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Dianne Chipps Bailey, National Philanthropic Executive at Bank of America Private Bank, discusses charitable giving by affluent US households. Laura Modi, CEO of Bobbie, talks about battling inflation for customers of her pediatric nutrition company.
Hosts: Carol Massar and Emily Graffeo. Producer: Paul Brennan.
Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg Business Week inside from the reporters and editors who bring you America's most trusted business magazine, plus global business, finance and tech news as it happens. Bloomberg Business Week with Carol Messer and Tim Stenebek on Bloomberg Radio.
All right, everybody, you are listening and watching Bloomberg Business Week. I'm Carol Masser along with Emily graffeo in for Tim Stanevik, who is out today.
Listen. Holiday season.
You know, we talk a lot about Black Friday, Cyber Monday, people shopping and so on and so forth, but a big part of the holiday season is about giving and giving to foundations, organizations and to folks who really need it.
Yeah, and for some individuals in America that means making an impact through volunteering or philanthropic efforts. I'm thinking about those individuals that are much higher income and have perhaps more to give. Bank of America surveyed one thousand high networth individuals across the country about how they're approaching philanthropy. And we're joined now by Diane Chips Bailey, national filanthropic executive at Bank of America Private Bank. She joins us on Zoom from Charlotte, North Carolina to discuss, So tell us about just the most recent giving by affluent households. What are you seeing right now in terms of trends.
Thank you so much for the opportunity to share more about how wealthy people are leveraging their capital to achieve their social impact goals. December is the moment giving season is in full tilt. Thirty percent of all dollars will flow in December, with ten percent.
On the last three days of a year.
And what we're seeing with wealthy Americans is they're all in with their generosity. Ninety one percent of them are giving every year. That's compared to less than fifty percent of the general population.
That they don't stop with their dollars.
As you've already referenced, they're incredibly generous as volunteers, whether that's direct service, being on boards, fundraising for organizations. I'm certainly also leveraging other tools like sustainable investing and conscious consumerism.
How much of this kind of pull towards more giving? What does it tell us, I guess about the markets and the general health of the economy. We were just talking about university endowments, so like longer term investors are top of mind for me, and just how a lot of those endowments have not actually beaten the market. But I guess what do you kind of see from your angle working with it a private bank, about how just the prize in the S and P five hundred is really impacting all different facets of wealth.
It's a huge impact. If you want to look at an indicator of what giving will look like, look at how the strength of the markets are performing in December. There's a huge correlation between the generosity and the performance of the market. Certainly, other economic factors are coming into play, certainly inflation and interest rates. But we do believe that twenty twenty four will be a really strong year forgiving, coming on the heels of some tough years.
We saw.
Twenty twenty one was astronomic, you know, that incredible generosity in response to the pandemic, calls for racial justice. But then twenty twenty two is a really tough year. You know, we saw a pullback in giving when adjusted for inflation, which is very unusual. We've only seen roughly four of those in almost as many decades. But we think that this will continue to be a really strong year.
What are we seeing in terms of generational differences or you know, men versus women? Tell us a little bit if you can give us some idea in terms of giving.
Along those lines, the study of wealthy Americans have really powerful insights as it relates to the gender and also the generational differences in giving. I want to really double click on those generational differences, particularly as it relates to where they're giving.
Of course, all.
Wealthy Americans, regardless of their age, do prioritize basic in human needs above almost everything. Certainly religious giving. It is also an important driver of generosity. But when you look at areas of difference between the older and the younger generations, the older generations are much more likely to prioritize giving to religion, giving to veterans, causes, and the rising generation is very focused on education. They're obviously more approximate to their educational experiences, climate and the environment, and again also those social justice issues are a real priority when you look at the rise generation. It's so interesting with these affluent, wealthy individuals, they're more likely to be wealth inheritors, so that factors into some of these differences, but they're really don't shy away from publicity in their giving. They're less likely to give anonymously. They're much more likely to feel that their giving experience is enhanced by that recognition. And the reason why is, I believe because they're not only honoring their name, but also the name of the family that originated and created wealth that they've then inherited. And it's also just they're used to living their lives transparently. Certainly if they're going to post on social media about their vacations and what they had for breakfast, and you know, why would they censor what they're doing so unproperly.
One thing, I'm curious because you mentioned I think during the pandemic, when things maybe weren't the people weren't giving as much. I am curious though, you know, going through the pandemic, George Floyd, and I feel like a lot of people when they thought about their giving efforts, they really thought about both of those issues and both of those tragedies and stress points for our society. And I'm curious if you can give us any insight about that time and the type of giving that was going on and whether or not that's carried over until today.
So I'll reframe the conversation around the pandemic era giving the twenty twenty and twenty twenty one.
Giving, Those were very.
High years were giving the generosity really stored, particularly in twenty twenty one, which was that year where you felt the full impact of the pandemic and the racial justice issues. It was twenty twenty two when the markets were so volatile, having declines interest rates and inflation, storing with twenty twenty two where we saw the drop off in giving. And so are the focus of giving in twenty twenty and twenty twenty one continuing?
