Recent years have seen a rise in anti-democratic extremism, hate speech, and violence in the U.S. In 2019, the FBI documented hate incidents at an all-time high, not only in numbers but with increased levels of violence, including murder. As concern about these problems has grown, the search for solutions has led to questions about how hate groups are funded. What is the role of philanthropy and in particular, foundations of different types, in stopping the growth of hate and extremism? How does philanthropy handle requests from donors when those requests do not align with their values? What policies need to be proactively developed to address these issues?
In late 2020, the Council on Foundations launched the Values-Aligned Philanthropy initiative to build on previous efforts within the philanthropic sector and partner with others to respond to growing concerns about the issue of funding hate and extremism. The Council conducted interviews with 24 organizations from across the sector including a diverse group of foundations and Philanthropy-Supporting Organizations (PSOs), as well as advocates with specialized knowledge of how hate groups are funded. The Council released the Values-Aligned Philanthropy: Foundations Resisting Hate and Extremism white paper in August 2021, which identified five key challenges facing the sector:
- A lack of definitional clarity and broadly accepted resources for identifying these organizations
- Aligning organizational values
- Establishing policies and procedures
- Issues specific to Donor-advised funds (DAFs)
- Enlisting government support
Challenge #1: A lack of definitional clarity and resources for identifying hate groups and gauging their harm
A great many definitions of “hate” and “extremism” exist, from the broad to the politically motivated to the definitions used by law enforcement agencies, several of which the Council collected as a resource for foundations looking for examples. Some foundations and advocates are content to let the terms speak for themselves and feel that the question of whether these terms apply to a specific group is one that should be decided on a case-by-case basis. Others are looking for a standard definition for the philanthropic sector that would be widely accepted and used. Having an agreed-upon definition can be a useful reference point in making determinations about funding when challenges arise but developing a policy should not be dependent on having a definition. It is not necessarily the best first step if it becomes a barrier to action rather than a helpful exercise. In practice, no matter what the definition, gray areas will remain and even the most carefully crafted definition will at times require discussion as to its application.
Most foundations, especially small community foundations, do not have the capacity to conduct a thorough examination of all the activity of every single grantee- in order to determine for themselves whether groups qualify as hate groups, particularly groups that fall into ideological gray areas. However, foundations do not have to start from scratch: resources and tools do exist, including the Southern Poverty Law Center’s (SPLC) frequently used list of documented hate groups and anti-government organizations, and foundations should use them in their decision-making. However, others feel that this list, while useful, represents a political point of view that is not accepted by all their stakeholders. Other organizations also track hate incidents—see the Anti-Defamation League’s HEAT Map and Council of American-Islamic Relations’ Islamophobia Network. Additionally, Horizon Forum is currently developing a tool to aid foundations in their due diligence.
In short, there are tools available, but foundations should use discretion when using those tools: read the rationale behind a group’s placement on the hate list and use that rationale to determine whether a group does or does not align with your organization’s values.
Challenge #2: Aligning organizational values
It is essential for foundations to clearly define organizational values—and follow through with those values when both making and receiving grants. As one community foundation interviewed for the Council’s report put it, “If you don’t align with our ethical foundation, the action will probably be that your grant won’t be honored.” Further complications arise from communities with conflicting values, especially around polarizing issues. It is difficult and time-consuming to bring stakeholders into alignment to develop a shared understanding of what is valued. This is especially true for foundations serving ideologically, ethnically, politically, and religiously diverse communities—and representing a group of stakeholders with the same level of diversity. Even foundations serving politically homogenous regions and with politically aligned staff do not agree on every issue. Moreover, foundations across the political spectrum struggle with not wanting to push any one political perspective onto donors.
In other words, the line between values and politics is not always clear. To circumvent this, foundations must clearly define their values. This has different meanings for different types of foundations. For example, some community foundations connect their concerns with hate and extremism with their organization-wide work around equity and inclusion, emphasizing that values that are shared across the political spectrum can be most powerful. For the Cleveland Foundation, developing an anti-hate policy was part of a broader equity and inclusion initiative—and, for an organization representing diverse stakeholders and serving a diverse community, grounding its anti-hate policy in its anti-racism and inclusion programming gave the policy important context and logic.
