Where Are Donations Leaking?

Non-profit organizations must be strictly regulated so their CEOs cannot exploit their donors.

Reading Time: 3 minutes

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By Fareha Islam

When I hear the phrase non-profit donations, I want to envision people like Jane Goodall, selfless activists who want to help the needy. However, doing so isn’t possible when I read headlines about non-profit corruption and hear about people exploited for sob stories. The recently thriving corporation Black Lives Matter Global Network Foundation (BLMGNF) has only confirmed these realizations.

The Black Lives Matter (BLM) movement was initially about reducing police brutality and making the world safer for black people. An easy and accessible way to contribute to this overwhelmingly successful movement was through donating to one of the largest non-profit organizations established for BLM, BLMGNF, which raised around $90 million. However, the lavish lifestyles of BLMGNF leaders and their suspiciously luxurious purchases seem to cloud the original intentions of the movement. Recently, BLMGNF leaders bought a $6 million house with a sound stage, music studio, pool, and two-bedroom guest house in California. Though the organization has said that it was for the purpose of establishing a “campus” for its members, it’s hard to believe that the money couldn’t have been more effectively used. Their method of purchase was not transparent either, and clearly not meant to be publicized. The building was bought by real estate developer Dyane Pascall, then transferred through a private Delaware shell company that is connected with the BLMGNF organization. Such actions contradict the BLM cause to redistribute wealth from the elite to more marginalized communities.

The connections BLMGNF has with other corporations also seem to serve personal gain rather than the greater good. For instance, a non-profit organization co-founded by Janaya Khan, the wife of BLMGNF executive director Patrisse Cullors, received $6.3 million from BLMGNF in Canada. Shortly after, two BLMGNF Toronto leaders, who quit due to concerns about financial transparency, were denied and gaslighted. Clearly, it isn’t merely a coincidence that BLMGNF chose to give money to a non-profit that was tied to Cullors herself.

This example is just the tip of the iceberg when it comes to non-profit corruption. Non-profit organizations frequently give irrationally high salaries to their executives and create shell companies to transfer money. Fifty charities have been exposed for spending an average of less than four percent of their donations on the original cause. The remaining 96 percent goes to executives or pay-for-profit companies that are connected to the non-profits. In fact, the average non-profit CEO gets paid $130 thousand a year. The College Board, a non-profit organization for education, has monopolized SAT and AP exams, requiring students to pay $52 for the SAT exam and $95 for the AP exam. With this money, they pay their president, Jeremy Singer, over $1 million a year.

We need to enforce stricter regulations on non-profit organizations to make sure their spending is transparent and true to their cause. Especially considering that federal law gives tax exemption to non-profit organizations, corrupt corporations must not be allowed to establish themselves as non-profit. Their money-making tactics are nothing but theft from their donors and from regular tax-paying corporations. Continuing to allow this kind of corruption will only demoralize the innocent public and hurt well-intentioned charities. From the start of the 21st century, the percentage of Americans participating in non-profit donations has dropped from 66.2 percent to 55.5 percent, showing that less people trust non-profit organizations. The public has the right to be informed of these corrupt non-profit organizations before their hard-earned money ends up in the hands of the already rich. Relying on the donors themselves to research before they donate is an unfair burden, as they would have to navigate past complex business tactics that corporations often use to hide their corruption. For example, non-profit organizations often change their names to avoid discovery of their past corruption, which once again makes it difficult for regular donors to find out whether their donations are going to the right places. After changing its name from the National Veterans Services Fund, the HonorBound Foundation continued exploiting their donors by spending only $0.5 million from the $8.5 million raised for their original purpose of helping veterans. Because they continued their tax-exempt status as a legitimate non-profit organization, they were able to target genuine people who care for veterans, even after misusing their original funds.

The currently easily manipulable laws for non-profit organizations do not suffice. Non-profit organizations should be required to make their proceeds transparent, and they should be stripped of their non-profit status if the money going to their original cause is unreasonably smaller than their proceeds. We must honor Americans who do wish to make a difference by punishing those who attempt selfish gain. If we fail to do so, recent events like the BLMGNF luxury purchases will only continue to happen.