The following is a conversation between Kathleen Enright, President and CEO of the Council on Foundations, and Denver Frederick, Host of The Business of Giving on AM 970 The Answer WNYM in New York City.
Denver: The impact that foundations have in the field of philanthropy is even greater than the cumulative value of all the grants they make. They often provide the leadership for the sector that influences what and how things get done. One of the most important organizations in that ecosystem is the Council on Foundations, and it’s a pleasure to have with us tonight their President and CEO Kathleen Enright.
Good evening, Kathleen, and welcome to The Business of Giving!
Kathleen: Denver, thanks so much for inviting me.
Denver: The Council was founded back in 1943. What does the organization do?
Kathleen: The Council exists to help philanthropy be a strong and trusted partner in advancing the greater good. We are an advocate for philanthropy up on the Hill, so that there’s a supportive ecosystem, so that philanthropy can grow and expand. We also help support the field in displaying high integrity, and earning and maintaining the public’s trust. We do this by strengthening the bonds between funders. We represent a diverse and varied group of grantmakers, and we help them navigate the regulatory environment in the US and around the world so that they can do their work to the best of their ability.
Philanthropy happens by individuals every day… it happens in communities across the country and around the world, and it is part of what makes America unique and great.
Denver: What do you believe is the most common misunderstanding that people have about foundations?
Kathleen: Sometimes folks think that foundations are only “at the biggest of the big” – like the Bill and Melinda Gates Foundations – but foundations come in all shapes and sizes, and many of them are created in a variety of ways. Like health conversion foundations – those come out of the sale of a hospital or health system. Some are very small. And also, philanthropy does not have to be institutionalized. Philanthropy happens by individuals every day. Denver, I bet you’re a philanthropist. I bet you give money to causes that you care about; I give money to causes that I care about. So, it happens in communities across the country and around the world, and it is part of what makes America unique and great.
Denver: That’s right. And it’s not only money, it’s time as well.
Kathleen: That’s true. There’s a lot of different forms.
Denver: Philanthropy is getting a broader and broader definition in the public’s mind. Are you a membership organization?
Kathleen: We are. We’re a membership organization.
Denver: How many members?
Kathleen: We have about 720 at the moment.
Denver: Okay. And counting…
Kathleen: Yes. I was going to say, “I didn’t check today.”
…at the very heart of it, we have to take into consideration the fact that philanthropy itself comes out of the fact that there is economic inequality. Philanthropy is a product of economic inequality.
Denver: Well, a few of the issues that the Council on Foundations is engaged, let’s talk about a couple of them. One would be economic inclusion. That’s becoming increasingly important. We sometimes think that it happened right downstairs where Zuccotti Park is because that’s where Occupy Wall Street was, and although sometimes people looked at that as being kind of an “eh,” it really did set off this whole thing about economic inclusion. What are you doing in that regard to help engage the foundations and your members to try to be a more active partner in that?
Kathleen: There’s a lot of different ways that our members are working on that. Some of them are doing more traditional work related to access to jobs, sustainable wages, et cetera. And so, we are helping them learn from one another. But at the very heart of it, we have to take into consideration the fact that philanthropy itself comes out of the fact that there is economic inequality. Philanthropy is a product of economic inequality. So, we’re trying to help explore the fact that that exists and that we need to take a very deep look at what that means, and whether and if philanthropy needs to take a broader approach at addressing it.
Some of our members are more interested in Opportunity Zones at the moment; The Rockefeller Foundation is one of those. They’ve been very seriously trying to make sure that opportunity zones are community-driven and that they are really benefiting those that they’re intended to serve, rather than seen as tax write-offs for those who make the investments there. And so, that’s one way in which some of our members are taking advantage of a federal government program that’s trying to decrease the economic inequality.
… there is a sense that some of these deeply entrenched societal problems are not going to move forward unless we look at them from the perspective of: Where might there be common ground? Where might many of us agree on what some of the solutions are?
Denver: You know, Kathleen, that as a society, we pretty much have stopped talking with people who disagree with us; rather, we’re talking at them. And now, people are looking to philanthropy to say, “Is there something that we can do to help build bridges?” Speak a little bit about that.
Kathleen: I think that’s something that our members are thinking very, very carefully about, and I am personally committed to finding ways for the Council to serve a role there. One of the unique values that I keep hearing that the Council can provide – given that we are seen as such a big tent, and we are nonpartisan, and we convene foundations who might be seen as supporting causes that might be more right-leaning and more left-leaning – that we can possibly help our members have conversations across difference that can lead to more productive solutions.
