Philanthropy Must Not Support Hate

(Illustration by Jennifer Heuer) 

For more than a decade, I was president and CEO of Inland Northwest Community Foundation (now known as Innovia). In early 2017, after I had announced my goal of pursuing other interests, we discovered overwhelming evidence to deny a donor-advisor’s recommendation of a grant. He wished to award it to VDare, a charity that supports white supremacy. The board approved the grant anyway.

During my last six months as the foundation’s head, the subject became contentious with the board and foundation’s attorney, whose firm, as it turned out, was representing both the foundation and the donor-advisor who wanted to give to VDare. The scandal alerted me to the problem that donor-advised funds (DAFs) can raise for their sponsor organizations.

DAFs are the fastest-growing vehicle for Americans to set aside billions of dollars for charitable use. A DAF begins with a donor making a tax-deductible contribution to a public charity such as a community foundation or a commercial national charity (e.g., Fidelity Charitable, Schwab Charitable, and Vanguard Charitable), which then creates a separate account for the donor, who may recommend grants from a donor-advised fund to IRS-approved 501(c)(3) nonprofits.

For the contribution to qualify as a tax deduction, the donor must contractually surrender ownership over the contributions in exchange for the tax deduction. Thus, the sponsoring commercial national charity or community foundation has final authority over whether a donor-advised recommended grant will be awarded to a charity.

According to the latest National Philanthropic Trust report in the United States, there are more than 728,000 DAFs, with total DAF charitable assets surpassing $121 billion and annual grants to IRS-recognized charities from DAFs exceeding $20 billion for the first time. The great majority of these grants went to worthy organizations that improve lives. But there are also DAFs financing a growing epidemic of hate. And the culpability for enabling this heinous behavior rests squarely on the shoulders of national charities and community foundations.

Charity for Hate Groups

From 2005 until June 2017, while I was president and CEO of Inland Northwest Community Foundation (INWCF), the foundation’s assets increased by 171 percent (from $42 million to $114 million), and the total number of funds jumped 122 percent (214 to 475). More important, paralleling this growth, the foundation’s visibility, collaborative efforts, and reputation as a trusted partner improved significantly throughout its 20-county service area in Eastern Washington and North Idaho.

In August 2016, I gave the board 10 months’ notice that I would not renew my employment agreement beyond June 31, 2017. Everything was running smoothly until January 2017. Unfortunately, a seven-figure donor-advisor recommended a grant from his foundation’s DAF to VDare. I vigorously opposed the grant by providing the board with discriminatory quotes attributable to VDare, as well as numerous legal, moral, emotional, and mission-driven reasons to refuse the donor’s recommendation. I also warned board members that even though the VDare grant was recommended by a donor-advisor, it would be interpreted thereafter as INWCF’s grant to a hate charity.

The VDare Foundation (VDare) is a 501(c)(3) nonprofit whose mission is “education on two main issues: first, the unsustainability of current US immigration policy, and second, the ‘National Question,’ which is the viability of the United States as a nation-state.” It pursues this mission by publishing a website, VDare.com.

This VDare venture was launched in 1999 by Peter Brimelow, a British journalist who resides in Connecticut, after he wrote the best-selling book Alien Nation: Common Sense About America’s Immigration Disaster. The website has become popular with alt-right and white nationalist readers, who share Brimelow’s bigoted, anti-immigrant views. VDare regularly publishes articles by white supremacists, race “scientists,” and anti-Semites. VDare has defined America as “a white nation, for white people.”

After my departure in June 2017, INWCF’s board, with full knowledge of VDare’s doctrines, continued to award increasingly larger donor-advised grants to VDare (from $5,000 in fiscal year 2017 to $22,000 in fiscal year 2019). For three years, I advocated with board members for Innovia (INWCF’s name after a rebrand) to adopt a hate policy, cease awarding grants to VDare, and rid itself of a toxic wealthy donor, who was using the foundation to anonymously reinforce and finance hate.

Finally, when the Southern Poverty Law Center and the Council on American-Islamic Relations (CAIR) published their March 2020 report Hate-Free Philanthropy, which included reference to Innovia’s grantmaking to VDare, and regional newspapers ran stories on the Innovia/VDare controversy, Innovia succumbed to public pressure, drafted a hate policy, and declared that it would “never again provide funds to organizations that promote hate.”

DAF-funded hate is by no means restricted to community foundations; it is also a problem at the big national DAF sponsors. Collectively, Fidelity Charitable, Schwab Charitable, and Vanguard Charitable house the most DAF assets of all charities—more than $56 billion. Two recent studies, based on objective data and direct quotes attributable to these commercial charities, validated that they are supporting hate organizations via their DAFs.

