Lydia Brimelow, VDARE, May 1, 2019
A new battle against patriots has emerged—and it’s more insidious than the direct hits we’ve gotten thus far. Corporate Cultural Marxists are stealing money right out of the hands of donors and using it however they please—and, technically, it’s totally legal.
This swindle exploits the fastest-growing method of charitable giving in America—Donor Advised Funds (DAFs)—to take control of, and then redirect, charitable dollars intended for patriotic causes.
Some of VDARE Foundation’s most generous donors have supported us with pass-through donations via DAFs. Many more are incorporating DAFs into their estate plans.
It has become clear that this mode of giving is dangerously unreliable for donors intending to give to patriot causes.
The risk is so great that even mainstream experts are advising the avoidance of Donor Advised Funds altogether:
- Not all donor-advised funds are created equal, by Iain Bernhoft, Philanthropy Daily, May 3, 2018
- Charitably Infidelity: Are DAFs Secure for Ideological Giving?” by Hayden Ludwig, Capital Research Center September 20, 2018
- Are Donor Advised Funds Safe for Conservatives, by Jason Barbour, Young Americas Foundation, Libertas, Winter 2019
DAFs are legal entities that hold obvious advantages for donors: giving can be timed to maximize tax benefits; they expedite the process of giving property and complex assets; they are exempt from mandatory disbursement or disclosure requirements, theoretically offering donors a level of anonymity if desired; they handle the red tape.
A DAF is controlled in its entirety by a 501c3 tax-exempt “sponsoring organization,” for example Vanguard Charitable or a local community foundation. The sponsoring organization is required by law to use the money for tax-exempt purposes. Once the donor hands over his money to the DAF, he becomes an “advisor” and can recommend that the sponsoring organization send donations to other non-profit organizations (like VDARE.com!) at will.
Obvious advantage for the sponsoring organization: the fees on the funds they manage.
In the last five years, charitable contributions from DAFs have grown some 200%, while overall charitable giving has grown by only 21%. In 2017, donors contributed $29.23 billion to DAFs and used them to recommend $19.08 billion in donations to charities around the world. Charitable assets in donor-advised funds totaled $110.01 billion, a record high, passing the $100 billion mark for the first time. (See the National Philanthropic Trust’s 2018 DAF Report, released November 13, 2018.)
But serious problems have emerged with this tempting arrangement.
- For one thing, the benefit of anonymity, as it turns out in the case of Fidelity Charitable, is not as complete as one might assume. According to Capital Research’s Hayden Ludwig, cited above, Fidelity Charitable Gift Fund shared confidential information about some of its accounts with the IRS, ostensibly for “forecasting.”
But more on Fidelity later.
- Another problem: sponsoring organizations benefit from DAFs because they generate significant income and fees on assets. This creates a conflict of interest. The longer the sponsoring organization holds on to the money, the more it earns.
- When a DAF disburses money, the money must, by law, be given to charitable causes. But the law does not spell out when or where those monies must be disbursed. Result: the DAF has lots of ways to hold on to it.
It all comes down to ownership. At the end of the day, when you give money to a DAF, the donor-advisor (you) has relinquished control of that money. Period.
This isn’t just a hypothetical risk. Here are some real examples of flagrant thwarting of donor intent by DAFs:
- In the fall of 2017, a long-time reader of VDARE.com who has been a consistently generous donor for years, decided to increase his gift. Before this time, he had given donations through his Donor Advised Fund with no problem. This time, however, the fund administrators kicked up a fuss, claiming that GuideStar, a service that reports on non-profits, didn’t rank VDARE Foundation high enough. (We don’t know why). Only after legal intervention was the donor-advisor’s wish honored.
- That same year, a DAF called The Jewish Community Foundation refused to release a donation from donor-advisor Lisa Greer to a progressive group of young Jewish activists called IfNotNow that advocate against the occupation of the West Bank. It doesn’t appear that this was ever resolved. [Jewish Federation Challenged on “Hate Grants” Facilitated through Donor-Advised Funds, by Ruth McCambridge, Nonprofit Quarterly, March 29, 2017]
- Also in 2017, a DAF called Community Foundation for the Central Savannah River Area came under fire in the Los Angeles Times for not exerting “final control” over pass-through donations directed to Demon King Richard Spencer’s National Policy Institute.[ Georgia nonprofit says it unwittingly gave $25,000 to white nationalist Richard Spencer, by Matt Pearce, March 20, 2017]
- Fidelity Charitable is the top DAF in the country with a reported $3.5 billion in annual revenue in 2016. But it has three known strikes on its record of honoring donor intent—all focused on vetoing contributions to right-of-center causes.
The first, Illinois Policy Institute, was bounced for being “too political” for Fidelity Charitable’s taste, despite having received nearly $1.3 million in fourteen grants from Fidelity Charitable on previous occasions.
