The following is a conversation between Elise Westhoff, President & CEO of The Philanthropy Roundtable, and Denver Frederick, the Host of The Business of Giving.

Elise Westhoff, President and CEO of The Philanthropy Roundtable

Denver: The Philanthropy Roundtable, founded in 1991, is America’s largest network of donors committed to protecting philanthropic freedom, upholding donor intent, and strengthening our free society through charitable giving. And here to discuss their work and some of the issues where they’re currently engaged is Elise Westhoff, the President and CEO of The Philanthropy Roundtable.

Welcome to The Business of Giving, Elise!

Elise: Thank you so much for having me. It’s a pleasure to be here.

We were founded as kind of a home for donors who want to advance liberty, opportunity and personal responsibility. We believe that people have the right to give freely and privately if they so choose, and that they should have the flexibility to give in a way that works best for them. And that that is actually what spurs generosity.

Denver: Tell us about The Philanthropy Roundtable and some of your ongoing programs that support the goals that I just described.

Elise: Absolutely. Well, we are a network of donors who are really committed to values and principles, and advancing those principles.

So, we were founded as kind of a home for donors who want to advance liberty, opportunity, and personal responsibility. We believe that people have the right to give freely and privately if they so choose, and that they should have the flexibility to give in a way that works best for them. And that that is actually what spurs generosity. So, we’re active on that front in many ways, and I’m sure we’ll be talking about that a bit more later today.

But from a program perspective, we really work to protect America’s founding principles, promote pathways to opportunity, and build strong communities. That’s the framework that we work from. So we support donors who are interested in those things through a variety of lenses, from education to health – it doesn’t really matter what area it is. We look at it through that framework and through the lens of our values and help them advance them.

Denver: My first exposure… or  I think the first time I heard about The Philanthropy Roundtable, was through the Simon Prize. Tell us about that.

Elise: Absolutely. So the Simon Prize is a prize to honor a philanthropist who really embodies the values that we just talked about and is doing really exemplary work. And we want to help highlight those philanthropists who are promoting personal responsibility, showing faith in their giving.

We’ve worked closely with the Simon family for many years. And this year, our 30th anniversary, we’re excited that we’re adding the DeVos family to the Simon Prize. So that now,  it’s a collaborative prize between the two families, which is really, really a special opportunity.

We’ve had people like Bernie Marcus honored, Paul Singer, some of the most prominent philanthropists in America who really share our values and are doing incredible work to change their communities and better their communities, and empower individuals to flourish and succeed in life.

Denver: Well, I knew there was a lot more collaboration going on in the sector, but I did not know about Simon and DeVos. So that’s a new one on me – joining forces.

Elise: This year’s prize will be really special, and I can’t tell you who it is yet, but we have decided, and we’ll be presenting it at our annual meeting in October. So, two great families in the philanthropic world coming together.

Denver: Fantastic. Well, an issue of enormous concern for the Roundtable at present is the Accelerating Charitable Efforts Act or the ACE Act. Now, the energy behind this has come from John Arnold of ArnoldVentures and Ray Madoff, who is a legal scholar up at Boston College.

And there are a number of different provisions in this, but one that maybe is central to it all and gets talked about the most is that people who’ve made a contribution to a donor-advised fund have to distribute that contribution or make a grant of it within a 15-year period in order to enjoy all the tax benefits. There’s this belief that too much of this money is being warehoused, and it’s getting all those tax benefits, but it’s not going to operating charities. Now, the Roundtable is opposed to this legislation. Tell us why, Elise.

Elise: Well, we see this legislation as really a solution in search of a problem. So, when you look at the actual data, donor-advised funds have very high payout rates in comparison to private foundations. They are giving– different studies show different payout rates depending on how you cut the data and look at it and what your methodology is.

