Backlash to Big DAFs' Decision to Cut Off the Southern Poverty Law Center - Chronicle of Philanthropy review
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Backlash to Big DAFs' Decision to Cut Off SPLC
Following the federal indictment of the Southern Poverty Law Center, major donor-advised fund sponsors capitulated to the demands of the Trump administration, say community foundation and philanthropy leaders.
On Thursday, 60 leaders and institutions signed a letter decrying the indictment of the civil rights group and chastising the three DAF sponsors, which are associated with Fidelity, Schwab, and Vanguard, for freezing donations to the embattled nonprofit.
The pushback is a show of resolve against perceived overreach by the Trump administration and a signal that the signers won’t be intimidated like “financial institutions and other intermediaries critical to charitable work,” as the letter states.
The episode lays bare a crucial aspect often overlooked about donor-advised funds. When donors give to an account, they may advise where that money ultimately goes, but the sponsoring organization legally controls it. DAFs have attracted hundreds of billions of dollars in recent years and are viewed as a simple way to direct tax-deductible donations to charities. But that premise — that donors can always direct the funds as they see fit – is not guaranteed. The role of adviser that account holders play is being tested in a court case involving a DAF sponsor that is accused of cutting off access to an account, as my colleague Rasheeda Childress recently reported. Although the circumstances are different, this dust-up over SPLC donations also raises questions about whether DAF sponsors will respect the wishes of donors.
The SPLC controversy undermines a sacrosanct philanthropic principle, honoring donor intent, a group of community foundation leaders told me this week. Several of them, including Fred Blackwell, CEO of the San Francisco Foundation, said the pause on donations is not a neutral “wait and see” maneuver. He noted that the Trump administration has aggressively used the Department of Justice to attack political foes. The commercial DAFs’ move to block grants before a legal verdict is reached is essentially siding with the administration, Blackwell said.
“We need to hold firm and hold consistent to the notion of innocence until proven guilty,” Blackwell said. The three commercially affiliated donor-advised funds, which declined interview requests, may have been looking out for donors by pausing any grants to the SPLC, said Lawson Bader, president of DonorsTrust, a conservative donor-advised fund sponsor. Donors, he said, may want their charitable dollars to go toward the organization’s mission rather than defending a lawsuit.
Still, Bader said, a wiser move would be to inform donors of the situation, giving them the option to pause gifts to the SPLC.
Blackwell and other progressive nonprofit leaders posted statements holding the commercial funds to account and inviting people to donate directly to the SPLC or transfer DAFs to their organizations. Brooklyn Org announced that any transfers from a commercially affiliated account would trigger a $718 grant to a Brooklyn nonprofit from its general account.
At least one major institution has decided to move its funds elsewhere. Riverside Church in New York, which was funded primarily by the Rockefeller family, this week moved $12.5 million out of Vanguard-managed funds. The church, which divested from fossil fuel holdings nearly a decade ago, urged other faith-based institutions to review their investment portfolios and platforms to consider whether they align with their commitments to civil rights, democracy, and free speech.
“Riverside’s position is that this is bigger than one grant recipient: It raises questions about donor intent, intermediary control, and what happens when a charitable platform blocks support before a case is resolved,” the church said in a statement.