So, we have been dipping our toes in that water and supporting some of those conversations. We released a report alongside the Kettering Foundation earlier this year at our conference that shares some early insights along those lines. But our members are modeling some of the way forward. The Koch Brothers Foundation – they’re not a member at this moment, but they have been working on criminal justice reform with what others might characterize as more left-leaning foundations who are working on criminal justice reform.
Denver: They’ve been champions of that, really, for a long time now.
Kathleen: Exactly. And so, I think that there is a sense that some of these deeply entrenched societal problems are not going to move forward unless we look at them from the perspective of: Where might there be common ground? Where might many of us agree on what some of the solutions are?
Denver: And I think sometimes what we do is we spend too much time analyzing their motivations. And at the end of the day, as you just said, if you can find that common ground and get stuff done to improve a condition, that’s what really counts.
Kathleen: Yes. Exactly.
One of the ways that we’re trying to advance that work is to help people see that this is not just an international issue, it’s a domestic issue; that you can incorporate the Sustainable Development Goals into your citywide strategy.
Denver: You have your toes in a lot of pools of water. One of those would be the Sustainable Development Goals. Obviously, philanthropy has to play a role in helping meet those 17 goals put forth by the UN. How have you been working in that regard with your members there?
Kathleen: Several of my colleagues were just up at the UN General Assembly and meeting with many of our members to advance that work there. The Hilton Foundation has been a real leader in advancing the Sustainable Development Goals over many years.
One of the ways that we’re trying to advance that work is to help people see that this is not just an international issue, it’s a domestic issue; that you can incorporate the Sustainable Development Goals into your citywide strategy. Community foundations are often taking some leadership there and thinking through: How do the Sustainable Development Goals apply to our local area? How can we play a role in incorporating them into our thinking and into our community plan?
My sense, though, is that for many grantmakers who are just getting started, thinking first about getting brilliant on the basics of doing the grantmaking makes a lot of sense… before you veer off into the worlds of those kinds of investments.
Denver: We have had a number of CEOs from foundations on the show, such as F.B. Heron, the Ford Foundation, the Surdna Foundation. And those, among others, are really in the forefront of impact investing and program-related investing. How much is that spreading across the foundation world?
Kathleen: In the course of my time in philanthropy, Impact Investing – using the 95% of the assets, in addition to the 5% or therein… around that amount of grantmaking – has really transformed the way that grantmakers are thinking about their work. Heron has been a huge leader on that front under Clara Miller’s leadership and others. I think that it is expanding greatly. My sense, though, is that for many grantmakers who are just getting started, thinking first about getting brilliant on the basics of doing the grantmaking makes a lot of sense–
Denver: Yes. Getting some of the exotic ways…meat and potatoes down first.
Kathleen: –before you veer off into the worlds of those kinds of investments. It makes sense to just ensure that you’re doing right by your grantees, that you’re setting up grants in the way that makes the most sense for them, that you’re streamlining reporting requirements, that you’re opting for general operating support, all of those kinds of things.
Denver: And an interesting byproduct of that… I remember Clara spoke about that, is that within her own organization, when they did that 100% commitment of all their assets to doing social good, she said it broke down the silos in the organization, that the investment people and the program people would meet at the Christmas party, and now they were working together and really helping each other. So, there’s a lot of benefits that come from that, both externally and internally.
Kathleen: Certainly, and I’m not at all trying to dissuade any foundation from going down that path. I just think there’s a time and organization life cycle when it makes sense.
Denver: I can’t agree with you more.
Philanthropy has become more global, both in terms of cross-border grantmaking and really applying a global perspective to what we’re doing here at home. What are you able to do there to assist?
Kathleen: The Council’s role has been, for several years, to support US-based grantmakers as they do work abroad. Since I took this job seven months ago, I’ve heard from many of our members and others that they’ve really appreciated the work that we’ve done, particularly post 9/11, to help them respond to the increasing regulations and requirements of doing grantmaking overseas. So, we are committed to continue to support grantmakers in those lights.
And additionally, we are hoping to figure out the ways that we can learn from those emerging civil societies overseas and the foundations that are growing up in many different countries. I’m sure that there’s plenty that philanthropy in the US can learn from the philanthropic organizations in many other countries.
The people who bear the brunt of the risk related to foundations are those who are either well-served or ill-served by the investments that foundations decide to make or not to make.
Denver: Share with us your observations and insights around risk… because people sometimes look at foundations as being the passing lane of society; they can roll the dice a little bit more. On the other hand, you hear people say, “They can be some of the most conservative organizations,” and I don’t mean that in the political sense. What do you see?