Under any methodology, payout rates from donor-advised funds far exceed those of private foundations. So, it’s a solution in search of a problem. It’s also sort of interesting that these large progressive foundations like Ford have come together to join on to this proposal. It doesn’t impact them at all and really impacts these smaller donor-advised fund holders. The average donor-advised fund is $166,000. So it’s much, much, much smaller than these large progressive foundations that have a 5% payout requirement and can go on in perpetuity. And forcing them to spend down over a 15-year period – it just doesn’t make sense.

And we also don’t believe that putting more restrictions and regulations on donor-advised funds is going to encourage people to want to open one. And that’s what we really want to do – is get people excited about the flexibility that that tool offers so that they invest in it. I think that the whole premise behind this legislation and behind this bill is that people are using donor-advised funds as simply a tax shelter. And in reality, people are using it because they want to invest in their communities over the long term, and some quickly.

So, again, solution in search of a problem, assuming bad intentions when really people are quite committed to their communities, and the big guys telling the little guys what to do when they’re getting off very unscathed from this proposal – it comes across as quite self-serving.

Denver: So, in solutions in search of a problem, if it really isn’t a problem…. In other words, the studies that I see indicate that maybe 20% payout rate from these donor-advised funds. Most people with it aren’t going to find this legislation to be troubling at all. They’re going to say, “Well, I’m doing that already.” So, all it’s really going to do is maybe target a handful of people who have been, if you will say, keeping their money in a donor-advised fund, which is only going to provide a trigger for that small segment of people and the rest.

And I’ve talked to a whole bunch of friends who have donor-advised funds, and they’re like, “It doesn’t make any difference to me. I’m paying it out. It doesn’t make any difference.” So, if you can go after that subset who is not paying it out, why do we really care that much, and what would be the problem with the legislation?

Elise: That’s a great question. And I think what my issue is, and I think what most donor-advised fund holders or the umbrella organizations would say is that the administrative burden of tracking every single one of these small donor-advised fund accounts…

Remember, a lot of these places have very low thresholds for opening a donor-advised fund. They have thousands of donor-advised fund accounts, and to track each one of them individually would create such an administrative burden; that ultimately means less money going to charity because then you’ve got to hire all the people to track all the things when there actually isn’t a problem.

And a lot of these donor-advised funds, these sponsors don’t– they already have rules that they apply. They’re saying they have internal rules that they apply to their donor-advised fund holders. So, they may have their own requirements about not letting an account sit dormant for very long. So, it’s just an unnecessary rule that will mean huge administrative costs and actually won’t result in very much change.

Denver: Let’s talk about then the private foundation piece of this because you just said a moment ago that these private foundations are getting away scot-free, and they’re the ones who are putting the pressure on the little guy, or the mid-size guy, I guess, would probably be a better way to describe it.

But one of the pieces of this legislation is indicating that private foundations who need to meet their 5% payout rate cannot direct that money to a donor-advised fund. So, if you’ve got a million and they’ve got to pay out $50,000 of it, you can’t stick it in a DAF, which right now has no restrictions as to how long you keep it there. Would that be something that you would be in support of, or would that be something that you would be against as well?

Elise: Well, it’s interesting. I ran a private foundation–

Denver: I know. The Snider Foundation.          

Elise: –the Snider Foundation before I came to the Roundtable. We use donor-advised funds for different reasons and reasons that are legitimate. So, we supported organizations that were fighting terrorism, and there were legitimate safety concerns around that. And so, we would sometimes use a donor-advised fund for reasons of privacy, for protection. I have three little kids, and guess whose name and address is on that 990-PF? So, it’s a real reason for concern, especially in this day and age.

We also used it for grants that were off mission. There are legitimate uses of donor-advised funds. And I think that this proposal doesn’t think through all of the unintended consequences. Just during the pandemic, there were a lot of private foundations that wanted to give to their community in a very quick and nimble way. So, contributing to a community foundation donor-advised fund that helps get money out quickly into the community – I don’t think we want to discourage that kind of behavior.

So, I think what the problem with this proposal is: it hasn’t really thought through all of the downstream unintended consequences of what they’re proposing.

