Denouncing Hate

Last year, I wrote about the challenges that arise when donors with deep pockets push their ideological agenda through non-profit news outlets that have arisen in recent years as financial pressures force the news industry to retrench.

This points to a bigger issue that exists involving wealthy donors who have hijacked non-profit groups and charities to advance their agenda while masking their ideological motives behind a thin veneer of altruism.

Everyone has heard of the Koch Brothers and the network of non-profits that they have created to advance their particular world view. But while the Koch Brothers have become the subject of suspicion and scorn on the left for this, the brothers have made no secret of the groups they fund, including Americans for Prosperity, where the Kochs have openly taken leadership roles as members of the board.

A more challenging example comes when wealthy donors essentially highjack these charitable groups and attempt to pull strings from behind the scenes to avoid public scrutiny. This creates a quandary for the non-profit charity that depends on the wealthy donor’s financial largesse, as well as the groups that charity, in turn, funds.

An example of these tensions is playing out in North Carolina. And it involves a non-profit charity, Foundation for the Carolinas, that had been widely revered – until recently, that is, when published reports surfaced that it has funded a network of hate groups and anti-immigration zealots while receiving significant amounts of money from a donor who holds alarming views about who should or shouldn’t enter this country.

The LA Times reported that The Foundation had spent $15 million over the last decade to fund a network of extreme anti-immigration groups. The groups they fund include organizations like NumbersUSA, Federation for American Immigration Reform (FAIR), and Center for Immigration Studies (CIS). Some of these groups are actively monitored as extremist “hate groups” by watchdogs such as the Southern Poverty Law Center (SPLC) because of their “virulent and false attacks on non-white immigrants.”

The foundation has also contributed $25 million to controversial population-control groups, according to a review of public documents and the organization’s tax records that the Los Angeles Times recently published an article exploring the roots of these groups.

The Times points out that a major source of funds to the Foundation for the Carolinas is Fred Stanback Jr., a wealthy man from Salisbury, North Carolina who has been clear about barring people he considers unsavory from entering the United States because he wants to protect America’s resources.

The Atlanta Daily World reported that a spokesperson for the Foundation for the Carolinas said that the foundation is politically neutral and that it doles out dollars to outside groups based on recommendations from donors who give money to the foundation. “Community foundations do not pass judgment or take a political stance on our donors’ grantmaking” provided that the charities are legally registered as charities under section 501(c)3 of the federal tax laws, said Tara M. Keener, Vice President and Director for Marketing & Communications at the Foundation For The Carolinas, the report says.

But it appears that the truth may be a little more complicated than what she stated. The foundation’s guidelines, or code, suggest that the final decision over where the foundation allocates money rests with the foundation’s leadership under an obscure policy known as a variance of power.

“A distinctive feature of community foundations is the `variance of power” reserved by the Foundation’s Board of Directors and contained in the charter and bylaws of the Foundation,” according to a guide issued by the foundation. “The variance of power authorizes the Foundation’s Board of Directors to modify any condition or restriction on the distribution of funds if in its sole judgement (without the approval of any trustee, custodian or agent), such restriction or condition becomes, in effect, unnecessary, incapable of fulfillment, or inconsistent with the charitable needs of the area served by the Foundation or with the requirements of the Code.”

“The foundation is required to have this discretionary power as to all gifts to the Foundation to enable the donor to receive a tax deduction for his or her contribution and to meet the Foundation’s accounting standards and practices,” the guide continues. “The Foundation, however, will carefully consider recommendations regarding preferences and distributions.”

What the Times also reported was that “in 2014, Stanback donated 1,500 shares of Berkshire to the foundation, worth $397 million, tax returns show.”

That donation is so big it would have put him among the top 5 charitable donors in 2014 if he had sought publicity. Instead, however, he routed the money through the foundation, making it difficult for most people to trace donations back to Stanback unless they are willing to sift through the organization’s voluminous tax returns.

For its part, the Foundation for the Carolinas has a financial incentive to encourage donations like those from Stanback. A review of their tax returns shows that his contribution was a staggering 64% of their total revenue from grants and contributions in that year.

On all of the dollars they received and managed during the year, they earned $8,306,570 in “administrative fees” from managing all of the assets in their pools. In the case of Stanback, his stock gift alone would have likely generated a whopping sum in administrative fees for the foundation.

According to the Foundation Center, “Administrative fees are the main revenue driver in community foundations of all sizes.” The Foundation Center actually advises community foundations to think about competition from other “alternatives” the donors may have when setting their fees.

The handsome fees appear to make a big difference. In 2014, the president and CEO of the Foundation for the Carolinas made $500,140 in salary and another $106,456 in other compensation, according to records.

The building they use as their headquarters is so nice it is used as a wedding venue and is lined with “art, historical treasures or other similar assets” they display in the offices that had a value of $4,078,448 in 2014.

To be sure, Foundation for the Carolinas funds many worthy causes, including museums, operas, homeless shelters, and churches. But until the foundation renounces the groups behind the hateful rhetoric, its good deeds will be forever sullied. The Foundation for the Carolinas would be wise to do so quickly, for the sake of its reputation and, more important, our nation.