After Trump, What’s Happening at DonorsTrust, the Right’s Favorite DAF?

Virrage Images/shutterstock

Virrage Images/shutterstock

When it comes to philanthropic support for right-leaning policy groups, it’s hard to get around the fact that year after year, a growing cascade of donor dollars is flowing through one outfit: DonorsTrust. Often criticized on the left as a channel for unaccountable cash, DonorsTrust is little different on paper from someplace like Fidelity Charitable—that is, it’s a donor-advised fund sponsor, taking in tax-deductible contributions and keeping them around until the donor chooses to direct them to a nonprofit, anonymously.

But for donors on the right, DonorsTrust’s appeal lies not only with its DAF structure, but with its free-market values and ideological mission. “We were created specifically to ensure the intent of people who tend to want to support charities that are not over-reliant on government dollars and are addressing a problem without intentionally trying to expand the size and scope of government,” said Lawson Bader, DonorsTrust’s president and CEO. 

Marketing itself as “the community foundation for liberty,” the DAF sponsor has grown into a power player—contributions totaled $350 million in 2020, with grants of $190 million going out the door. Since its founding, DonorsTrust has given out over $1.5 billion. In addition to the sheer volume of money, a large proportion of DonorsTrust’s grantees operate in the policy arena, magnifying the impact of this funding on the public sphere. 

That impact has garnered controversy. When DonorsTrust does receive media attention, it’s often for channeling funds to controversial charities, which include groups backing narratives of widespread voter fraud, anti-LGBTQ groups associated with the religious right, groups spreading misinformation and obstructing action on climate change, and anti-immigration advocates classified by watchdogs as hate groups.

Of course, DonorsTrust isn’t the only DAF sponsor watering that particular garden. Far-right groups have received money from DAFs at ideologically neutral places like Fidelity or Schwab, as well. But for many DonorsTrust clients, part of the core appeal lies in their freedom to support often contentious causes without any pushback. That, and the security that comes with knowing that no one, including DonorsTrust itself, will mess with those intentions after they’re gone. 

As Bader was quick to say, DonorsTrust wasn’t created to change with the times. But there are some definite ways it has evolved, not least a massive upswell in cashflow over the years. Its centrality to the conservative 501(c)(3) landscape is now undeniable. And as a values-driven funding middleman on the right, it’s also a foil for the torrent of unaccountable policy funding that has emerged on the left.

Created to stay the same

Several years back, Inside Philanthropy’s founder David Callahan wrote a piece detailing DonorsTrust’s origins and unique appeal for conservative and libertarian givers. DonorsTrust isn’t all that old in the grand scheme—conservative activist Whitney Ball founded it in 1999, decades after Drummond Pike pioneered the values-driven DAF model on the progressive side through Tides. 

A key figure in conservative 501(c)(3) circles, Ball helped build up the Philanthropy Roundtable and founded DonorsTrust as something of an adjunct to the Roundtable’s work of organizing and extending the conservative donor community. DonorsTrust was also founded on Ball’s critique of liberal philanthropy, now canon on the right, which holds that founders’ free-market giving intentions tend to get unacceptably skewed once left-leaning heirs and professional philanthropoids assume stewardship. 

Bader described DonorsTrust’s ethos, half-jokingly, as “to be the same damn thing 20 years from now as we are today, because that’s why we exist.” On top of that creed, another safeguard is built into DonorsTrust’s operations to preserve donor intent—every DAF must sunset no later than 25 years after the death of the original account holder. “We want to protect our clients from ourselves,” Bader said. “It’s also important as people come and go that they don’t do the ideological shift, if you will.” 

Accounts at DonorsTrust close as soon as the donor wishes, but in the event an account does outlive the original donor, one and only one successor adviser is allowed during that 25-year period. If something happens to the successor, DonorsTrust pays out the account based on its best judgement of the donor’s intent and history of giving.

As Bader tells it, DonorsTrust has gotten a definite boost from fears of so-called “cancel culture” coming to the DAF world. “The fact that Fidelity Charitable (and some community foundations) [are] refusing to honor grant recommendations (or at least slowing down the process) to various ‘conservative policy’ groups, combined with the recent decision by the Goldman Sachs DAF to cease grantmaking to all perceived ‘policy’ groups—on left and right—has resulted in a noticeable uptick of account rollovers from these groups,” Bader said.

The concern is that such a pattern could spread further afield to Schwab, Vanguard and the like. “Fortunately,” Bader said, “in this market, there are alternative choices, and DonorsTrust is benefiting from that.”

Exponential growth, ideological giving

The biggest change at DonorsTrust over its two decades of existence is its size. Back in 2002, the newly minted organization took in $1.4 million and made $1.2 million in grants. Growth since then has been exponential, reaching $44 million in contributions and $63 million in grants in 2010. Today, the dollars coming in and going out are in the low hundreds of millions every year. Total assets in DonorsTrust’s DAF accounts now exceed $600 million.

For the most part, DonorsTrust’s success can be understood as part and parcel with the general rise of DAFs. The privacy, ease of use and low overhead of DAFs have endeared them to today’s donors to the extent that Fidelity Charitable, the top DAF sponsor, has now been the nation’s largest grantmaker for several years running. Overall assets in DAFs have climbed from around $30 billion at the time of the 2008 recession to over $140 billion in 2019. 