Denver: Is there any provision of this initiative that you think has merit or is it pretty much no-go all the way?

Elise: I think that there could be a discussion around some of the incentives that they have proposed in the proposal. But the problem is the approach, the process that they use to get here. They didn’t really bring people to the table in the way that one should if one wants to talk about all of the considerations and the downstream consequences and everything that should be considered, all the people impacted. That discussion wasn’t had. That’s our issue with it. So, the listening tour that Ray and John did didn’t result in any actual changes to their proposal, which tells me that they weren’t really listening.

Denver: You’re looking to rally some support. And I saw that there are some national philanthropic organizations that have signed a letter opposing this ACE Act. Tell us about that and who some of them are.

Elise: Yes, we’ve been very happy to see that most of our sector colleagues have come out against this. And I think some of them maybe have a slightly different position than we do, but they agree.

Denver: How so?

Elise: Well, I don’t want to speak for them. I think it’s important that each of them have their own voice in the process. But I think that the one concern that they all share is, again, the one I just mentioned, which is process. How you go about this kind of discussion is really important.

I do want to call attention to the family foundation piece of this because I worked for a family foundation. And even though it seems like a very minor aspect of the proposal, it actually concerns me very significantly that they are creating a distinction between the work of a family member and the work of a non-family member and devaluing the work of a family member unnecessarily.

There are already rules on the books on self-dealing, and there already are reasonable and necessary rules that they apply when looking at pay for foundation professionals, whether they be family or not. To create this distinction… I wonder what the next step is. It doesn’t actually accelerate giving.

Family foundations are typically much smaller than the big professional ones. Two-thirds of them have less than a million dollars in assets. And to me, it doesn’t seem to actually address anything about their goal. But if they’re trying to say that one kind of board member or one kind of staff member is better than another – that concerns me, and I wonder what they want to do with that next.

Denver: The slippery slope is what you’re really concerned about here. Not just this alone, but where does this go? And what’s the next step?

Well, this legislation has been introduced on Capitol Hill by Senator Angus King– he’s from Maine, and Charles Grassley from Iowa. And it seems to have a fair amount of bipartisan support. What is your assessment of what’s happening up on Capitol Hill right now? Are there forces to oppose this, or do you think that some version of this is eventually going to go through? What would your take be?

Elise: I think it’s unclear where…what the support of this proposal is at this point. I think people are still in a learning phase. They want more data. They want to understand why this is necessary, and they want to understand why so many of the people in the sector are opposing it. They must have a reason.

So I think people are in an information-gathering phase and trying to figure out sort of how to approach this. Senator Grassley has been involved in efforts like this in the past, so it wasn’t necessarily a surprise to us that he would sign onto this. I don’t think there is broad support on our side for this proposal. That is my take.

Denver: Let’s move on to another issue. And you recently wrote an article about the state of philanthropy in America today, and there was maybe the viewpoint expressed that philanthropy’s embrace of some left-wing ideology is, let’s say, less than constructive. Share with listeners what your thoughts were on this.

Elise: I think the Roundtable was founded 30 years ago to talk about this very thing. So this is not a new trend. Big, progressive philanthropy has existed for a long time, and they have been pushing a progressive agenda that is, some would say, political in nature.

And I think what has changed in the last year or so is the lack of discussion and the lack of ability to have a conversation about whether these things are effective or not. And this is a broader cultural issue. It doesn’t just apply to philanthropy. But philanthropy is very progressive in nature, a big piece of philanthropy is. I think philanthropy as a whole is made up of a lot of different types of givers, and 70% of givers are individuals.

So a lot of philanthropy isn’t doing this. It’s only 15% coming from foundations, and some of those are not political. But I think that what we’re trying to point out is that there’s just been a lack of discussion about what works and what doesn’t, and kind of a blind acceptance and a shutting down of conversation about what actually helps communities in need.

