Wall Street’s Nonprofits Use Selective, Opaque Logic to Defund Charities
Illustration by Shoshana Gordon/ProPublica. Source image: U.S. Treasury via Wikimedia Commons. When the Justice Department indicted the Southern Poverty Law Center in April on controversial fraud charges, the storied civil rights organization faced a major threat to its lifeblood — the flow of donor dollars. Not because it was convicted or because the Internal Revenue Service revoked its tax-exempt status. Not even because individual donors stopped writing checks. Instead, three Wall-Street-affiliated grantmaking giants each made a decision, one they refused to fully explain, to prevent donors from using their platforms to give to the embattled nonprofit. Vanguard Charitable, Fidelity Charitable and Charles Schwab’s DAFgiving360 sponsor donor-advised funds, offering account holders immediate tax deductions on contributions they can later recommend be granted to charities. Once niche, donor-advised fund sponsors controlled more than $327 billion in assets as of 2024, over 10 times their footprint two decades ago. They are the conduit for about a quarter of all individual giving in the U.S. After the three sponsors cut off the SPLC, ProPublica investigated how the new gatekeepers of American philanthropy make these opaque, high-stakes decisions. In examining the treatment of dozens of nonprofits, we uncovered troubling inconsistencies in how some DAF sponsors applied their policies and found that donors and affected charities are routinely left in the dark about how decisions are made. The three sponsors are nonprofits spun off from major brokerages. Their accounts, used largely by high-income earners, charge administrative fees while sponsors retain legal control over the charitable assets. (ProPublica has received donations through each of the groups.) Donors “advise” the sponsors on where to send grants, but sponsors can deny requests for any reason. They say decisions stem from policy triggers. Vanguard Charitable pauses payments when an organization faces formal charges, while Fidelity Charitable and DAFgiving360 say they “may” or “might” stop donations if organizations come under investigation by government or law enforcement agencies. Deone Powell, a former general counsel for Vanguard Charitable who now advises nonprofits, said that DAF sponsors don’t view these moves as moral policing, but instead as ways of protecting their own brands. “All of these really speak to reputational risks for the sponsoring organizations,” he said. They weigh these choices carefully, given the possible ripple effects, he said. “A single decision often establishes a precedent that’s going to affect thousands of other future recommendations.” But ProPublica found that Fidelity and DAFgiving360 appeared to apply their policies unevenly. Even though they froze donations to the SPLC, they allowed numerous other groups to keep receiving money amid government investigations. The cases included hospitals, universities, charter schools and even a white nationalist organization. The sponsors say their decisions are viewpoint neutral, and ProPublica found no evidence to the contrary. Removed groups spanned the political spectrum. But most of the ones that spoke to ProPublica shared one common experience: silence from the sponsors. Months after being deemed ineligible for donations, the SPLC still doesn’t know why the action was taken or whether there is a path to reinstatement, according to a source familiar with the matter. The legal pressure, however, continues: A former employee was indicted this week on charges related to the case. Experts say this is particularly problematic under the Trump administration, which has a track record of making politically charged accusations that don’t hold up in court. “I don’t think Fidelity, Vanguard and Schwab are acting in bad faith,” said Joe Goldman, the president of Democracy Fund, a foundation supporting democratic principles. “They’re applying old rules to new circumstances without recognizing that the circumstances have changed.” President Donald Trump has put nonprofits under an intense spotlight, alleging that many of them “undermine the security, prosperity, and safety of the American people” and directing federal agencies to align funding decisions with administration priorities. Members of Congress, mainly Republicans, have initiated over 135 investigations into nonprofits since 2025, often claiming that charities were operating with foreign influence, engaging in supporting terrorism, or promoting diversity, equity and inclusion. In letters sent to the IRS, Republican lawmakers accused several organizations that support pro-Palestine efforts of funding terrorism and asked for them to be investigated. One of the charities has not been charged in court, and another was the subject of a state investigation. Neither has had its IRS status revoked, but they no longer appear on a Fidelity Charitable donation portal that allows users to select charities to donate to, ProPublica found. Fidelity wouldn’t say whether the letters