Both donations were eventually disbursed. But still outstanding: as of this writing, a donation to our own VDARE Foundation is being held by Fidelity Charitable “under review”—with no explanation.
The situation is developing, but, as Philanthropy Daily’s Iain Berhoft reports (emphasis in original):
Fidelity Charitable Trust president Pam Norley commented that FCT monitors recipients not just for legal compliance but also for bad publicity. If a recipient appears on the Southern Poverty Law Center’s Hate Groups List, Fidelity will notify donors, but will still make the donation if the donor requests it.
The bottom line, however, is that Fidelity is under no legal obligation to do so. Once a donation has been made into a DAF, the donor can only “advise” how they are disbursed (hence the name). He or she has no legal rights beyond the “right” to make recommendations.
These are cases of sponsoring organizations refusing to honor donor intent during the donor’s life, and in the context of a booming DAF industry, these instances rare. After all, the sponsoring organization wants to encourage the donor to continue to give in an ongoing way to the fund, both in life and through his estate.
However, once monitoring the donated assets is no longer possible, lack of ownership of the fund can jeopardize the donor’s clearly-stated wishes.
Incredibly, even a major Beltway Right group, Young America’s Foundation, suffered a DAF refusing a bequest by a donor advisor despite his longtime support of YAF and very clear intent. It took two former U.S. Attorneys General, Ed Meese and John Ashcroft, to weigh in before the disbursement was made. (See Are Donor Advised Funds Safe for Conservatives, by Jason Barbour, above.)
There has been a distinct trend in recent years for the wishes of the deceased not to be honored and estate assets not to given to the intended recipients. There is reason to believe this trend will metastasize in the future—affecting even donor-advisors, like those listed above, who actively monitor their funds.
Why might a DAF consider withholding a gift? As YAF’s lawyer Kimberly Begg put it:
The gift in question was a substantial amount of money, capable of generating significant income and fees that benefited the sponsoring organization. Institutions rarely act against their self-interest, absent external influences. When there is no legal obligation for the sponsoring organization to honor the gift, and death prevents a donor from objecting to his intent being thwarted, hoarding is incentivized, not disbursal.
But scamming fees out of powerless and well-meaning philanthropists isn’t the only issue—it may not even be the biggest. There is something more sinister going on.
America’s Emerging Totalitarian Left is deeply implicated in orchestrating political pressure against financial institutions of all kinds.
- Taking the lead, in its usual treasonous way, is the $450 million Southern Poverty Law Center ($PLC), which according to YAF’s Barbour, succeeded in pressuring Amazon Smile, Vanco Payment Systems and Wells Fargo to block donations to “reputable conservative organizations” that it libelously labeled “Hate Groups.”
As seen above, the $PLC’s Hate Groups List smear is a blackball for the largest DAF in America, Fidelity Charitable.
- In a strong second, the $14 million Human Rights Campaign is in its 16th year of pressuring businesses to refuse service to patriot organizations through its “Corporate Equity Index.”
This index ranks thousands of public and private companies and law firms on compliance with its radical agenda “pertinent to lesbian, gay, bisexual, transgender and queer employees.” Affiliates of three of the largest DAFs receive a perfect 100% score for implementing “internal requirements” for prohibiting philanthropic giving to patriotic organizations.
Significantly, several law firms have cited fear of jeopardizing their 100% Corporate Equity Index score as the reason for blocking the pro bono representation of reputable conservative and patriot groups. (VDARE.com’s long-time pro bono patriot lawyer was forced to quit by his white-shoe law firm—that’s one reason we’ve had to set up our Legal Defense Fund.) So much for John Adams.
- BloodMoney is a project of Color Of Change , which has more than $3 million in yearly revenue and $2 million in assets. Color Of Change was co-founded by CPAC 2019 special guest (!) Van Jones.
BloodMoney’s mission is to halt financial services and credit card companies from processing donations to alleged “Hate Groups” a.k.a. American patriots. Although BloodMoney doesn’t have an explicit relationship with the $PLC, its proprietorial list of “Hate Groups” is suspiciously similar. On its website, BloodMoney brags about removing 158 funding sources from 123 “white supremacist” organizations. Who those organizations are, and what funding sources they’ve “removed” isn’t clear. But you can be sure DAFs are on their radar.
- Sludge.com is a Leftist thug group masquerading as a news site. Journofa Alex Kotch [Tweet him]has a particular fixation on DAFs who honor donor intent when disbursing funds to patriotic causes.
In a three-part series, Kotch has attacked the anonymity that DAFs theoretically afford donors:
Several charitable gift funds, including the largest charity in the United States, are helping dozens of hate groups raise millions of dollars by giving their donors a way to keep their identities secret.