Kathleen: The bottom line for me on risk is that the way that people define risk related to philanthropy is often wrongheaded. The people who bear the brunt of the risk related to foundations are those who are either well-served or ill-served by the investments that foundations decide to make or not to make. So, in the highly publicized investment by Mark Zuckerberg in the Newark public schools, it was not Mark Zuckerberg who bore that risk; it was those kids who were not well-served by the way that that investment went down.
Foundations think about reputational risk and financial risk and are they going to get return on their investment and all of those sorts of things, but it is the people who are marginalized, it is the people who are underserved, it is the people who are not getting the value out of the public resource that has been tax-advantaged… because the person has gotten a charitable tax deduction based on giving it… it is those people who bear the brunt of us making less than well-thought-through investments.
So that’s how I think about risk and philanthropy, and I’m hoping that if it gets flipped on its head, sometimes the risk is stronger to not do something than it is if we go ahead and do it.
Denver: I hear you. Some big news in your world recently where those five large foundations – MacArthur, Hewlett, Ford – who basically are going to try a set of practices and commit more of their money to overhead, to administration, to programs that will make the nonprofit organization, the grantees, more effective at what they’re doing. End that starvation cycle. Do you think this is going to take off or not?
Kathleen: Oh, Denver. This is a generation-old conversation—
Denver: The overhead myth.
Kathleen: —that I’m hoping will finally find some momentum. Before I came to the Council on Foundations, I ran a group called Grantmakers for Effective Organizations that has been a champion of both full cost funding and general operating support for decades. I’m very glad that these foundations have decided to go public and to fund in this way.
But the fact that foundations don’t do it already feels unconscionable; that foundations pick and choose which costs they think are appropriate and inappropriate feels paternalistic and isn’t something that they would do… that these business people who made their money in any enterprise would do as they were building their business… so why would they do it as they’re trying to fund work that is, by orders of magnitude, more difficult than the work that they did to make their money?
Denver: Yes. I don’t think any CEO in a business has gone into the boardroom and people said, “How much did you spend on training this month?” It’s just not the issues. They want the bottom line. They want the end product of the impact and not how you got to the impact, as long as you did it in an ethical and a conscientious fashion.
Kathleen: That’s exactly right.
Denver: Over this past summer, you sent a letter asking readers to help you renew the Council’s vision and the value to the field. What are some of the things you heard, some of the things you’re considering, maybe even some of the things you’re acting upon?
Kathleen: Thanks for asking, Denver. And that’s why I’m in New York. It’s because I was doing one more listening session with New York grantmakers. We are hearing terrific themes. One theme, very clearly folks have told us that we need to continue to be a policy voice in Washington, D.C. on behalf of the sector, and that, we will clearly do.
Denver: What’s at the top of that agenda at this moment?
Kathleen: Tax reform really hurt charitable giving. The numbers are clear now, that when tax reform doubled the standard deduction, it reduced the number of itemizers, and therefore, it has reduced charitable giving. So, we want to help increase the incentives for charitable giving again and not just for those who are in the highest income groups. So we’re pushing hard to create those incentives, either through a universal charitable deduction or charitable credit. So that is a top policy objective for us.
But back to the vision, in addition to being a policy voice on the Hill, folks are asking us to be a leadership voice for the sector. So when there are misconceptions about what philanthropy is and the good that it does in society, that we can provide that leadership voice and bust through some of those misconceptions.
Denver: Do you feel that the Council is ready to assume that role? Or do you have to do some things internally to say, “We got to step up. This is a big responsibility.”
Kathleen: I think column B. We are getting there.
Denver: Well, that’s self-awareness. That’s always good.
Kathleen: There’s definitely some internal work that we need to do, but reputationally, the Council is ready. Our members are asking it of us. So, I think the field wants us to do it, and we are building the internal strength to be able to get there.
But that’s not the only thing that our members want us to do. They are also asking us to help decrease the polarization, to bridge those divides, and to lead on some of those conversations. They’re also asking us to help professionalize the field by providing some of those learning opportunities for their leaders and their emerging leaders. So that’s something else that we’re looking to do; and also, to support collaboration. So, many of the themes that you’ve already brought up with me here are the themes that our members are asking for us to lean into.
Denver: And I would imagine also, they probably had some say in wanting a little bit of a new membership model, which you have implemented. Give us a highlight of that.
Kathleen: That was a clarion call from the members. Before I was hired as CEO, the board did a lot of listening, and a key complaint was that the previous membership model didn’t feel fair. And so, right when I came on board, we convened a member committee and did a lot of listening, and have structured a new membership model built on transparency and fairness and inclusion. And so, we’ve rolled it out, and that’s why I don’t know our membership numbers exactly because it’s going up because new people are joining on a daily basis, which is very, very good news.
