Community foundations, which have long allowed the donor-advised funds they administer to give to any nonprofit deemed tax exempt by the Internal Revenue Service, increasingly are facing scrutiny over pass-through donations made to groups seen as controversial, the Charlotte Business Journal reports.
One such community foundation, the Charlotte-based Foundation for the Carolinas (FFTC), came under pressure last August after Frank Sharry, founder and executive director of the immigration advocacy group America's Voice, urged the foundation's board to "[stop] all funding to organizations that promote anti-immigrant policies." In a letter, Sharry cited the more than $11 million disbursed by the foundation between 2014 and 2017 to groups such as the Center for Immigration Studies and the Federation for American Immigration Reform — donations largely tied to billionaire Fred Stanback, who reportedly has put nearly $400 million into donor-advised funds administered by the foundation. The grants to CIS were criticized again in November when emails from White House advisor Stephen Miller to Breitbart News showed frequent mention of the nonprofit and after the Charlotte Observer reported that FFTC-affiliated donor-advised grants to anti-immigration groups had totaled $21 million since 2006. FFTC chief executive Michael Marsicano told the Business Journal that he and board members had debated whether an impartial standard for determining whether a nonprofit is engaged in work that should disqualify it for a grant exists and concluded it does not. At an FFTC luncheon in December, none of the sixty-five major donors attending suggested it was time for the foundation to change its policy.
"We believe we can champion two values that we hold dear," said Marsicano. "We can model our values by standing against discrimination with discretionary grants controlled by FFTC and not individual donors and [through our] civic leadership work. And we can model the value of free speech with donor fund-holders and the grants they make." Marsicano and FFTC board members also pointed to what they described as the slippery slope involved in applying any such standard to every nonprofit and faith-based group.
But Aaron Dorfman, CEO of the National Committee for Responsive Philanthropy, argues that community foundations "can't pretend to be neutral when [they] are facilitating harm against certain members of [their] community. Any entity that oversees donor-advised funds that is facilitating grants to…groups that are promoting a hateful agenda against immigrants and others, it's disingenuous for them to pretend they're a neutral actor." Dorfman further noted that some community foundations have begun to factor in lists compiled by organizations like the Southern Poverty Law Center when reviewing donor-advised grants.
Marin Community Foundation president and CEO Thomas Peters told the Business Journal that his organization began checking grants against the SPLC list in 2017 but hasn't come across any that were made to groups on the list. And "[s]hould there ever be a match," said Peters, "it would be handled on a one-to-one basis with the donor. It's a reasonable judgment, it's always a judgment," Peters added, noting that FFTC's policies "are really quite industry standard....All of us operate under the same federal guidelines to a very large degree."