What rights do/should DAF donors have?

 
This prominent case has quickly zoomed into a core question for DAF policy: who ultimately controls charitable DAF dollars—the donor, the sponsoring institution, or government authorities? The case also exposes conflicting impulses and goals within the progressive nonprofit/philanthropic community. Here's an update on the issue – on the protests and how the matter has developed. It makes for an intriguing story.

Where it started

In April 2026, the U.S. Department of Justice indicted the Southern Poverty Law Center (SPLC) on fraud-related charges. Prosecutors allege that the organization did not disclose to donors that some donated funds were used to pay confidential informants who had infiltrated extremist groups such as the KKK and Aryan Nations. SPLC denies wrongdoing and argues that such payments were part of legitimate intelligence-gathering efforts that helped monitor and prevent extremist violence.

After the indictment, three of the largest DAF sponsors – Fidelity Charitable, Vanguard Charitable and DAFGiving360/Charles Schwab – stopped honoring designations by DAF account holders to make grants to SPLC. Although the matter is still at the indictment stage (no guilty/not guilty verdict), they and others stopped allowing grants pending resolution of the legal case. These actions were quickly confronted by a broad coalition of progressive philanthropy organizations, community foundations, nonprofit leaders, and advocacy groups supporting SPLC and criticizing the commercial DAF sponsors. Notable pushback came from the National Council of Nonprofits, Independent Sector and the Council on Foundations, which have largely framed the issue as one of civil-society independence and donor freedom, which will make charities vulnerable to politically motivated investigations.

Conspicuously absent from public comment has been the conservative Philanthropy Roundtable, which is both the most public advocate for “donors rights” and believes that private philanthropic institutions should generally be free to set their own policies without government interference (promoted as “philanthropic freedom”).

The three Wall Street mega DAF sponsors (with combined assets of $130 billion in 2024) argued that they were simply applying ordinary risk-management and compliance policies when possible grantees face criminal charges. But DAF sponsors customarily limit their vetting of transfers from DAFs to simply checking the names and exempt-status on the IRS EO master file of charities. However, these are not ordinary times, nor ordinary actions of an impartial Justice Department. Many see the indictments not as good government oversight but as the Trump administration punishing the SPLC for its work in civil rights, particularly in fighting voter suppression in the south. Is this a strict interpretation of the lawyerly fiction that the sponsors control the money, not the account holders?

Opposition speaks up

Nonprofit opposition to the freeze has focused on:

• Donor intent: Freezing grants to SPLC goes against the intent of DAF account holders (donors) who want to donate to SPLC through their DAFs
• "Innocent until proven guilty" – SPLC has not been found guilty on any of the charges
• Vulnerability: the indictments are politically motivated and should be rejected lest precedent is set for enabling political attacks nonprofits

The Free Your DAF campaign

The most interesting direct pushback to the SPLC freeze has been a spirited Free Your DAF campaign, urging DAF account holders to move their DAF funds from the big three commercial DAF sponsors. Led by Solidaire, Color of Change, the Democracy Alliance and others,more than 400 "donors and networks" have engaged the campaign, many signing the open letter calling on the three mega-sponsors to end their "pause."

More than 150 individuals who hold DAFs at these three institutions have also committed to taking action, such as writing a personal protest note to the institutions they use or moving their funds to a DAF sponsor that is continuing to allow grants to SPLC. Other public stances:

• Community foundations – typically defenders of all things DAF – have also taken up the campaign. It's impossible not to note that they call for donors to move their DAFs to community foundations which permit grants to SPLC.
• Formal meetings have taken place between institutional presidents and some of the protesting networks; and such presidents have been said to be "wringing their hands," having hoped the whole issue would fly under the radar.
• The Association of Fundraising Professionals (AFP) strongly criticized the freeze without explicitly calling for its suspension: "The DAFs were not architects of a political outcome. They were instruments of one."

We appreciate the fact that AFP acknowledged that they are funded by Fidelity, one of the DAF sponsors in question.

• Independent Sector (also funded by Fidelity) made a brief statement: “Fair oversight is essential to public trust in the charitable sector, but allowing political leaders to target perceived opponents for investigation does nothing but undermine that trust."
• And most impressively, 16 state attorneys general sent a formal letter to Fidelity, Vanguard and Schwab demanding that the DAF sponsors reverse their course:
  "Institutions that administer donor-advised funds have an important role to play in protecting charitable giving from politicization and infringement on the First Amendment rights of charities and the donors who support them. We urge you to reconsider your actions and policies that would undermine donor intent and advance a broader effort to weaponize government power against disfavored nonprofit organizations simply for exercising their protected First Amendment rights."