And so, at the Roundtable, we want to have a real dialogue about what things that we may be able to do to empower communities. And I think there are real issues to address. There are racial disparities. We want racial equality, absolutely. And we want to fight racism. That’s really important. I think some of what’s happening now is that we’re not sure that what people are investing in is actually working in order to do that best, in the best way possible.

And I think the moment we’re in is a moment we’re obsessing about things that people can’t control rather than focusing on the things they can. And I think that that is a dangerous place to be, and it’s not the world I want to live in, and it’s not the world that I want to raise my kids in.

Denver: So let’s talk about the critique you got for your remarks because it was pretty intense. People said, “Look. We have folks who are stepping up to try to make this a more inclusive society. We are trying to address systemic racism. We’re trying to imbue racial justice. And instead of accepting that, there has been sort of a sense that, well, this is leaving out rural whites and poors and things of that sort.”

So, their efforts at inclusion have been portrayed in their mind as they were being exclusionary… at least the Roundtable says that, and then there’s also this idea that philanthropic woke-ism is undermining the principle of free enterprise. So, they wrote back; they had their say about it. What was your take on all of that,  and what would your critique be of their critique?

Elise: Well, I guess the first thing I would say is the idea that Roundtable’s values have changed is just completely misguided. The Roundtable has been doing– and Denver, you know this. The Roundtable has been in existence with the same values for 30 years. And really the idea of the Roundtable has existed even longer than that.

I think there were parts of that criticism– I wish there had been more curiosity in the response about asking questions about what was meant rather than filling in blanks. In an 800-word op-ed, it’s very difficult to convey everything that you think and believe.

Again, of course, we believe in racial equality. I think the issue that we’re having now is that some of what’s being promoted is a system that creates winners and losers. And that system is going to keep changing over time. So if we’re creating now rural whites are the losers, then at some point, they have to be the winners again, and we’ve got to rebalance again.

We believe in equality. We believe in individual rights. We believe that every child should have the opportunity to get a good education. That’s why we unapologetically support school choice, whether they’re white, they’re Black, they’re Asian – it doesn’t matter. We want every human being to be treated with dignity and respect. We want to judge people on the content of their character, not the color of their skin.

And I think the moment we’re in is a moment we’re obsessing about things that people can’t control rather than focusing on the things they can. And I think that that is a dangerous place to be, and it’s not the world I want to live in, and it’s not the world that I want to raise my kids in. I want them to see people for who they are, not their gender, not their skin color, not their sexual orientation. Treat every human being with dignity and respect.

Denver: And as an individual. Looking at your values, philanthropic freedom would be one of them. Aren’t these entities just practicing philanthropic freedom? They have their values. They have their passion. They are putting their resources towards them. They’re putting their energy and influence to them. That’s kind of the mosaic that I think that the Roundtable stands for. Would that not be a fair statement?

Elise: It absolutely is. And just because someone has the right to do something doesn’t mean that we have to say they’re doing the right thing. So I’m allowed to think they have the right to do it and simultaneously criticize it.

There are many people who believe in free speech and are free speech absolutists. That doesn’t mean they believe in the speech of every person that talks, right? So, I’m allowed to criticize it. We also believe in philanthropic excellence, and we also have values. We have values as an organization that we are promoting. And so, my criticism doesn’t mean that I don’t believe they have a right.

Denver: Let’s talk about those 800-word op-eds because I tend to agree with you. I find this in an organization sometimes, that when you’re sending emails back and forth with one another, things can just deteriorate. And every once in a while, you say I better go down to their office and talk to them because a conversation would go a long way. Is there any movement in terms of getting these opposing viewpoints together to actually talk?

Elise: Well, I’m really glad that you brought that up because two things. First, even when it’s uncomfortable, I always am willing to come to the table. I’m committed to that. It’s something I believe firmly in.

I’ve had conversations with the Ford Foundation after the pieces that I wrote, and they were actually quite civil and productive conversations where we found agreement. And we also found areas where we disagreed. I listened to them, and I felt they’ve listened to me about what I was trying to say.

