In 2023, following passage of the Donor Intent Protection Act in Kansas, Philanthropy Roundtable launched a monthly series on donor intent developments and controversies nationwide to better inform you about this important topic. The Donor Intent Protection Act has now passed in Kentucky and Georgia as well, and efforts on behalf of this legislation continue in additional states.
This Donor Intent Watch includes a discussion of prospect research designed to uncover potentially “toxic” donors.
We encourage donors to contact us with any questions about our featured items and consult additional resources on donor intent at the Roundtable’s Donor Intent Hub. We also welcome any news about donor intent we may have missed.
“Every Breath You Take … Every Move you Make”
In Fall 2023, Planned Giving Today published an article I wrote on “toxic donors.” Beginning with Michael Milken in the 1980s and closing with Jeffrey Epstein, the article explored the various ways grantees of such donors had responded to disclosures of behavior which rendered donors “tarnished” and their gifts “tainted.” At that time I noted, “No matter how much due diligence organizations apply to prospective donors, they are not likely to uncover questionable activities from generations past, nor can they predict the occurrence of such activities in the future.”
Now, however, the Robb Report has revealed the emergence of companies “putting donors under a microscope, trawling their pasts for everything from criminal connections to money laundering to legal compliance—and even gray areas such as political associations and distasteful, if legitimate, business interests.” Some of these companies were once the resources nonprofits utilized for donor prospect research. Now they are advising potential recipients whose money they should refuse.
One such company is Xapien, founded in 2018 by an expert in financial crime with the fortuitous name of Dan Secretan, and co-founders Shaun O’Mahoney and Chris Green. Clients include universities in the United States and the United Kingdom. At the University of Pennsylvania, a senior prospect analyst said Xapien produces more comprehensive donor profiles in less time than the work can be done internally. Another company doing extensive donor research for nonprofits is Wealth-X, whose successes include warning clients against engaging with Elizabeth Holmes and her company, Theranos.
Regardless of what increased due diligence reveals, nonprofit organizations will still need to make “so what” decisions. What sort of offenses are intolerable? What sort of behavior warrants the refusal of a gift or the removal of a name? Should you embed morals clauses in your gift and grant agreements? If so, who will write them and more importantly, who will decide if a donor passes muster?
And if a donor falls from grace after a gift is made and accepted, will funds be returned to their source? In a time of increased polarization, such decisions will likely be both difficult and murky. It is clear, however, that we have come a long way from Salvation Army founder, William Booth, who reportedly said, “The trouble with tainted money is t’aint enough.”
Read more here.