played a role. “This is potentially a way that a hostile legislator could harm tax-exempt organizations without having to prove anything,” said Samuel Brunson, a Loyola University Chicago School of Law professor who researches nonprofits. “Even if these letters are completely legitimate, you can take that same set of tools and use them illegitimately.” The consequences can be significant. The SPLC, for instance, has received $20 million through Fidelity Charitable, Vanguard Charitable and DAFgiving360 in the past three years, with roughly 7% of its 2025 contributions coming from the three sponsors that cut it off. “When investment firms block donor-advised funds to nonprofits based on allegations and speculation, it not only impedes critical charitable work; it also sets a dangerous precedent that stifles the rights of donors and chills the rights of the organizations they seek to support,” said an SPLC spokesperson in a statement to ProPublica. The fund sponsors have not responded to similar concerns voiced by 16 state attorneys general, who wrote that their actions could enable weak or politically motivated investigations to “suppress, chill, or dismantle organizations” that are doing vital work. Their own donors are also reaching out. Dawn Piccolo, a retired Fidelity Investments senior vice president who has kept a DAF account since the 1990s, is a fervent supporter of donor-advised funds. She wrote to Fidelity Charitable reminding the sponsor that it had allowed another charity under similar fire to keep receiving gifts. “The SPLC has not been found guilty of anything,” she wrote. “Preemptively restricting donations under these circumstances sets a troubling precedent.” All three fund sponsors declined to be interviewed for this story or answer detailed questions, including on their process for identifying nonprofits facing allegations and deciding which ones to ban. Fidelity Charitable said it does not comment on decisions involving individual charities and declined to give a statement. DAFgiving360 said in a statement that it “communicates directly with donors when a grant recommendation is impacted by an eligibility determination” and will provide information on other alternatives when appropriate. The sponsor said that it does “not take charity eligibility decisions lightly.” In a separate statement, Vanguard Charitable noted its “procedural pause” is “not a value judgment; it is the application of objective criteria and reflects Vanguard Charitable’s responsibility, as the legal owner and steward of the charitable assets, to review and approve the grants made in its name.” A spokesperson said it denies fewer than half a percent of donors’ donation recommendations annually and that “independent oversight is central to the value of donor-advised fund structure.” Unexplained Inconsistencies ProPublica reviewed donor-advised fund sponsors’ policies and giving records alongside government actions taken against charities to understand when and how sponsors intervene. The review identified cases in which Fidelity Charitable and DAFgiving360 diverged from their treatment of the SPLC and kept giving to charities facing the kinds of government investigations their guidelines identify as grounds for halting donations. Then-Washington Attorney General Bob Ferguson sued Providence Health and Services in February 2022, alleging that the nonprofit Catholic healthcare system illegally billed and aggressively collected payments from low-income patients without determining if they were qualified for charity care. The case was extensively covered in the regional media, and Ferguson’s own news release emphasized that Providence’s conduct continued despite an investigation by his office. Even so, Fidelity Charitable and DAFgiving360 allowed Providence to keep getting donations, ProPublica found. Providence ultimately agreed to pay $150 million in refunds and debt relief for unlawful charges, the largest resolution of its kind in the country, according to Ferguson’s office. Providence did not admit to any wrongdoing. Fidelity Charitable and DAFgiving360 also kept sending donations to Grand Canyon University as it faced a lawsuit and a $38 million fine following federal investigations that found it deceptively advertised the cost and course requirements of its doctoral programs and made illegal calls to consumers. The university denied the allegations, calling them “unsubstantiated.” The Department of Education rescinded the fine in May 2025, and the Federal Trade Commission dismissed its remaining case months later after losing multiple court motions. But records show the Christian university drew donations from both fund sponsors throughout the two-year dispute. Idea Public Schools, Texas’ largest charter school network, was investigated from 2021 to 2024 by the state’s chief charter school regulator amid allegations of lavish spending on private jets and parachute payments to leaders. Fidelity Charitable kept the dollars flowing throughout. The charter network was ultimately placed in a conservatorship by the state and forced to pay