The F Word Philanthropy Avoids Is the One It Needs Most feat. Nwamaka Agbo
FROM: BREAK FAKE RULES WITH GLEN GALAICH
In this episode of Break Fake Rules, host Glen Galaich sits down with Nwamaka Agbo, CEO at the Kataly Foundation, to discuss thetransformative power of spend-out philanthropy and the necessity of embracing failure in the nonprofit sector. As Kataly approaches its 2028 dissolution, Agbo challenges traditional grant-making norms, arguing that foundations must move beyond risk-averse, perpetual models to become deeply responsive partners in community wealth building. The conversation explores how breaking "fake rules"—such as the obsession with 501(c)(3) structures and the fear of public failure—can help philanthropy better support grassroots movements during times of political crisis.
Key Takeaways
Spend-out models enable responsiveness: Unlike perpetual foundations that prioritize preserving endowments, spend-out foundations like Kataly can deploy capital more quickly and flexibly, allowing them to be deeply responsive to grantees' immediate needs without the constraint of maintaining a 95% investment portfolio.
Public failure drives sector learning: Agbo advocates for sharing failures openly rather than hiding them, arguing that transparency about what doesn’t work allows the broader philanthropic sector to learn from mistakes, avoid repeating them, and build stronger, more authentic relationships with communities.
Risk tolerance is inverted in philanthropy: There is a critical disconnect where foundation investments (the 95%) are managed with high risk tolerance, while grantmaking (the 5%) is treated with zero risk tolerance; Agbo argues this limits innovation and imposes unrealistic perfectionism on grassroots organizations.
Support beyond 501(c)(3) structures: To truly support community resilience, funders should break the rule of only supporting nonprofits by also funding for-profit cooperatives and other legal entities, even if it requires covering tax liabilities, thereby providing political cover and flexible resources to movement builders.
Reject pedestalizing grantees: Philanthropy often tokenizes Black and brown-led organizations by treating them as "big bets" or success stories rather than equal partners; Agbo urges funders to drop the pedestal and engage in genuine solidarity, recognizing that these leaders are also flawed humans doing difficult work the best they can. And they deserve real partnership, not just scrutiny.
Full Transcript
(Opening Teaser)
>> Nwamaka Agbo: People do not just live their lives in non-profit structures. Let's continue to fund the 501c3s and let's also fund the other entities that we know are so critical to the ways that people live, work, and play.
>> Glen Galaich: Oddly enough, the 95% that's going to be churning away through investment houses and earning money tends to be done with very high risk tolerance. On the non-profit side, for some reason, no risk tolerance, from what I can tell. And as a result, failure is something that's greatly feared.
00:00:36
>> Glen Galaich: Welcome everybody to another exciting edition of Break Fake Rules. This is a special one for me. I'm solo today. The co-hosts all decided they were going to take a break, so I'm going to We're going to go old school here. Back to me by myself, but not totally by myself. I have Nwamaka Agbo with me. One of the great spend-down, spend-out leaders here in the in the Bay Area and in the foundation sector, and we've had the opportunity to go on this journey together. Kataly Foundation, where Nwamaka works, is spending out about on the on roughly the same schedule. Isn't that right?
00:01:11
>> Nwamaka Agbo: Yeah, our last dollars are set to go out the door in 2028.
>> Glen Galaich: 2028, okay. Our last dollars are going to be 2027. So, I think we've been right
in that zone, about a year, the whole way. How's that going for you?
00:01:25
>> Nwamaka Agbo: I mean, it's going well, as can be, given the state of the world. I think our team is sitting with the fact that it is difficult to be spending out during this time in the world.
We have received helpful critique and feedback from some of our grantees that this is the time when they need Kataly the most. This is the time when they need funders to really lean in and fund at scale and at frequency. And so, to have a foundation that is likely one of the largest funders for a number of organizations coming to the end of our life. It's a bit hard for our team. It's a bit hard for the movement.