This is not a personal criticism. I think Darren Walker is amazing. He is a marvelous human being. He’s charismatic. He is smart. He has overcome incredible challenges to be where he is, and good for him! He is the American dream. And that’s why I love living in this country. And so, to me, it’s not personal at all. It’s just we get to two very different places when we look at his background, his trajectory, everything he’s overcome, which is amazing. And I’m not sure how that leads to “We need to dismantle capitalism and the free market system” because that’s kind of what enabled him to get where he is.

Denver: Well, I hope these conversations continue with everyone in the sector because bringing people to the table and trying to work some things out is the key to everything in philanthropy and not in philanthropy.

Let me turn to the organization, Elise, what has been the impact of the pandemic, COVID-19, on the organization, your ability to fundraise, your ability to deliver your programs?

Elise:  Well, it’s been a year of transition, and in many ways for us. I came on board in the middle of a pandemic, which was a very interesting experience. My last interview was actually on March 2, 2020. So right afterward, I accepted, and then the world shut down and changed. So, it was very unexpected. But like every non-profit, we had to pivot. We had to think about delivering our programs in different ways… obviously move things virtual.

I had to start leading a team that I didn’t know yet. Thankfully, I had some experience, having been on the board and interacted with the Roundtable for many years as a member. But leading a team that you don’t get to spend time with in person and gaining their trust is not an easy thing to do.

Denver: I can’t even get my mind around it.

What do you think you’ve learned about leadership? Because sometimes, we learn best when we are put in the most difficult situations with extraordinary constraints. And this would be one: how do I lead a team that I physically don’t even know?  But it can also help inform your leadership for the future. Anything come out of it that you think might benefit you in the long run?

Elise: What you said earlier about the long email chain, to get back and forth, and at some point, you have to pick up the phone, right? That is something I’ve always believed firmly in.  Pick up the phone; don’t go back and forth over email and get yourself into a tizzy. Just call and have a conversation.

So we’ve definitely done a lot of that. We’ve had to learn how to adjust to a Zoom kind of world. And it’s actually been helpful in a lot of ways because we were already planning to go through a lot of transitions with our website, with moving more things online, with being more public in different ways than we have been before.

So, it’s forced the issue. So, I didn’t have to make an argument that we needed to. We all had to. And I think you have to just adjust and find creative ways to get to know people and earn their trust, which is what we’ve done. And there has been a lot of change at the Roundtable. I’ve made a lot of bold decisions.

Denver: What was the toughest decision you had to make and how did you go about making it? And I know there’ve been a lot because everybody’s had a lot. I think I’ve talked to a lot of organizations, Elise, and they say they’ve made more decisions in the last year than in the previous 15 years.

So, I think this is something which is across the board. What would be the toughest one that you made, and how did you come to your decision?

Elise: It’s hard to even hone in on one because there’s just so many in the last year. I think anything that relates to personnel is challenging because it’s someone’s livelihood, and I don’t take that lightly. But I think what I’ve learned is that if you know you have to make a decision in order to execute– and we have a new strategic plan, a new, bolder direction that the board wanted us to take– you need the right people on your bus, and delaying the inevitable is not helping anybody.

So direct and honest communication, decisive, not pretending that something is going to work if it’s not – all of those things I think have been important to me for a long time. But over the last year, I’ve had to really live that out in a different way.

People became more flexible and nimble in terms of how they were approaching their giving… it was like we were going through this crisis, and everybody looked at the nonprofits as a partner versus viewing it as this power dynamic. And I think that’s really healthy.

Denver: I really understand that. You know, one of the things is that when you put off these decisions, they don’t become easier. You find out how it’s just as equally as hard, if not harder. And before you actually execute the decision, it really occupies a lot of psychic RAM because when you’re looking forward to having to make it, it can drain you because you only get the release after you’ve made the decision, and as difficult as it may be, you’ve just got to do it.