back $28.7 million to the U.S. Department of Education. The network acknowledged that it did not properly ensure that funds were administered lawfully in a statement released at the time. Then there’s VDARE Foundation, which ran an influential far-right, white nationalist website. In 2022, New York Attorney General Letitia James began investigating the organization for misuse of millions in charitable assets. As VDARE faced subpoenas, it solicited donations asking supporters to “help us fight back.” Clear evidence on its homepage that it was under investigation didn’t stop DAFgiving360 (formerly Schwab Charitable) from continuing to give. An article published by VDARE, a white nationalist website run by VDARE Foundation. DAFgiving360 continued giving to the foundation, despite its policy that it “may” stop donations if organizations come under investigation by government or law enforcement agencies. Screenshot by ProPublica James sued the organization in 2025. Its leaders are fighting the charges, and the case remains open. VDARE, whose website is now inactive, is no longer listed as an option for current DAFgiving360 customers. The sponsor would not say when the charity was removed, but said in a statement that it conducts a “thorough assessment” to determine eligibility and that it “applies its policies consistently across all charitable organizations, regardless of their political viewpoint or orientation.” The fund sponsors’ discretion to keep money moving to embattled groups becomes evident when considering the Trump administration’s actions against major universities. Dozens of colleges became the subjects of formal government investigations involving their handling of campus protests and alleged antisemitism tied to the crisis in Palestine and Israel and over allegations of diversity, equity and inclusion. At least 20 of the universities are still listed as options for donation recommendations on Fidelity Charitable’s and DAFgiving360’s websites. ProPublica asked each school if it was still receiving funds from the DAFs. Most did not respond. One said that it has not seen a decline in donations from the sponsors. Rather than making ad-hoc decisions about which organizations to keep giving to, some legal experts told ProPublica that fund sponsors should follow the direction of the IRS, which has the authority to investigate and rescind tax-exempt status through an audit, while also providing avenues for organizations that come under scrutiny to appeal decisions they don’t agree with. “The wisest choice is probably to rely on the IRS list,” said Lloyd Mayer, a professor at the University of Notre Dame Law School who researches nonprofits. Cutting off organizations deemed eligible by the IRS, Mayer said, runs the risk of looking inconsistent or partisan. “An investigation by who? An indictment at what level? Is it only federal government indictments? Is it also state indictments? What about the local county prosecutor? Of the thousands of counties in the United States, if any one of them brings an indictment, you’re gonna stop? Where do you start drawing the lines?” Answerable to Few ProPublica used an internal Fidelity Charitable tool to identify 22 nonprofit organizations that Fidelity had given to in the past but no longer lists as options to donors. ProPublica limited its analysis to nonprofits that have raised $1 million or more annually. The charities represent a cross section of ideologies and missions — left- and right-leaning, foreign and domestic, media, religious, humanitarian. The list includes The Epoch Times, the conservative media outlet whose chief financial officer pleaded guilty in July to federal money-laundering charges, as well as pro-Israel nonprofits that support the country’s defense forces. It also includes the Alliance for Global Justice, a progressive, Arizona-based organization scrutinized for its financial ties to a Palestinian group that the American and Canadian governments designated a terrorist organization in 2024. The Epoch Times released a short statement following the plea agreement, noting that it was not named in the lawsuit. The Alliance for Global Justice has called the allegations against it “false and unsubstantiated.” Both groups are currently eligible to receive tax-deductible donations, according to the IRS. Fidelity refused to confirm it had deemed these charities ineligible. A source familiar with the sponsor said donors can manually enter a charity’s tax information to ask the fund to make a contribution to an unlisted charity. But ProPublica reviewed requests from two donors who tried the manual workaround. Both were turned down. ProPublica attempted to ask representatives of all 22 charities if they understood why they did not appear on Fidelity’s rolls of more than 1 million potential grant recipients. Seven responded. One of the only groups that said it had gotten a clear answer about its removal was the United Aid and Logistics Foundation. “Our activities include providing aid to those defending the safety and human rights of Ukraine’s men, women and children, which