Twenty-five foundations and other philanthropic entities on Tuesday issued a call to urge organizations that house donor-advised funds to enact policies that prevent donors from earmarking grants to nonprofits that are considered hate groups and to urge supporters to demand that their DAF providers adopt such policies.
The campaign, called Hate Is Not Charitable, was the brainchild of the Amalgamated Foundation. Anna Fink, the foundation’s executive director, said it wants to change the industry standards that guide organizations that house DAFs.
“Our goal is really to build a dialogue and a coalition with donor-advised-fund providers who are willing to take this on right away and insert some accountability into the sector,” said Fink.
She said she was spurred to take action after seeing a news report about the millions of dollars donors are giving anonymously to hate groups through donor-advised funds.
The Amalgamated Foundation is a charity affiliated with Amalgamated Bank, a financial institution that is majority-owned by Workers United, an affiliate of the Service Employees International Union.
Privacy and Anonymity
Donors give to the advised funds in part to get an immediate tax deduction on money they can give away over time, but many also like the privacy the funds offer.
Unlike a private foundation. which has to file tax forms that disclose the names of its donors and the nonprofits it supports, people who give through DAFs can keep their names confidential and make anonymous grants.
Donor-advised-fund providers at big financial firms like Fidelity, Schwab, and Vanguard have historically shied away from imposing restrictions on which nonprofits their clients should support and usually say they will provide money to any organization that has charity status from the IRS, which is true of some hate groups, according to a Chronicle study.
Fink said her foundation did not contact those firms directly about the new campaign. Instead, her team hopes that the involvement of DAF providers in the Hate Is Not Charitable campaign (including community foundations that house DAFs and donor groups like the Women Donors Network) will spur other providers to adopt stricter guidelines.
“We had to start somewhere and wanted to start with allies who felt similarly that this was a critical issue,” said Fink. “It really gets at the larger issue of the responsibilities DAF providers have.”
She also said she hopes that making the effort public will spur large DAF providers created by financial institutions to enact new policies on their own or adopt the policy Fink’s team created to guide Amalgamated’s donor-advised funds.
Requirement to Give
Amalgamated started to offer donor-advised funds in April and currently houses about 30. Those funds have given out a total of $2.5 million to charities so far, said Fink. It differs from other providers in requiring donors to give at least 10 percent of their accounts to charities each year.
In crafting its policy, Fink said the foundation worked with legal and nonprofit experts, as well as activists like Change the Terms, who are trying to eliminate internet activities considered hateful, and the National Committee for Responsive Philanthropy, an advocacy and watchdog group.
Whether the big financial firms that house DAFs will adopt Amalgamated’s policy or create stricter guidelines of their own is uncertain. Many rich donors the firms work with do not want to be told which nonprofits they should and should not support.
“Nobody’s trying to tell anyone what to do, but there is a need for responsibility among DAFs to do due diligence before making any kind of grant,” said Fink. “It’s not a particularly high bar to exercise due diligence around hate groups.”
Providers Respond
When asked about its policy, a Fidelity Charitable spokeswoman responded in an email that its “policies and procedures have always required that grants are made only to qualified charitable organizations and that funds are used exclusively in furtherance of charitable purposes.”
Vanguard Charitable said in a statement that when its donors recommend a grant, “Vanguard Charitable follows a strict grant review and approval process to ensure compliance to IRS guidelines.”
Schwab Charitable provided a statement that said the firm does not condone hate groups.
“We take concerns about illegitimate activity by grant recipients seriously and follow a strict review and approval process for all grant recommendations in order to ensure that grant dollars are used only for qualified charitable purposes and go to an organization whose mission is entirely charitable.”
Through the statement, Schwab officials said they make sure a charity is not being investigated for illegal activity and that they may ask a recipient charity to return the money or terminate the account holder’s advisory privileges if they find out a grant was made for an “improper purpose.”
Corrections: A previous version of this article said the Amalgamated Foundation is a grant maker rather than a charity. Also, it said Fidelity Charitable did not respond to a request for comment. A spokeswoman for Fidelity Charitable did, in fact, leave a voice mail for the reporter. The story has been updated with a comment from Fidelity.