We built the model to honor the different kinds of philanthropic organizations that exist. These are not organizations that have everything in common. Family foundations, private foundations, community foundations, and corporate grantmakers are very distinct and unique in how they’re set up and where their money comes from, and therefore, they needed different dues models. And so, we structured it that way this time.
Denver: You came into this current role less than a year ago, after 17 years as CEO of Grantmakers for Effective Organizations. How do you balance showing the appropriate respect and reverence for a 75- year-plus institution, at the same time trying to give it a little bit of a charge, and dust it off and give it a facelift at the same time? That’s always a very, very tricky proposition for a new CEO. How do you think about it?
Kathleen: The great news is that this is what the board was asking for, and this is what the field was asking for. So, this is not my agenda that I’m coming in with; this is what the stakeholders are requesting of me. So, there is a lot of strength to build from with the Council. People feel a very close connection. I hear people say “I’m glad to come home to the Council” when they rejoin. People have told me some of their most meaningful professional development experiences of their career were had at the Council. So, it makes me proud to be in this role and to try to create that next generation of leaders who are able to say that to whatever future CEO replaces me 20 years from now.
I think that the critics – we should listen to them very carefully because there is certainly truth in their criticism. The insularity of philanthropy, the fact that we have not listened as carefully and well to those that we serve and integrated their voices in our decision-making, is valid.
Denver: Twenty years. Well, I was looking for the timeline of how long you plan to stay in this role. I got the answer. Three more than the last one, I guess.
Let me close with this, Kathleen. Foundations, like any other institution, come in for their fair share of criticism. What part of that criticism do you think is really justified, and we need to step up and do a better job? And what part of it do you think might be a little misguided and unfair?
Kathleen: Yes. Absolutely. I think that the critics – we should listen to them very carefully because there is certainly truth in their criticism. The insularity of philanthropy, the fact that we have not listened as carefully and well to those that we serve and integrated their voices in our decision-making, is valid. It’s something that we need to think very carefully about and do better at. In fact, there’s an effort in philanthropy called The Fund for Shared Insight—
Denver: Yes. They have been on the show.
Kathleen: —that is directly on that issue. They have? Excellent! Melinda Tuan or—
Denver: Melinda Tuan was on the show.
Kathleen: Terrific! They are working very hard to help move that work forward, as does GEO and The Center for Effective Philanthropy. So many in our sector are trying to build those feedback loops and build the opportunity for engagement and inclusion of those that we are trying to serve. So, that is a justifiable charge, and we need to work harder.
Denver: Beneficiary feedback. Who would have ever thought?
Kathleen: It seems straightforward. But some folks don’t take it as seriously as they should; they don’t integrate it as deeply; they do it in a surface level way – all of those kinds of things.
The things that are possibly less valid are painting philanthropy with a very broad brush, presuming that we are monolithic, that we are the privileged trying to protect our own privilege. I think one thing that Anand Giridharadas is known to believe—
Denver: Winners Take All, the author.
Kathleen: Yes, the author of Winners Take All – is that that many philanthropists are doing their philanthropy kind of as cover for the ills that they’re doing and their—
Denver: Sort of the greenwashing type of—
Kathleen: Yes. These are not the philanthropists that I have met and know over my almost 18-year career in philanthropy. So, he is bumping up against a very different caliber and set of people than the hundreds, if not thousands of philanthropists that I have had the privilege of engaging with over my career.
Denver: Well, I think there are a lot of authors out there sometimes who think they’re mind readers, and they know the motivation inside of all these people, and they’re going to tell you what it is, even if the person doesn’t know what it is.
Kathleen: That might be true. Or that their inferences may not be correct.
Denver: Well, Kathleen Enright, the President and CEO of the Council on Foundations, I want to thank you so much for being here this evening. What is your website, and what information do you have there that you think visitors might find of interest?
Kathleen: It’s cof.org. You can find amazing information about the legal guidance related to philanthropy, a lot of information about how to structure foundations, anything about 101 guidance around philanthropy and foundations – go there. And a lot of links to our peers and partners. There are incredible philanthropic-serving organizations beyond the Council on Foundations that might also be terrific references for you.
Denver: Well, thanks, Kathleen. It was a real pleasure to have you on the show.
Kathleen: Thank you, Denver.
Denver: I’ll be back with more of The Business of Giving right after this.
The Business of Giving can be heard every Sunday evening between 6:00 p.m. and 7:00 p.m. Eastern on AM 970 The Answer in New York and on iHeartRadio. You can follow us @bizofgive on Twitter, @bizofgive on Instagram and at www.facebook.com/businessofgiving.