Now, yes and no, basic.
Needs are always a priority, but we've seen basic needs giving pullback to more common levels. So if you look at our study of philanthropy, the three most popular areas of giving in terms of proportionate giving would be religion, higher education, and.
Then basic needs.
If you look at incidents of giving, just popularity of gifts, not the size of the gifts, basic needs is the most popular category.
But.
Twenty twenty basic needs was actually second instead of the third where it usually is, and that's because of the attention from the headline. You know, wealthy Americans could live in a bubble, but they don't. They're very intentive to the needs of the day, and so we see a surge in giving in response to tragedies, whether they be the pandemic, you know, natural disasters, mass shootings, Supreme Court cases. But their attention then will move on to the next headline.
All right, good to know, and I'm glad we were able to squeeze that in as well. Diane, Thank you so much. Happy holidays, Diane Chips Bailey. She's National Philanthropic Strategy Executive at Bank of America Private Bank. Joining us from Charlotte, North Carolina.
This is Bloomberg Business Week with Carol Messer and Tim Stenebek on Bloomberg Radio.
We're talking a lot about inflation. We're talking about it from a few different angles. Makes sense ahead of this week's FED decision and meeting. On that and on pricing, Bobby, it's the mom founded and led infant nutrition company, recently announcing a sweeping fifteen percent price reduction for its classic organic infant formula available online. They sell it and Target and Whole Foods nationwide. The price reductions are, in the company's own words, an active stepf step on behalf of the mom led company to support families who are experiencing rising costs of living, which is something we talked about with Peter Atwater, William and Mary who is someone who coined the case shaped economy and recovery. So great to have back with us. Laura Mody, she's co founder and CEO of Bobby and joining us here in our studio.
So great to have you here. How are you? Thank you?
Oh, I'm doing okay. I'm ready for the holiday season.
We are too, We are too.
Tell us about those price cuts and in Yeah, in an environment where there's still inflationary pressures.
Why and how are you doing it? I know the how is the big one. Yeah, And it was very intentional.
I'll bring you back your I mean everyone remembers the infant formula shortage.
Of twenty twenty two. We made very.
Intentional decision to buy manufacturing at the time and to invest in the heartland of the country and really own our own production. I mean, the initial goal was really to own our own quality control, production control. Also to be in a place where we had resilient supply. God forbid, there was another shortage. We were in a position.
Supply right here in the US Market Act.
The industry wasn't resilient enough. America wasn't resilient enough. We were at a point where America wasn't able to feed babies. Now, through that investment, which has taken an entire two years, a lot of capital and a lot of time, we knew that if we did it right, we could also reduce the costs as well. And I rewind to that moment and being in a position of saying, if we got to that place, we would pass the savings over to our customers.
How did you reduce the costs?
I mean, it's its owned production, so you bring it in house, you have your supply chain from a more local perspective.
You know, just not importing product has.
Been reducing imports. And you know, but also we were manufacturing a lot through using comen through now our owned facility and opening up our own manufacturing and making those investments.
They're starting to pay off scale.
And why do that instead of like using that extra money to I don't know, reinvest in the business, especially in an environment where all of your other competitors are still raising prices.
Yeah, I've had this debate now a few times, and you know.
I'll first say, even as a mother of four, I feel the inflation. Feel it. I feel it in grocery stores.
You see it with basic pantry products. And I think the election was a big wake up call that people were voting with their pockets.
You saw it.
Inflation is an issue, and I'm not making any product. We're feeding babies. We are making one of the most important products out there, and it should also be if you're able to, while not compromising on quality, also accessible.
Laura, you know, based on what you are doing, and we've talked to various global architectural firms who talk about designing building in Mexico or like closer or even here in the US, like Closer to Home.
I'm curious is you know.
That you show that you can kind of do it and it does impact the cost equation.
What about labor though?
What about like I'm just curious about that argument which has often been against moving things.
Back here in the United States because labor costs are so high.
I mean, look, it takes having to take several steps back. Initially, the costs are high, investment needs are big, but over time you see that returned and we have I mean, yes, our investments have been substantial, but over time, being able to centralize it, keep it close to home, have fewer steps in the process, you should be able to see costs go down.
Is it all automated?
Forgive me, because I did talk about the cost of labor, but it's how much of the process is automated.
No.
I mean, we have a lot of fabulous staff at our manufacturing facility, and you know, I will say, nothing makes you feel more patriotic than seeing the manufacturing labor who is.
Making this product one by one. It's incredible.
So this fifteen percent price reduction on your classic organic infant formula. This came recently, but I'm wondering how has business been in response to that move so far.
I'll first start just with the sentiment it's the most rewarding. You know, we didn't just roll this out for new customers. We have tens and thousands of subscribers who were receiving their product every month. They signed up for a particular price, and when we made the decision, we said, well, we're not just going to do this for new customers. We're going to retroactively change the price for our existing subscribers too.
And it builds, loyalty, love you.
