The progressive funding arena looks very different today than it did a decade ago, and the rapid growth of philanthropic intermediaries has been a big part of that story. These entities – like Tides, the New Venture Fund, NEO Philanthropy, Borealis Philanthropy and a host of others – all operate and position themselves in slightly different ways, but their centrality in recent funder efforts to resist Trumpism and build movements for social justice is clear.
For conservative critics, these left-leaning intermediaries — and their often rapidly expanding budgets — make for convenient bogeymen. Their progressive ideological positioning is one part of that, but so is the charge frequently laid at their doorstep that they’re channeling “dark money” from shadowy donors, much of it in the form of 501(c)(3) tax-deductible contributions.
Those critics aren’t entirely wrong. Places like Tides do act as platforms for donors to anonymously water the progressive field, most often in their capacity as sponsor organizations for donor-advised funds (DAFs lack the federal transparency requirements of private foundations), and also by acting as fiscal sponsors for smaller organizations. Many of these intermediaries also engage in some level of donor organizing work, i.e., by hosting pooled funds pursuing specific strategies or providing infrastructure for funders to network and convene.
Nevertheless, it’s all too easy — and common — for outside observers to make of these organizations something they’re not, both by misunderstanding the roles they play in the flow of philanthropic dollars, and by ascribing to them a level of strategic agency (conspiratorial agency, one might say) that they lack.
This tendency doesn’t just show up on the right. Over the past few months, the drumbeat of references to philanthropic middlemen in the mainstream media has grown louder, often in reference to funding for groups that have sponsored what they call pro-Palestinian advocacy and what critics charge is anti-Israel or antisemitic organizing. In that coverage, the role of funding intermediaries has often been misrepresented.
Examples are numerous, but one notable oversight came in Politico, which ran a story early this month tracing supposed links between pro-Palestine protest groups and major Democratic donors — as well as liberal-leaning philanthropies. An initial version of the piece made the inference that because the Bill & Melinda Gates Foundation made a donation to the Tides Foundation, a DAF sponsor — and because Tides, in turn, had directed money to campus protest groups like Jewish Voice for Peace and IfNotNow — that somehow Gates had backed those groups.
Most of us with any knowledge of how DAFs work understand the absurdity of that claim: Tides receives hundreds of millions in contributions per year, and while it’s always possible that any DAF contribution could be funding any DAF grantee, matching Gates’ six-figure contribution to another six figures outgoing, in the midst of Tides’ nine-figure sea, does not follow. (Besides, Gates specified in its own grant database where its Tides gift went — not to pro-Palestine groups.) But although Politico corrected its story, attempts to trace dubious funding links through places like Tides show up time and again when outside commentators purport to “follow the money.”
Even as they misapprehend how DAFs work, observers from outside the sector also exhibit the unfortunate but understandable impulse to give philanthropic intermediaries a lot more credit than they’re due as behind-the-scenes string-pullers. In by far the majority of cases, an entity like Tides isn’t the prime mover — that would be the original donor — even when it furnishes funding to a cause people find objectionable.
Intermediaries are most often playing a supportive, facilitating role — an infrastructural role — and making it easier for movement groups to secure funding, by, say, acting as fiscal sponsors or hosting DAFs. In that sense, Tides and its peers may sometimes be the curtain, but they’re not the man behind the curtain.
The same is true of an entity like the New Venture Fund, which fiscally sponsors a long list of mostly progressive projects. It offers left-leaning donors a tool to make anonymous contributions to causes they like, and provides project incubation services to movement efforts, but it’s not calling the shots (and neither is Arabella Advisors, the oft-maligned firm that stood up and supports the New Venture Fund). Progressive or not, donors have a broad palette of funding intermediaries to choose from. Some elect to give through vehicles that cater to them ideologically, while others go through Fidelity Charitable or their local community foundation. Either way, the money gets where it’s going.
Why does all of this matter? Well, for one thing, sensationalist misapprehensions about how c3 money is moving through philanthropy’s less-well-lit channels further erodes public trust in nonprofits. That makes it all that much harder for them to raise money and effect change. In addition, all the dark money conspiracy-mongering also adds fuel to the fire of potential congressional reforms, which have made significant headway among Republican legislators over the past year.
This spring, those legislators have stepped up their efforts, targeting their attacks at fiscal sponsors like Tides. With the apparatus of nonprofit fiscal sponsorship and intermediaries under heavier scrutiny, we’re drifting ever closer to the kind of congressional attention — and potential nonprofit sector rules overhaul — the philanthropy establishment has long dreaded.
I’m of two minds here. On the one hand, federal philanthropy regs are indeed in dire need of an overhaul, especially given the explosive growth of DAFs — which are even less regulated than foundations and certainly weren’t top-of-mind for legislators half a century ago when the last big update to philanthropy law went down.
But even if reform is desirable, the highly partisan cast of those leading the charge raises questions about the impartiality and fairness of any potential new regulations. It’s telling that despite the apparent appetite among some Republican congresspeople for a crackdown, philanthropy sector stakeholders on the right, such as the Philanthropy Roundtable, are not on board. That’s partly because it isn’t just groups on the left engaging in the philanthropic intermediary bonanza. Everybody’s doing it, including through entities like DonorsTrust and the National Christian Foundation, which offer to conservative donors some of the same services – and anonymity – that those like Tides do for progressives.
In the end, some kind of philanthropic reform is necessary, given how creaky and out of date the ground rules are getting. But that doesn’t mean we shouldn’t call foul when deeply biased, partisan politicians lead the charge toward reform while citing reporting that does not fully understand the sector.
