050, which is enough to take down the entire US healthcare system. 

Life expectancy has increased significantly over the past 30 years driven by numerous technological innovations, which is a good thing. But, it has enormously pushed up healthcare costs as a by-product. I am not arguing that we need a drastic measure as we saw in aforementioned fictional scenarios. However, an aging population puts budgetary pressure on society as a whole. The number of workers declines relative to the number of consumers. The ratio of those working to those not working is set to move from 4 to 1 to 4 to 2.5 by 2050. It will create a financial burden on our next generations and put enormous pressure on society as a whole. 

The elderly contribute to the economy by putting money for consumption in a variety of ways. However, prolonged life expectancy creates huge uncertainty for the elderly. The elderly would abstain from spending if there is not enough savings or social security to support their living after retirement. They wouldn’t freely spend their life-saving. Existing pensions won’t be enough. One crucial fact is that we have to live a life of the elderly, perhaps, way too long. The elderly may earn from continuing to work after retirement, but overall productivity would not be as good as they wish. If there is no proper job or reskilling training in this technologically advanced work context, life won’t be easy for them. Therefore, policymakers should consider protecting and expanding financial security and assistance programs for the elderly, including public health insurance and also universal basic income, tailored to the standard of living for the elderly beyond this existing pensions. Financial security is vital to maintain health and quality of life. 

Nothing beats old friends. We can’t buy friendship with money. Dignity comes from respect. Dignity is a given. Dignity identifies a worthy, high, and honorable condition as part of being human. We should make the elderly feel wanted and valued like all people have the right to be recognized for their inherent humanity and treated equally. Everyone does not need to be a king or queen to be dignified. Simple paid work could strengthen and restore dignity for the elderly. What we need to give them is not money, but meaning as all want to be remembered through the work we leave behind or through our relationship in life. 

Philanthropic Giving Redefined with Crypto

Philanthropic giving is huge. In America alone, philanthropic giving reached $485 billion in 2021. Despite uncertainty about further spread of COVID-19, the total amount of philanthropic giving grew by 4% year over year. Philanthropic giving is driven by mission, purpose, and passion. Donors are focused on building a more inclusive and equitable society. They also aim to drive systemic change and sustainable social progress.

The majority of philanthropic giving went to religion, education, health care, and so forth. Gifts for arts, culture, humanities, and environment also saw double digit growth. Prior to Covid-19, approximately 78 million citizens of the United States volunteered and contributed 5.8 billion hours for public benefits. Religion, sport, culture, and art are key areas where people were actively engaged in volunteering top onto their philanthropic giving. 

Some might have done philanthropic giving to receive a charitable tax deduction. Though, donors tend to provide their money, capabilities, and professional acumen to support charitable causes in ways that also sharpen up their own competitive edge. Philanthropic giving is an act of goodwill. Philanthropic giving helps to improve the well-being of humankind and prevent social problems. 

Philanthropic giving is a driving force of social change. It can be in the form of social movements for civil rights, labor, women’s empowerment, environment, and LGBTQ+ issues. Philanthropic giving is not only providing necessary funding, but also advocacy support for social change. Oftentimes, donors do not want to let their left hand know what their right hand is doing. In order to reach a critical mass of philanthropic giving, it has to be done proactively and also transparently. 

We have to learn to give. We can give our time, expertise, love, and compassion. We should also educate young generations to be equipped with knowledge, experience, and skills to be more compassionate and engaged in various social causes. We don’t have to be rich to give. None of us can ever run out of something worthwhile to give. 

Philanthropic giving also means following the frontlines. Next generation leaders can catalyze entrepreneurship and innovations for philanthropic giving from early on in their life to strengthen citizenship, organizations, and communities. 

Philanthropic giving has long contributed to education. Leading research universities around the globe have produced leaders for all sectors and fields. Universities suit their students with a broad range of skills and the inspiration to shape the world for the better. Students will go on to tackle the most serious crises of humankind such as climate change with what they have learned. 

The next generation leaders will be more representative by and large thanks to the diversity of philanthropic giving efforts. Universities can be a magnet for talent. Philanthropic giving in the form of endowment has made every part of the advanced learning experience more affordable for students from all backgrounds. Generosity building upon the tradition of philanthropic giving can help shepherd students into a brighter future. 

Philanthropic giving should be strategic so that it can prepare every mission-driven student to pursue their last job, not just first. It would help students with intellectual framework, competencies, and digital literacies that are necessary to confront the challenges of tomorrow, not just today. It shall help connect the dots especially for students to have the meeting with mentors and advisors on a potential career path and help them to build necessary career portfolios that they are destined for. Philanthropic giving has to aim to connect people with disadvantaged backgrounds to bring their personal aspirations to fruition bearing public benefits. 

Philanthropic giving certainly helps embrace obligations for those who have been privileged with their achievement and reputation. It will help them to leave the world just a little bit better off than they have found it. Science, for example, is not just for the elite or done by the highly educated. Philanthropic giving shall open science to innovatively devise solutions engaging all backgrounds and disciplines from artists to engineers or entrepreneurs.

The impact of the work of philanthropic giving is certainly beyond business. It shall focus on effect change by training most skilled and compassionate leaders for all kinds of organizations to carry on philanthropic giving efforts. Everyone has to have a sense of belonging where their values are fully supported and encouraged and feel deep in their skins that they are contributing to meaningful solutions for the betterment of society. 

Digital assets are poised to disrupt philanthropic giving. Crypto donation is like a lab for philanthropic giving. Some progressive blockchain leaders now make it possible to donate crypto currency to support STEM (meaning science, technology, engineering, and mathematics) education. Donors tend to be young high-net-worth individuals. 

Philanthropic giving in crypto is also inspiring young generations to give by matching and facilitating directly between donors and recipients. It provides a cause-based impact investing opportunity for crypto holders in unprecedented ways. Blockchain projects would offer donors the opportunity to easily participate in and monitor the philanthropic giving of projects they support. 

Crypto donations are expected to be the fastest growing trend in philanthropic giving. Tax authorities like the IRS classify cryptocurrency donations as property, meaning they are not subject to capital gains tax and are tax-deductible. Hence, philanthropic giving is tax-deductible to the fullest extent permitted by law. 

Some progressive churches in Silicon Valley accept crypto, for example, that is no different than accepting a stock, property, or contribution-in-kind. Nonprofit leaders in education should also consider acceptance of such digital assets as part of philanthropic giving. They should also determine whether to sell the donated crypto promptly. Like many other donated assets, school administrators should decide if they would keep it as an investment or not.

Philanthropic giving is like a bet on how to move the needle on a social issue. Similarly, crypto holders would appreciate the long-term value of their bold investment positions. They can choose to bring that approach to their philanthropic giving as if they are investing in ideas and projects that may take years to manifest like making grants to education that take a generation to realize. 

Bringing the mindset of crypto investing to philanthropic giving especially in education presents uncharted opportunities to elevate new causes and potential solutions. It will help bring up a fresh view on long-standing social challenges. Practice of philanthropic giving is not simply a windfall to people poorer than donors. Instead, it is an effective and thoughtful way to continue building the world and expanding the horizon of what crypto can do for the world.