And, something I always try to remind all of us collectively about is that if Kataly is the only foundation doing this work, we would have already lost. And so, it is exciting to think about doing this work alongside foundations like Stupski, following on after foundations like Chorus Foundation and Fund for Democratic Communities because our spending out and closing down as a foundation actually creates more room, more space for other funders and donors to step in and support movements.
00:02:44
>> Glen Galaich: Yeah, we hear the same thing. You know, there's just a general concern about foundations like ours stepping away. I have not spent a lot of time certainly leading or even sitting in one of the perpetual foundations, so I don't have a sense of how decision-making operates, how the program officers operate or otherwise.
But what I hear and I know I hear the same about your foundation is that we in the spend-out world tend to do things a little differently. There aren't a lot of long grant cycles. You're able to move quickly. I know you have a structure where you have even a participatory approach. You don't see a lot of that in the perpetual environment and you know, we hear from our grantees the same thing. Please don't go. We really like the way you operate. We love the support of your program officers. But at the same time, one of the benefits, one of the things we're so proud of, I'm sure you feel the same way, is that the money is moving and it's moving at numbers that are much higher—if we were a 5% foundation, right?
00:03:43
>> Nwamaka Agbo: Absolutely. And you know, I think one of the conundrums about being a spend-out foundation or perpetuity foundation, the reality is for me personally, I don't know that the dichotomy of those two things is where I want us to stay focused in on.
00:03:58
>> Glen Galaich: Right.
00:03:59
>> Nwamaka Agbo: For the Kataly Foundation, being a spend-out foundation is what gives us the freedom and the ability to be deeply responsive to our grantees on the ground because instead of trying to preserve our 95%—instead of trying to stay invested in what would be harmful companies and corporations that are actually working against the work of our grantees on the ground, we're able to move capital in the ways that are needed to our grantees in the moment.
The other thing that is interesting is that it does create an opportunity to engage in a conversation around the philanthropic nonprofit industrial complex. So, one of the reasons we frame our work as being a spend out is because we really want to focus in on transferring our assets under management into community wealth building institutions and grassroots communities. So, it's not that the money disappears when Kataly dissolves as an institution, rather we have helped to invest in ensuring that communities have access to the durable resources that they need to build self-determined lives.
So, I'm more interested in figuring out how is philanthropy actually helping to support the economic foundation that is at the base of so much of the inequalities that we see across urban, rural, suburban communities across the country.
I like to have the complex conversations up front and I think that's actually where we need to be right now as opposed to staying stuck in the debate of perpetuity or spending out.
00:05:36
>> Glen Galaich: Yeah, no, I love that. Those are the principles that I think lead to spending out. Doesn't mean you have to, but if you're going to divest from toxic corporations, if you're going to divest from restrictive grant making and capping your giving at 5%. And you're being as responsive
as you can be. love that you said that—deeply responsive. If you're being deeply responsive as a foundation, the debate is irrelevant. However, you're going to end up somewhere. It's probably not going to be perpetual, but you're going to end up in a place of doing good work with the communities you care about.
00:06:11
I want to switch us over to the big reason we have you on today. And that is that you are embracing and wanting to really talk about a word that we don't talk about all that much in the foundation sector and it is failure. I know we're not I don't want to be too loud, but failure.
>> Nwamaka Agbo: [laughs] The F word.
>> Glen Galaich: What is failure all about and what does that mean to you?
00:06:31
>> Nwamaka Agbo: You know, I appreciate the way you framed it. Uh, failure is just a natural part of being a person in the world and being a person who's interacting with other human beings. One of the reasons our communications director Zaineb Muhammad really, you know, pushed / dragged our team into leaning into the Failure Series we first launched in 2022 was because coming from her background as someone working in movement building organizations and so many of our team members, we know that philanthropy fails. It's just that philanthropy doesn't have to fail out loud. We fail in secret. And when we fail in secret, we're not then accountable to how the impacts of our failure touch on our grantees, our communities, and our colleagues.