In 2019, CAIR published Hijacked by Hate: American Philanthropy and the Islamophobia Network. CAIR identified $18 million given anonymously between 2014 and 2016 by donor-advisors through Fidelity Charitable, Vanguard Charitable, and Schwab Charitable to IRS-approved nonprofits that spread hatred toward Islam and Muslims.

In another study, Sludge, which produces data-driven investigative journalism, drew similar conclusions as CAIR’s. By analyzing the tax returns from 2014 to 2017 of DonorsTrust, Fidelity Charitable, Schwab Charitable, and Vanguard Charitable, Sludge reporter Alex Kotch discovered that these four large commercial charities donated close to $11 million via their DAFs to more than 30 anti-Muslim, anti-LGBT, and other hate groups, many of which disseminate their hate doctrines via online social networks.

Vanguard Charitable is a charitable arm of the Vanguard Group, whose assets exceed $5 trillion. According to Sludge, from fiscal years 2015 through 2017, Vanguard Charitable donated more than $2.5 million on behalf of its donor-advisors to 11 hate groups, including VDare. When asked about this issue by a Philadelphia Magazine reporter, a Vanguard Charitable strategic planning officer responded that the company “allows clients to donate money to any groups so long as that group is a ... nonprofit ... recognized by the Internal Revenue Service.” The officer added that Vanguard is “cause neutral.” 

Another example of a hate charity benefiting from commercial national charities identified in the CAIR research is ACT for America (ACT), which sees as its mission “to educate, engage, train, and mobilize citizens to ensure the safety and security of Americans against all threats foreign and domestic.” In a May 2019 statement to National Public Radio (NPR), Schwab Charitable, which donated to ACT through its DAFs, distanced itself from any responsibility regarding its grants by saying simply that it “facilitates grants on behalf of individuals to [501(c)(3)] charitable organizations of their choice.” Fidelity Charitable, another ACT contributor, also washed its hands of any accountability when it told NPR that it is the IRS’ responsibility to determine whether organizations are qualified nonprofits—not Fidelity’s.

Lack of Contrition

Commercial national charities have offered tepid rejoinders but have not fundamentally changed course. Schwab Charitable told NPR that donor-advisor grants “in no way reflect the values or beliefs of Schwab” and that the company “does not condone hate.” Similarly, Vanguard Charitable told Philadelphia Magazine that it “condemns any act of hate committed by an individual or an organization.” Yet, like Innovia, they hypocritically financed hate.

Philanthropy has no neutrality. There is only “yes” or “no” regarding a donation. When Vanguard Charitable classified its VDare contribution as “cause neutral,” it was attempting to whitewash its actions. Hate organizations have qualified for IRS 501(c)(3) tax-exempt status because they claim to be “educational” organizations, similar to zoos, orchestras, and universities. Donations from Vanguard Charitable and Innovia to VDare were declarations of support for its supposedly educational mission. The organizations were not required to underwrite VDare. 

Philanthropic organizations must realize that they are being exploited and sullied by donor-advisors who hide their identities when donating anonymously to hate groups through their DAFs. National commercial charities and community foundations are also at serious risk of being labeled accomplices with these hate charities by knowingly donating millions of dollars to support their hate doctrines and practices.

National charities and community foundations have missions to improve communities. “Community” must include, at a minimum, classes protected by US federal law—i.e., race, national origin, religion, gender, sexual orientation, etc. Therefore, donations should be awarded to nonprofits that advocate in their written policies and practices for the equality and inclusion of these classes into American society.

For philanthropy to remain true to its espoused mission and values, DAF sponsors must go beyond the IRS’ tax exempt classification for charities. Due diligence for grantmaking to a charity should include a review of the charity’s IRS Form 990, its communications (e.g., website, blogs, and message boards), and other relevant information that can be gleaned and cross-referenced from sources such as Charity Navigator and GuideStar, and watchdogs like the Southern Poverty Law Center. 

With their charters and overflowing money vaults, commercial national charities and community foundations are the ideal candidates to lead grantmaking out of this morass. Community foundations such as Innovia and national charities like Fidelity Charitable, Schwab Charitable, and Vanguard Charitable relinquish their moral authority when they partner with donor-advisors who support white nationalism or Islamophobia.

There needs to be an ongoing public awakening by philanthropic and political leaders to the risk of some donor-advisors commandeering the purest of charitable intentions by community foundations and national charities. Otherwise, one of philanthropy’s hallmarks will become its funding of hate.

Read more stories by Mark Hurtubise.