Fidelity does not consider to be humanitarian,” said Sytske de Boer, a director of the volunteer group. “We understand it is their prerogative, however we disagree with their interpretation and hope they reconsider.” Four organizations told ProPublica they’d been left with no or unclear answers from Fidelity Charitable. Among them is Nonviolence International, a group founded by a Palestinian activist that supports nonviolent campaigns worldwide. “Substantial funds have been paused by Fidelity DAF that were earmarked for our projects,” co-director Michael Beer said in a statement. “If funding is not resumed, nonviolence training, education, and intervention programs for marginalized communities will be slashed.” Donors have also been met with silence. Piccolo, the retired Fidelity senior vice president, said that the decision to cut off the SPLC seemed at odds with the careful decision-making she’d come to expect from the fund sponsor. “This action feels out of band for me,” she said in an interview. “The case appears weak and politically motivated.” For over 25 years, the SPLC has tracked the activity and influence of extremist groups across the country. Its “Hate Map” lists over 1,200 groups with connections to white nationalism, the neo-Nazi movement, antigovernmentalism and a plethora of other ideologies that it says are rooted in hate. The tool has been widely cited by journalists and academics for years, and, up until last year, the FBI utilized SPLC research to assist in law enforcement efforts. The map has drawn scrutiny under the Trump administration, whose supporters are among some of the right-leaning groups the organization has labeled extremists. In a letter addressed to top White House aide Stephen Miller last year, several of those groups called the map a “smear tactic” and called upon the Trump administration to remove references to the SPLC’s work from the federal government. Attorneys for the SPLC, in court papers, pointed out how language from the letter wound up in an incident report opened by the FBI one month later justifying an investigation. The Justice Department’s ultimate accusation was unorthodox. Prosecutors alleged that the SPLC’s longtime practice of paying confidential “field sources” to monitor extremist groups like the Ku Klux Klan constituted a fraudulent diversion of donor funds. The SPLC pleaded not guilty to 11 counts of wire fraud, giving false statements to a federally insured bank and conspiracy to commit money laundering. Former federal prosecutors called the indictment “stretched” and “not valid,” and whistleblower reports to Democratic lawmakers said that the prosecution was rushed despite weak evidence. The Justice Department did not respond to a request for comment. Earlier this week, it arrested Heidi Beirich, a former SPLC employee, on charges connected to the case. Prosecutors allege that she facilitated secret payments to informants inside extremist groups. Beirich’s attorney said that she is innocent and the case is “without merit.” “I can understand that if overwhelming evidence were to emerge publicly in the course of proceedings, a temporary pause might be warranted,” Piccolo wrote to Fidelity Charitable. “But that is not where things stand.” While company representatives sent rote responses and promised to pass along her inquiries, Piccolo told ProPublica that she has yet to receive a thorough explanation of their actions. She has stopped funding her Fidelity Charitable account and plans to move her existing balance to a different sponsor. After the fund sponsors moved to cut off the SPLC, 16 state attorneys general, all Democrats, registered their objections in a letter. “As attorneys general, many of us are the chief regulators of nonprofits, charities, and charitable trusts in our states, and serve as representatives of the public and donor intent,” they wrote. “This decision raises serious concerns that you are allowing the DOJ’s selective political targeting of a charity to impact your donor-advised giving decisions.” They said their concerns were amplified by the sponsors’ refusal to disclose other charities whose donations they’d paused. They have not received a response. Powell, the former Vanguard Charitable attorney, said the sponsors are unlikely to be moved by public blowback. “I don’t see this as being earth-shattering enough where it’s going to drive any immediate change,” he said. “These are sponsoring organizations that are aligned with financial institutions, which are traditionally adverse to risk. Once policies are in place, it takes a lot to change something.” But in the future, he expects large account holders will want more from the fund sponsors than just moving their money between organizations. “I think that any change is going to be driven by donors who are asking questions about how their philanthropy is defending democracy.” The post Wall Street’s Nonprofits Use Selective, Opaque Logic to Defund Charities appeared first on ProPublica.
English
Arabic
Spanish
Portuguese
Deutsch
Turkish
Dutch
Italiano
Russian
Romaian
Portuguese (Brazil)
Greek