We received, you know, a ton of emails and responsing They've never seen a company do anything like this.
Tell us about subscribers and subscribertion like that is your model, right, it is a model. So what have you seen in general in that kind of growth prior to the price cuts. I'm just curious since this is relatively new.
Infant formula is it's repeatable, it's predictable. But because of the infant formula shortage, there's been this PTS sty and fear over not being able.
To get totally get that and supply and you're feeding your baby.
You want to know that your product is arriving to you when you need it and that there's never going to be a gap. So one of the things we implemented was guaranteed supply when you sign up for us, So as a subscriber, even if there's ups and downs in supply chain, even if you're not able to find it at target, as a subscriber, you will always get a guarantee in your supply.
We also rolled up I did you do that? How did you do that?
Because that means you had to make sure you either had stuff in a warehouse or something.
It's modeling.
It's almost okay, I mean to put very simply, it's making sure that we're not bringing on subscribers at a race that we can't replen it.
So you would have said, maybe notice subscription if it meant that you couldn't keep that correct.
And do you know months ago we were finding that you weren't able to sign up because we were trying to catch up with supply. But if you do sign up, we will guarantee that we'll have that supply for you for.
How for how long?
For your entire journey?
Yes, And we also implemented inflation roof pricing as well, which, through this rollout of reducing prices has been a promise that even if inflation goes up, and hey, we might go in another direction where the constan of or product will go up, but we will never change it on subscribe.
How do you do that though? What if your price is double? Well, look, our prices may go up. They may.
But for our existing subscribers who signed up one day, yea, and they said I'm signing up for a certain price and I expect it not to go up, We're going to promise them it won't, but for new customers, they may.
See a change.
Okay, interesting, interesting, Hey the US election out come.
I don't know.
You run a business, You've got to be watching very closely. Everyone we talk to is just trying to kind of game this out. What are the issues that are top of mind for you as you look and get ready for a second Trump White House?
You know, I think I think in the infant formula space, we're seeing a lot of talk around making America healthy again. And I do think that there should be a bigger push on this. We've been so focused on the next election and not the next generation. What are they consuming, how we're raising standards, What is the quality of our own supply chain food nutrition?
And I am.
Watching this very closely in hopes that we're going to see a bigger shift towards a healthier country.
I'm sorry, go ahead, please.
Well, I was gonna say, maybe for people who aren't familiar with Bobby and your product, what makes it different than other baby food formula?
Purposefully sourced.
At the end of the day, infant formula needs to match breast milk, so the same carbs, proteins, and fats your baby needs to get the same nutrition. That's really important, but where those ingredients come from, the quality of both how it's produced and it's the sourcing making sure that everything from how it's extracted to where it's farmed. We are one of the only USDA organic infant formulas on the market.
Lor you know, one thing I think about with all I feel like, Emily, this may come in front of you. I know, Tim and I have a lot of conversations about this. But with climate change and how that is impacting certainly farmer's food production around the globe, how has that become more complicated if it has at all, in terms of what you guys are.
Doing, it has gotten more complicated. But I still think the uncertainty, the unknowns are ahead of us.
So we're just watching it closely.
Meaning you could get worse it could you expect it to get worse. Going back to we talked about the Trump administration, Robert F. Kennedy his nomination to lead the Department of Health and Human Services. Yes, there's vaccine skepticism by.
Some, but there's also his concerns.
As you said that you referenced earlier about our food supply and how food is made. Your knowledge and experience of going through this process co founding this company, running this company. What have you learned about how food is produced in the United States, be it infant formula or just in general.
What can you share why you know?
And I'm yeah, you did actually, And you know what's interesting about this question. At the end of the day, we have to turn to food and I feel this deeply. In the world of infant formula, creating fear and fear mongering is not a game anyone should be in.
I think it's really really important.
Availability, affordability, just access is important to the private sector, like myself. It's our responsibility to raise the bar, but we have to be very careful in how we are growing and improving standards and at the same time not having people walking around fearing everything they're picking up. So I am very hopeful that the awareness of raising the standards is out there, and.
While we're doing it, let's also.
Give each other a little bit of grace around what we're eating today.
Are the standards too harsh? Then on what goes in two baby food formulas or are they too lenient?
Another big debate we could go into for hours, and it depends on what standards you're talking about. I think from a nutrition standpoint, we should be looking a lot harder at what the latest science is. We should be trying to remove regulatory hurdles to get in new and better ingredients, and at the same time we also need to raise the regulatory barrier to make sure the quality and safety of the product continues.
To have oversight.
You want your product to be high quality and safe, at the same time, you shouldn't be compromising one for the other.
Interesting perspective.
Laura, thank you so much. Of course, are you finding all the funding you need? Can you stay private? You know, I hope so for as long as we need good stuff good stuff. Look forward to another update soon down the road. Laura Modi, co founder and CEO of the Baby Formula Company Bobby really great perspective and take on her industry, and just fascinating to see what they were able to do in terms of pricing in an environment where it's not always so easy.
And female founded and a mom led company.
Yeah, love that. Love that.