This is, needless to say, total hypocrisy—Sludge.com itself is funded by cryptocurrency, keeping donor identities secret. (Give to VDARE.com via cryptocurrency here!)
The rhetoric used by these thug groups is familiar to anyone who has followed patriot deplatforming and financial blacklisting trends in modern America. Leftists target non-political institutions and frame normal business dealings as explicitly political acts. For example:
With the dramatic escalation of violence and intimidation by white nationalists and right-wing extremists, it’s way past due for sponsors of donor-advised funds to cut off any dollars flowing to hate groups,” said [President and CEO of the National Committee for Responsive Philanthropy Aaron] Dorfman. “They have every right to exercise discretion by refusing a donor’s request to fund a hate group. Just as companies have come under pressure to deny those groups financial and technology platforms following Charlottesville, the Tree of Life massacre, and now New Zealand, foundations should similarly deny them philanthropic services. It’s more than just a best practice, it’s common decency.”
America’s Biggest Christian Charity Funnels Tens of Millions to Hate Groups, by Alex Kotch, Sludge, March 19, 2019
Several charitable gift funds, including the largest charity in the United States, are helping dozens of hate groups raise millions of dollars by giving their donors a way to keep their identities secret…
‘This is really a choice by the [donor-advised fund] company whether or not they care about where these funds end up,’ said SPLC’s Beirich.
America’s Biggest Charities Are Funneling Millions to Hate Groups From Anonymous Donors, by Alex Kotch, February 19, 2019. [Link added]
- In response to Kotch’s Sludge.com attacks on DAFs, The Amalgamated Foundation, a donor-advised fund provider linked to Amalgamated Bank, publicly launched its “Hate Is Not Charitable” campaign in 2018.
The purported intent of the Hate Is Not Charitable campaign is—according to their web page, which links directly to the Sludge attack—to encourage DAFs to “exercise their legal discretion over grants made by donor advised funds and reject donor recommendations to organizations engaged in hateful activities,” and to encourage “donors of conscience” to “demand their donor advised fund providers enact policies to ensure charitable resources do not flow to hate groups, or to move their donor advised funds to a provider who is willing to do so.”
In fact, of course, the actual intent is to cripple patriot resistance and impose Political Correctness throughout the U.S.
Typically, targeted entities fold immediately. Former National Review editor John O’Sullivan once said that any organization that isn’t explicitly right-wing becomes left-wing over time. That rule can be extended financial institutions too. And the time it takes for their leftward evolution to be complete gets shorter and shorter every day.
This is especially true when a DAF is a niche foundation created to benefit a particular locality or single issue, rather than advancing a supporter’s patriotic worldview. It is a serious mistake to think that an institution with no history of supporting patriotic ideas will begin doing so upon receiving a gift from an individual who cannot legally control, and in the case of bequests, cannot even monitor, the use of that gift.
I should say at this point that there are examples of DAFs who claim to be unafraid of right-of-center causes. DonorTrust has even published a response to Young America Foundation’s anti-DAF warning.
But these organizations remain untested. And they espouse values completely in line with Conservatism Inc., which has never failed to stab patriots in the back when it really matters.
So what is to be done?
- First of all, patriots should avoid donor advised funds or any other giving arrangement that delegates decision making to a Third Party.
Donor Advised Funds are particularly dangerous because they are owned and controlled not by the donor but by institutions—who are open to Leftist pressure and benefit from the growth of fund assets.
- Give directly, not through Third Parties.
Make current gifts and straightforward bequests to organizations with a track record of advancing your ideas.
Alert the recipient of your gifts so they are aware of them, and provide appropriate paperwork to reflect your intent. That way, if any unforeseen roadblock appears in the disbursal of your gifts, your chosen organization has evidence to argue its case.
Advance review of estate plans can protect intent and avoid costly litigation. If given the opportunity to review these plans in advance, perhaps amendments could be made.
If you already have a Donor Advised Fund, exercise your influence as the “advisor” to make gifts to spend down your Donor Advised Fund.
Include a Sunset provision to dissolve your fund after a set number of years.
Designate trusted organizations as beneficiaries of your account—and inform beneficiaries of your plans so they can follow up with the sponsoring organization when you are gone.
If your goal is to avoid having gifts spent all at once, choose endowments at organizations you trust over Donor Advised Funds controlled by Third Parties. Ask your recipient organization to report on the use of your endowment to future generations of your family.
We must do everything we can to protect America today.
Many of America’s most dedicated patriots partner with VDARE Foundation to keep America American.
[Editor’s Note: A native Texan, Lydia Brimelow [email her] graduated from Loyola University Chicago in 2006. She is fundraiser and office manager, lion tamer, fire extinguisher and miscellany handler at VDARE.com. She and Peter married in 2007 and have three daughters together]