So, we wanted to lean into our Failure Series as a way of offering transparency about who we are as a foundation. We are running a number of experiments inside of our work at the Kataly Foundation and we're not always going to get it right. And if we are an organization really trying to lean into experimentation, if you run a really good experiment, chances are every once in a while that experiment is going to fail. And the failure actually gives you more information, more indication for how to improve your work going forward. And so if we can share our failures with our colleagues in philanthropy more widely, more broadly, then all of us don't have to fail as frequently. And we don't have to fail alone, we don't have to fail in shame.
00:08:15
The other thing that was interesting as I was kind of thinking about, well, what am I going to say to Glen about failure? It's this other piece to counteract the narrative that often times comes up about individuals and institutions with access to wealth, right? A lot of what is implied by our shared existence as a sector is that we exist because you know, we're smart people. And smart people who made a lot of money and made good bets. So now we can, you know, give it away through philanthropy. And that's actually not true. That's actually not true. And the ability to really counteract a lot of the narratives that I think are harmful in that they deny us our humanity, they deny us our ability to learn and evolve, is also why the series is really important to us and our team.
00:09:17
You had also talked about relationships early on when you're intro-ing. And I found that in order to maintain authentic relationships, you need to be honest. You need to be honest with others, and that requires a level of humility and accountability. And it's inside of that honesty, inside of that repair, that you're actually able to strengthen relationships that can weather through hard political moments such as the one we're in right now. So for us, that is why it felt really important to lean into this invitation to think about failure and to think about it out loud, and then to be able to do it with our colleagues in philanthropy. So, I'm excited to read your piece and see what you offer to the conversation.
00:09:58
I think, as we come to the end of our spend out with Kataly—and I'm curious to how this lands for you—I've noted that there's a lot of language that follows our foundation around being the model, a model, and I'm really resistant to that. I'm resistant to it because it puts us on a pedestal.
>> Glen Galaich: Mhm.
00:10:15
>> Nwamaka Agbo: And in putting us on a pedestal, it sets Kataly and our team apart from the rest of our colleagues in philanthropy, and it has almost this inverse way of dehumanizing us, as if, well, Kataly can do it because they're magical and special. We're not magical and special. We are flawed people doing the best that we can, and rather than being on a pedestal, we would love to be on the field with everybody else just doing our best. And so, if we can be honest about our failures, I hope that it gives the rest of our colleagues in philanthropy the ability to take a little bit more risks in their work knowing that they'll be held and supported even inside of their failures.
I'm curious as you guys come to the end of your spend out. As a lot of people are talking about how Stupski Foundation has been moving and impacting the field, particularly in education in California and Hawaii, how are you kind of navigating through the ups and downs of what it means to lead a a spend out foundation in the failures that might come inside of that.
00:11:25
>> Glen Galaich: You know, well, a little while ago I put out a book called Control: Why Big Giving Falls Short, and in writing it, I did my best to be really vulnerable. There's a whole chapter that really is about, you know, I'd say that a moment when things really did—I hate to use this phrase because it's not really what happened—but the closest to it is what people typically say breaks down. We kind of broke down in a way. Like the machine stopped moving as we were making significant transitions in how we operated, how what we saw as “strategy”—we completely changed our view on that. We did it in a way that we tried to protect grantees from getting lost in the mix. So, the grantees hopefully didn't experience anything other than a change in how we would start showing up and the new grantees that we added to our portfolio. So from the community side—while we were going through this, you know, operating system change, which came with some failure, you know. There were people we lost along the way that I miss. There were tough conversations that happened. And some board members, in the end, left and new ones we were able to bring on.
You know, we've tried to be very honest and very transparent as a foundation. And I appreciate what you're saying about not wanting to be held up on a pedestal. I don't know if anyone will ever hold me on a pedestal, but I do think that I hear what you're saying. That does put pressure and in some way it may even suggest some sort of perfectionism that has to come from what you're doing. And I think all of that can be very detrimental.