Other community foundations think beyond banning hate to instead reducing harm, which to them means ending any funding to programs they believe cause harm in the communities they serve—for example, some foundations have ended funding to police-related charities in Black communities that have experienced police violence. Still other community foundations believe in neutrality and avoid taking sides on any controversial issues; they are nevertheless able to balance this principle of neutrality with concern about the impact of hate and extremism by funding groups regardless of their stance on certain political issues while simultaneously drawing the line at groups espousing hate or violence.
To do this, it is vital for community foundations to be proactive in establishing policies and procedures. For example, the Community Foundation of the Ozarks, headquartered in a conservative part of southwestern Missouri, began considering a viewpoint-based policy in the fall of 2020 after reading about another community foundation that had run into the issue. The Community Foundation of the Ozarks did what other foundations have done: they reached out to others in the sector for advice and sample policies. Yet even as they worked to develop this policy, a donor suggested a grant to an organization flagged by the SPLC as a hate group. Because the foundation did not have the policy in place, they felt it had to honor the requests—but contacted the donor directly once the policy was approved to tell them they would not make future grants to the flagged organization. The donor was not happy with the change but maintained their relationship with—and DAF at—the foundation.
It is also key for organizations to remember that this is a sector-wide issue regardless of politics or ideology. Foundations serving communities across the ideological spectrum have developed anti-hate policies. The fight against hate and extremism is not limited to one side or the other. For example, Stand Together is a philanthropic community founded by Charles Koch to unite Americans across the political spectrum against division and violence. In the aftermath of the Charlottesville riots, Stand Together helped found Communities Overcoming Extremism: The After Charlottesville Project in partnership with the Anti-Defamation League.
Challenge #3: A lack of knowledge about policy options and the need for sample policies
In general, foundations wading into this issue for the first time often lack the knowledge necessary to establish policies and procedures that are legal, effective, and broadly supported. This is further complicated by the varying needs faced by different types of foundations—for example, community foundations that must maintain donor relationships or corporate foundations that must manage broad based brand appeal.
Fortunately, this problem has a relatively straightforward solution. The world of values-aligned grantmaking is collaborative to the point of symbiosis; foundations with these policies already in place tend to make them public, and furthermore, tend to welcome other foundations to adopt or modify their policies and procedures for those foundations’ own needs. This came up regularly in the Council’s research: the Community Foundation of the Ozarks and the Cleveland Foundation both reached out to other organizations for sample policies. (The Council recently launched a resource hub featuring sample policies from a variety of foundations across the U.S. that can serve as a starting point for those looking to establish their own policies.)
Organizations with deeper pockets can conduct even more outreach. For example, when Facebook sought to create its own policy around Facebook Fundraisers, it sought input from worldwide stakeholders, including experts on extremism and counterterrorism; experts on philanthropy; and members of civil society, especially NGOs. Their policy now makes explicit that Facebook reserves the right to deny or remove access to fundraising tools for organizations that violate its community standards.
Challenge #4: Issues specific to donor-advised funds
Donor-advised funds (DAFs) are valuable tools for donors, grantmaking, and grantees. For many community foundations, they are key sources of funding and a vital component of their sustainability model. For donors, they are an important tool for long-term support for a cause or community the donor cares about. But, because DAFs provide donors with an extra layer of anonymity, there is not public scrutiny when it comes to funding hate groups. Hypothetically, a donor can give to a DAF at a community foundation and knowingly or unknowingly advise the community foundation to make a grant to a hate group while maintaining anonymity about that donation. In addition, because of the importance of DAFs at community foundations, community foundations looking to establish values-aligned policies may worry that these policies will alienate donors who direct their donations to support controversial causes—or that donors will avoid a foundation with any kind of grantmaking restrictions, especially when large national DAF sponsors do not always publicize similar restrictions.
