Harvey Dale (NYU), Daniel Hemel (NYU), and Jill Manny (NYU), have a new piece in Tax Notes, DAF Sponsors Should Stand Up for Nonprofit Sector Independence, 191 Tax Notes Fed. 1305 (May 25, 2026). Here’s the abstract:
The three largest sponsors of donor-advised funds jolted the philanthropic world in recent weeks when they announced that they would suspend grants to the Southern Poverty Law Center, a prominent Alabama-based civil rights group. The announcements by Fidelity Charitable, Vanguard Charitable, and DAFgiving360 followed a federal grand jury indictment of the SPLC on charges that several former federal prosecutors described as dubious. Fidelity Charitable and DAFgiving360 said that they were suspending grants to the SPLC because it is the subject of a government investigation, while Vanguard Charitable said that it would not make grants to any organization under a federal or state criminal indictment regardless of the merits of the charges. The three sponsors pulled the plug on the SPLC even though the organization has not been convicted of any crime or had its tax-exempt status revoked by the IRS.
The actions and statements by Fidelity Charitable, Vanguard Charitable, and DAFgiving360 should send shivers down the spines of donors, nonprofit leaders, and anyone else who is concerned about the independence of the nonprofit sector. These sponsoring organizations undeniably have the legal right — indeed, the legal responsibility — to review donors’ grant recommendations and to reject requests when grantmaking would be inconsistent with federal tax requirements or with the sponsors’ stated missions. But by unquestioningly treating any government investigation or indictment as cause for cutting off grants, the sponsoring organizations cede enormous influence to federal and state officials regardless of whether those officials are operating in good faith. The upshot is that the three sponsoring organizations — perhaps unwittingly — have undermined the nonprofit sector’s ability to resist politically motivated attacks.
