Blood Money: How America’s Biggest Charities Are Bankrolling Hate Groups Without Anyone Noticing
From OPT OUT in partnership with The New Republic
The last few years have seen a wave of anti-trans Republican legislation introduced across the country, and much of it has become law. To name just a few examples: In 2016, North Carolina and South Dakota banned transgender kids from using public bathrooms that correspond with their gender identity. Over two years ago, Idaho banned transgender women students from competing on sports teams that align with their gender identity. And last year, Alabama became the second state to ban gender-affirming care for minors and the first to criminalize doctors who provide it, threatening them with up to 10 years in prison.
The same organization was behind these laws: Alliance Defending Freedom, a Christian legal powerhouse that drafts, lobbies for, and defends anti-LGBTQ legislation and policies. This year alone, 500 bills have already been introduced around the country. And ADF’s power is only growing: The nonprofit organization’s annual gross receipts doubled from $52 million in the 2016 fiscal year to $104 million in fiscal year 2022.
It’s perhaps not surprising, given the rise of anti-LGBTQ rhetoric on the right in recent years, that ADF’s hateful agenda would be so well funded. But research by The New Republic and the OptOut Media Foundation has found that much of the organization’s money actually comes from charities tied to America’s largest investment firms, including Fidelity, Vanguard, and Schwab. Other notorious anti-LGBTQ organizations, such as the Family Research Council, as well as groups espousing anti-immigrant, anti-Muslim, and white nationalist ideology, also get much of their funding from these major mainstream charities.
Over the last decade, dozens of organizations designated as hate groups by the Southern Poverty Law Center have received more than $200 million from these types of charity funds, as well as from community foundations. What’s more, these funds allow Americans to donate to bigoted organizations without revealing their identity—while also getting a tax break for it.
Each year, some 140 million American adults give around $500 billion to charities, donations they can then deduct from their taxes. And one way of giving has become increasingly popular with wealthy Americans: donor-advised funds, which are charitable accounts managed by third parties.
When someone deposits money into a donor-advised fund, they immediately earn a charitable tax deduction; plus, they can transfer appreciable assets such as stock into the account without having to pay the capital gains tax that would normally accompany the sale of one’s earnings. For a fee, financial professionals reinvest the money to make it grow. Whenever clients feel like it—as in, many years later, if ever—they can “advise” the fund manager on how much and to which organizations their donations should go. The fund manager almost always obliges.
“DAFs are popular and fast-growing because of the tax benefits and the convenience,” Roger Colinvaux, a law professor at the Catholic University of America, told me. “Donors get the best tax benefits available, without having to fully give up control of their funds.”
But here’s the catch: When someone puts money or assets into a donor-advised fund, it’s no longer their money. They get the charitable tax deduction, since they’re actually donating to the donor-advised fund sponsor, a 501(c)(3) charity that then legally owns the money and has full discretion over where it goes. That also allows the donors to remain anonymous, both to the public and even to the IRS. So if someone wanted to fund, say, a white nationalist hate group but didn’t want the media or the government to catch wind of it, they’d use a donor-advised fund.
Fidelity Charitable is the biggest public or private charity in the nation by donations received, having taken in over $15 billion in contributions in the 2021–22 fiscal year. (While the organization is incorporated separately from Fidelity Investments—the former is a 501(c)(3) nonprofit, the latter a private for-profit—it employs Fidelity Investments to manage its clients’ money, handing over some of the clients’ fees in exchange.) Over the last eight fiscal years, Fidelity Charitable doled out more than $25 million to Southern Poverty Law Center–designated hate groups. ADF got the most, at $8.7 million, and among the other anti-LGBTQ recipients, the Family Research Council ($1.9 million), Family Watch International ($1.1 million), and the American Family Association ($800,000) topped the list.
Like ADF, the Family Research Council has attempted to link homosexuality and pedophilia. “While activists like to claim that pedophilia is a completely distinct orientation from homosexuality, evidence shows a disproportionate overlap between the two,” wrote Family Research Council president Tony Perkins on his group’s website in 2010. “It is a homosexual problem.” Family Watch International, which promotes anti-LGBTQ policies around the world, also links gay men and pedophilia. The American Family Association, which advocates for “traditional moral values” in media, has called homosexuality “a poor and dangerous choice” and claims it’s a threat to public health.