Some individual DAF holders believe that putting restrictions on where the funds can go is a violation of their First Amendment rights. This, however, has little legal support, because when the funds are given to the foundation for a tax benefit, the foundation assumes fiscal and legal responsibility for them, per the contract they have entered. Donors can make requests about where the funds are directed, but there are existing rules that already limit what kind of organizations can receive them, and foundations may exercise “variance power” in determining where funds can go. Even large national DAF sponsors have exercised this option, as when Fidelity Charitable and Schwab Charitable banned new donations to 501(c)(3) organizations associated with the National Rifle Association in 2019.
This demonstrates the importance of a community foundation knowing its legal rights while also engaging in donor education where necessary. And again, foundations can avoid this issue by having a policy and process already in place when approached by donors; they can point to these policies when asked to make grants that do not align with their values, as the Community Foundation of the Ozarks now does. Clear communication is key here: if a foundation is upfront and honest about not supporting groups that advocate extremism, violence, or hate, it can avoid the complications associated with DAFs without sacrificing the flexibility and privacy they provide.
Sometimes DAF donors genuinely do not know that an organization could be considered a hate group and are unaware of all the activities and positions of the organization. Educating donors and taking the time to have a longer conversation is necessary, even if, in the end, no agreement is reached. Very few foundations reported major problems with donors once they were made aware of the situation, with more recounting that donors had been grateful to learn more about the organizations they had wished to support.
Challenge #5: Enlisting government support
Foundations and advocacy organizations were united in their belief that the IRS should take a more active role in stopping hate and extremist organizations from receiving tax-exempt non-profit status. In order to receive this status, charitable organizations must demonstrate that they are dedicated to the public good, and most people believe that an organization with non-profit status has done so. But oversight has become weakened in recent years, with many organizations being approved through online submissions that receive only the most perfunctory review. Although many donors assume that any organization achieving 501(c)(3) status, which makes contributions to them tax-exempt, has been closely examined as to its activities and screened to make sure that it does not engage in hate or extremism, this is simply not the case.
Calls for increased funding for the IRS to improve oversight and to hold extremist and hate groups accountable have intensified since public awareness of the problem of hate funding has grown. In 2019, Congress held hearings related to hate groups and charitable organization status. This issue is contentious, with legal analysts expressing conflicting opinions over whether excluding them would violate First Amendment principles. Across the political spectrum, philanthropic organizations struggle with concerns about creating too much restriction and government intervention, and the impact this could have on donor enthusiasm, while simultaneously longing for a solution to this problem that could be provided from outside the sector. Many advocates believe that increasing government oversight and transparency can lead to exposure of organizations that are violating the law, as well as increasing the ability of government officials to monitor suspicious organizations.
Government attention to these issues is high in the wake of the January 6 attack on the U.S. Capitol and the key role played by racist extremists in the insurrection. Federal officials from many different agencies, including the FBI, the Department of Homeland Security, and the Department of Defense, are working to understand how these events occurred. As the federal government does this work and issues reports on how extremists operate, it will increase public understanding of who these groups are and how to track their activity, which will aid philanthropy in helping to make sure they are not receiving foundation dollars. The Anti-Defamation League published a report in the wake of the January 6 events investigating extremist and hate groups who may be abusing their tax-exempt status.
The eight recommendations we propose to address these issues are detailed below. Foundation staff looking to get ahead of the issue should:
- Formulate a policy proactively, before a difficult situation arises.
- Pair your policy with a process for making decisions.
- Make sure you clearly understand and can explain the legal issues, particularly regarding DAFs.
- Use existing resources to inform your decisions.
- Align your policy with your organizational values.
- Create consistency with both giving and receiving funds.
- Communicate clearly and constantly with all the stakeholders.
- Join others in philanthropy taking a stand.
For the sector, as for the Council on Foundations, this work is ongoing. It is vital that the sector speaks with a united voice in the fight against extremism, violence, and hate. To do this, grantmaking organizations must be proactive about defining their values and creating policies and processes aligned with those values. The Council on Foundations is developing tools to support foundations working on these recommendations, including our Values-Aligned Philanthropy resource hub, and will release additional resources over the next year.