00:13:20
You used a word that I think is really important, and that's risk. And so, I wanted to talk with you about that because there is a strange dynamic when it comes to even inside a foundation,
right? Foundations typically invest money, and we talked about that earlier, typically in what I would say is usually harmful investments for the communities we support. And then we have a small amount of money, about 5%, this is on average, that goes out as grant. Oddly enough, the 95% that's going to be churning away through investment houses and earning money tends to be done with very high risk tolerance. There's a lot of willingness to move that money to make more money and um it's not typically…—having sat in the investment committee seat, on occasion—I’m always surprised at the tolerance for risk. It's not seen as failure. If you made an investment and it didn't turn out like you wanted, then you say, “Well, let's look at another investment. And how did that one turn out?” And that one earned enough to make up for the other one. And there's just kind of this like easy-flowing view on how investment is done on a for-profit side.
On the nonprofit side, for some reason, people have referred to grant dollars as more like risk capital. It's not risk capital. The expectation is if you move the money, you're moving it with absolute perfection, which leads to a great deal of restriction on grantees, lots of evaluation of grants, lots of so-called learning—no risk tolerance from what I can tell. And as a result, failure is something that's greatly feared in the sense that if your grants did not go as you the foundation intended, then you have to change it or someone has to apologize for it or something like that. It's just completely different on both si- on the two sides of the house, if you will. So, it's an odd flip, a juxtaposition that exists, and I think piled in there is a lot of fake rules. I think I even threw a few out on the table just now. That's how I look at it. Do you do you relate to anything I'm saying there?
00:15:23
>> Nwamaka Agbo: Oh, I relate to all of it. I think it's really unfortunate dynamic in our field and part of what I try to invite people to think about when we're looking at lowering the firewall between the investment side of philanthropy and the grant-making side of the philanthropy is you know, if we were to look at Silicon Valley just like an hour and a half south of us, we would see that when you're doing venture capital investments, you are putting tens of millions if not hundreds of millions in maybe a portfolio of 10 different projects knowing that maybe one will be successful and the others will “fail.” And that is seen as a good bet. But we don't actually afford the communities that we do grant making to the same flexibility, the same opportunity to innovate and learn. And you know, I just want to be honest about it. I think there's a lot of structural racism rooted in that…
>> Glen Galaich: Yep, I agree. Yeah.
>> Nwamaka Ago: …particularly when these are grants going to Black and brown communities. And there's a way that philanthropy wants to kind of make— and I hate this framing and I'll tell you more about it why, but—make a “big bet” by investing or supporting a Black-led organization or a brown led organization. And part of what comes from that is the desire to want to tokenize them.
>> Glen Galaich: Right.
00:16:50
>> Nwamaka Ago: The desire to want to pedestal them and trot them out as well, this is a community leader or this is an organization that has figured it out. And what's really challenging about the frame of doing a big bet in communities is that one and you know, not to shame anybody. I love my time in Vegas. I love to sit at a roulette table. Well, I did before before the little one. Um but there's something to be said about not actually having to put any skin in the game.
>> Glen Galaich: Mhm.
>> Nwamaka Ago: Right? You are putting a bet on this other community, this other organization, and you just want to see how they do. And when you do when you engage with them like that, you actually divorce yourself out of the shared solidarity of what that community is going through. You also end up dehumanizing them as if they were a bet, right? As if they were some tokens to put on a red 12 at the roulette table, and that is not what these communities are looking for. They're actually looking for funding partners who want to be in deep relationship with them, who want to be in deep solidarity with them, and who want to see them succeed not so they can take pictures and put them in the glossy philanthropic report at the end of the year, but because it means that children are safe and fed and well-housed, and there's a lot for us to interrogate in philanthropy around why we do that, and I don't know how many of our colleagues in philanthropy are aware of like the history of grant making, the history of philanthropy, where it came from, and how a lot of these fake rules, as you call it, have shaped these practices that we continue to perpetuate to this day that are actually the practices that limit us from showing up and supporting communities the way that they need, and therefore create a world where we're all struggling in our own ways.
So, yeah, let's drop the firewall. Let's actually put an axe in that fake rule and be done with it, and give communities the opportunity to innovate and experiment. We're not going to change the problems of the world in a three- or even a five-year grant cycle. It's a generational investment. And so, organizations, communities deserve to have access to the capital that they need to continue to iterate, to learn, to innovate on their campaigns, on their organizing strategies, on their projects until they're able to get to something that gives them the level of justice and equity and liberation they're seeking.