And I’ve never– when you have had to let somebody go, I’ve never heard anybody say, “I think I let them go too early.” It’s just not what you do. It’s always, “I waited too late, and I was hoping against hope for whatever, but it doesn’t change.”

So, with all that’s happened here, how do you think this is going to change philanthropy going forward in the decade of the 2020s?

Elise: Well, again, everyone had to be creative and shift. I think that’s a good thing. There was a lot of innovation that I hope that… telemedicine as an example. There were innovations in education. There were innovations in every area that we can think of.

And I think we should encourage innovation. We should be looking at problems in unique ways and eliminating any barriers to innovation. So, we shouldn’t have too many rules, and we shouldn’t have regulations on how to make change. So, we want to eliminate those barriers, and I really hope that continues.

I think that another thing that happened on the funding side, in particular, is that people became more flexible and nimble in terms of how they were approaching their giving. And they looked to their nonprofit… it was like we were going through this crisis, and everybody looked at the nonprofits as a partner versus viewing it as this power dynamic. And I think that’s really healthy because the people on the ground know what they’re doing. They’re the ones doing the work day in and day out. Listen to them. Trust them. Give them the tools they need to do what they need to do and view them as an equal.

I really hope that people carry that into the future because I think it was a positive thing that came out of this pandemic.

The thing that inspired me most was the people in their communities that weren’t millionaires, and they just looked to their neighborhoods, and they looked around them and looked at what was needed in their own communities, and they stepped up. And it wasn’t necessarily with a lot of money. It was maybe just finding a way to deliver groceries to people that couldn’t go out or didn’t have access anymore. The small things, I think, are the things that are the most beautiful and show the generosity of the human spirit and the generosity of Americans.

Denver: A partner as opposed to a contractor. And that would be the distinction.

Let me close with this, Elise. This has been such a difficult year for everyone across the globe. Looking at this through the lens of philanthropy and everything else you’ve done, what was the one thing that inspired you most? The one moment, the one story, the one thing that really just lifted your spirits?

Elise: There were so many over the last year. And I’m one of those people – I don’t often look at the big things. The big things are great. So, we had the people that were…  we got the vaccine out. Fantastic. In a record amount of time. Really, that’s huge change, and it’s really important.

The thing that inspired me most was the people in their communities that weren’t millionaires, and they just looked to their neighborhoods, and they looked around them and looked at what was needed in their own communities. And they stepped up. And it wasn’t necessarily with a lot of money. It was maybe just finding a way to deliver groceries to people that couldn’t go out or didn’t have access anymore. The small things, I think, are the things that are the most beautiful and show the generosity of the human spirit and the generosity of Americans.

And I thought that was incredibly wonderful, and I think it speaks to the people that we are. And I think we should remember this as we have these tough conversations. Americans are really good, generous people. And our tradition of philanthropy in America is unique and special, and it should be cherished. And it goes all the way from the teenager who started a new nonprofit to Bill Gates funding millions and millions of dollars a year for research that is life-changing.

Denver: That’s good. I would echo that, too, is that there does seem to be this hyper-local sense that we never had prior to this pandemic in terms of the appreciation of our immediate community. And I’ve even talked to some impact investors who have been active on the global stage, but now they’re thinking down the street much more than they ever had before.

Tell us about The Philanthropy Roundtable website, Elise, the kind of information visitors are going to find if they come, go there, and take a look.

Elise: Absolutely. So we are a We have a lot of resources for people who are interested in a variety of topics from education, to funding in health areas, to donor intent and how to protect your legacy, how to think strategically about how you want your giving to be.

We have podcasts on interesting topics. I’m starting a new show called Doers to Donors, about entrepreneurs and philanthropy. So, really just a really wide array of content. And then also information on things like policy and what the Roundtable is doing to counteract some of these proposals that are out there.

Denver: Well, thanks very much for being here today, Elise. It was such a pleasure to have you on the program.

Elise: Thank you for having me. It was a pleasure for me, too.

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