Contradictions emerge

We at the Philanthropy Project also oppose the selective and political freezes on transfers from DAFs to the SPLC, an anchor organization of the civil rights movement.
But we can't help but be intrigued by some of the paradoxes arising:

* Contrast with the "Hate Is Not Charitable Campaign" initiated by the Amalgamated Foundation (now called Assets Under Movement) in 2019: This sign-on effort called on the same firms – Fidelity, Schwab and Vanguard – to disallow grants from DAFs to hate groups – ironically defined as groups identified as such by the Southern Poverty Law Center.

The Campaign's statement drew dozens of foundations in support: "As leaders of philanthropic institutions, donor-advised fund providers, and individual philanthropists, we are joining together to take a stand against the twisted use of charitable funds to support organizations that foment hatred. We are deeply concerned that donors, acting anonymously, through donor-advised funds managed by Donors Trust, Fidelity Charitable Gift Fund, Schwab Charitable Fund, and Vanguard Charitable between 2014 and 2017 contributed nearly $11 million to 34 organizations that the Southern Poverty Law Center considers to be hate groups. These organizations include anti-LGBTQ groups, anti-Muslim groups, anti-immigrant groups, a white nationalist group, among others."

How do DAF sponsors (such as community foundations and Assets Under Movement) that have signed onto the Hate Is Not Charitable Campaign reconcile this with their current opposition to the freezes on grants to SPLC? Some (notably the San Francisco Foundation) have pointed to the "innocent until proven guilty" argument, stating that DAFs sponsor should not act until there is a conviction. Others have a finely drawn line where DAF sponsors can deny donor-requests for grants if the DAF sponsor has in place a policy against certain kinds of grant recipients.

But most DAF sponsors in this apparently contradictory situation have not addressed the apparent conflict between these two stances.

So how sacred is "donor intent" anyway?

Conservatives in philanthropy have raised donor intent to a near religious principle, with "Donors' Bill of Rights" and legislative activity on federal and state levels. A key premise documented in the Philanthropy Roundtable's 2024 report is that "charitable donors’ intents are increasingly disregarded or violated today," and specifically calling out the Ford Foundation and the Pew Charitable trusts for "drifting towards progressive agendas."

Although conservatives in philanthropy have not explicitly supported the SPLC freeze, the Signal (long associated with the Heritage Foundation) is jubilant over it: "After years of the Southern Poverty Law Center demanding that charitable foundations blacklist conservative and Christian nonprofits, the shoe is finally on the other foot: Fidelity Charitable has denied contributions to the SPLC."

In other words, we all want to honor "donor intent" except when it means money going to things we don't like. We hope that progressive groups will address the contradiction and work to develop a sound principle related to limiting donor intent in a reasonable way.

* We've called DAF sponsors "Wink-Wink Organizations," because the business model involves the same kind of wink as Q-tips promoting their product as a makeup tool or vibrators advertised as "relaxers." Although the funds are legally under the control of the sponsor once the sponsor receives the funds, the Wink is that the donors continue to control both distribution of the assets (grants) as well as deployment of the assets (investments).

Even on a call sponsored by FreeYourDAF, one participant complained about Fidelity: "How can they say they won't give my money to SPLC? It's MY money!" This sentiment went unchallenged.

And so?

The SPLC freeze is first of all, unprincipled on the part of the Wall Street DAF sponsors, and shows a deference to the authoritarian Trump administration that should not be allowed to pass without criticism.

Second, the responses to the SPLC freeze reveal that ultimately, the idea that DAF sponsors "vet" nonprofits looks a lot like nothing. In reality, DAF sponsors (including community foundations) both rely only on the IRS list and are susceptible to political pressure.

Third, if DAF sponsors are going to prohibit grants to certain nonprofits or certain types of nonprofits, that should be specified on their websites and in their account contracts. Although legally DAF sponsors control the money, the whole system relies on everyone being told they don't. If they are going to make a run around their whole business models, they should be open about it.

And finally, the real solution? A payout requirement wouldn't affect the issue. Disclosure rules might discourage DAF account holders from giving to controversial causes as their names would be revealed, but again, doesn't address the underlying issue. Vu Le argues that at the least we should be discussing the abolition of donor-advised funds. It's an industry built on a fiction, but then again, so are many industries.

So: Who do DAFs belong to, anyway?

Next from the Philanthropy Project: recap of our three Leadership Briefings on reforming philanthropy, and a proposed, explicit, policy agenda.

by Philanthropy Project