00:19:35
>> Glen Galaich: So, maybe I can put you on the spot. Is there a failure you'd like to share as a way of kind of opening up this for the listeners here? I mean, many of whom are foundation leaders. They listen to this show and they're definitely going to run to it when they see your name on it. So, what would you like to share with the folks listening in today?
00:19:59
>> Nwamaka Agbo: The fake rule I'd like to break and I'm going to cheat, Glen. I'm going to say all of them, every single one of them. I was thinking about, you know, what I talk about breaking the fake rule of scale and replicability. Philanthropy can tend to talk about how grassroots organizations have a capital absorption capacity problem, right? That these communities cannot take on the hundreds of thousands or millions of dollars that philanthropy would like to move at one time, which I can show you a number of projects. If you give them time, they could definitely take a good $50 million and have a lot of great impact in their communities.
But the overall rule that's at the top of my heart right now is I want philanthropy to lean into doing what's morally right as opposed to being overly concerned with what's legally right. And what I mean by this, stay with me because I'm not telling anybody to go to jail. That's not where I'm coming from. But what I am trying to say is that we are living in a political moment of resurging fascism and intensifying racism and systemic oppression. And we have a president in the White House who doesn't listen to any rules, any rule of law, who does not have any moral compass in the way that he moves. And so what this means is that we need to be more creative in figuring out how we move capital to the organizations and communities that need it the most. We need to be willing to figure out what is morally right for us to do as a sector who has access to billions of dollars across both our grant-making and our investment portfolio and show up in resource communities in the ways that we need.
One of the things I've been reflecting on with one of our first integrated capital investment projects, the East Bay Permanent Real Estate Cooperative out of Oakland, is you know, I was talking to NonISession, their cooperative executive director, and we were reflecting on when we first moved a loan to their organization, we soon found out that they were not a 501c3, that they have a fiscal sponsor, but the entity that we were making the loan to was actually a for-profit cooperative. And in being a for-profit cooperative, they were going to incur taxes for the loan that we had moved to them. So, in the 11th hour, we sorted it out and we decided to cover the taxes that they were going to incur from receiving this loan as we think that we should. That's the right thing for us to do as a foundation.
But in reflecting on it some years later, I'm like, oh yeah, we actually decided to push up against the fake rule of only supporting 501c3 organizations and recognizing that people do not just live their lives in nonprofit structures. People live at the intersection of a number of different legal entity structures. And so being able to support a for-profit cooperative has provided them with not only the capital support that they needed to acquire buildings—residential buildings for permanently affordable housing—but it also provides them a level of political cover in a moment when 501c3 organizations are under attack. So these are the moments when philanthropy could start being a bit more creative around, yes, let's continue to fund the 501c3s, and let's also fund the other entities that we know are so critical to the ways that people live, work, and play. And if that means being prepared to cover the tax liability that might fall along when granting or investing into a mission-driven for-profit entity, so be it.
00:24:08
Or if it means being able to build out the administrative support to do expenditure reporting responsibility, so be it. Because those creative mechanisms are actually the ways that we're able to ensure that the wins that many of the grassroots groups are contesting for are able to be defended and not come under attack through a political party that is doing everything in its means to really undermine those of us that are committed to justice and deep inclusion for everybody. So yeah, my break fake rule: break all of them, but if you could only break one, definitely be more creative and fund beyond the 501c3 nonprofit structure.
00:24:58
>> Glen Galaich: Yeah, you’re really getting into some really, really interesting topics. And thank you for doing this Failure Series. I'm really grateful for it. It's just personally given me a chance to think about it. And I know it'll spark so many others. So, thank you for coming on Break Fake Rules, and I can't wait to talk to you again in the near future.
00:25:15
>> Nwamaka Agbo: Thank you so much for having me, Glen.
Originally published: May 2026
Show: Break Fake Rules
Host: Glen Galaich
Featuring: Nwamaka Agbo
Format: Video interview
Topics: Philanthropy, spend-out foundations, failure, restorative economics, community wealth
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