These days, donors of all political stripes understand the advantages of DAFs. That’s one reason DonorsTrust has fully leaned into its values-oriented mission to further its growth. “In the early days, we did some educating about what a DAF is, but we realized that’s not really all that valuable for us to do,” said Peter Lipsett, DonorsTrust’s vice president. “Our niche is to say, if a DAF is a good tool for you, also make sure you’re working with somebody that shares your values, shares your principles, understands the types of organizations you’re giving to.”

DonorsTrust’s success has indeed been a boon for conservative organizations of all kinds. Often, Bader said, clients come to DonorsTrust with the perception that it only facilitates giving to policy groups. That’s not true, although Bader did say that around 60% of DonorsTrust’s grants fall within the policy realm. Like the National Christian Foundation, the other major right-leaning DAF sponsor, DonorsTrust funds a wide range of charities, including non-policy grantees like schools, universities and local service organizations. 

Nevertheless, many of DonorsTrust’s larger grantees do operate in the policy sphere and in arenas of political relevance. Some of them are more controversial than others. In 2019, for instance, general support grants of nearly $7 million went to the Federalist Society and over $2 million went to the Heartland Institute—both relatively mainstream conservative organizations. 

But large sums also made it to places like the 85 Fund (over $10 million), a key purveyor of voter fraud narratives; the VDARE Foundation ($1.5 million), often characterized as a white supremacist hate group; Project Veritas ($4 million), a far-right “investigative” media organization that has been accused of spreading disinformation; and Turning Point USA (around $900,000), a pro-Trump organizing group whose 501(c)(4) affiliate was listed as a participant in the infamous rally that culminated in the Capitol insurrection. 

Beyond these ultra-controversial grantees, 2019 also saw significant sums pass from DonorsTrust to civic, intellectual and state/local advocacy groups operating in specific niches on the right, including the Institute for Free Speech, the Foundation for Cultural Review, the Foundation for Government Accountability and the Capital Research Center. The State Policy Network, whose array of state-level policy shops has channeled 501(c)(3) dollars to great effect for the right, is a regular DonorsTrust beneficiary and got over $7 million in 2019. 

Some of these groups are Trumpier than others. The amusingly named Center for American Greatness got $700,000 in 2019—no need to guess at its sympathies. 

Cultivating “philanthropic freedom”

However distasteful some of these grantees may be, DonorsTrust’s view is that it’s the donor’s money, and they should be able to dispose of it how they will. For the Roundtable set, the tenet of “philanthropic freedom” holds true whether the donor in question is giving to their alma mater, to the Cato Institute or to VDARE.

Philanthropic freedom, donor intent and a small-government ethos are all pillars of DonorsTrust’s giving philosophy, and it is that philosophy the DAF sponsor seeks to instill in the next generation through one of its key initiatives, the Novus Society. Headed at the time of writing by Lipsett, Novus is meant to help donors under the age of 40 cultivate their giving and engage with a like-minded community of rising philanthropists. 

“One of the things we hear a lot is, ‘all our donors are dying,’” Lipsett said. “Part of it is to remind folks out there that there is a future generation coming up, but also to say to the donors: You don’t have to wait until you’re 60, you can start developing those charitable giving muscles right now.” According to Lipsett, a good portion of Novus participants work in the nonprofit space themselves, and “understand the value of philanthropy because it helps pay their paychecks.” The other half includes young entrepreneurs, lawyers, doctors and the like. Heirs, whom he didn’t mention, are no doubt part of the picture, as well.

Novus members’ funds are housed at DonorsTrust—it’s not a separate entity—but Novus does host volunteer events and “mentorship conversations with more established givers in the DonorsTrust network.” It also gives members access to a list of pre-vetted organizations to provide newcomers with a jumping-off point. 

“I view it more on the self-improvement side than [as] donor organizing,” Lipsett said, characterizing Novus as a “a habit-building organization.” At the same time, there’s clearly an element of donor organizing involved, even if it’s more muted than at someplace like the progressive Resource Generation. By aligning their long-term giving habits with a values-driven organization like DonorsTrust and taking their cues from its donor community, younger givers set out on a path that won’t be at all disagreeable to conservative policy land.

From the perspective of older conservative donors, Bader spoke about Novus as “a mechanism to sort of help with the grandkids or the kids,” both in terms of teaching them the practicalities of charitable giving and, perhaps, nudging them away from paths the older generation might object to. 

In addition to Novus, which is an ongoing project, another interesting recent DonorsTrust initiative was its Growth and Resilience Project, a COVID response effort that started and ended last year. As the pandemic prompted a jump in DonorsTrust giving to typical COVID-responsive charities like food banks, job retraining, health clinics and medical research, Bader and team wanted to find “low-hanging fruit in the larger regulatory world” to eliminate “local red tape” that might be harming small businesses, toward the larger objective of limiting the size of government and shrinking it where possible.

Seeking to seize on the nimbleness possible with DAFs, DonorsTrust gave out a number of grants in the mid-five figures to local and national policy shops, some of which are listed here. Most of the money came not from a DAF, but from the Whitney Ball Memorial Fund, a discretionary pooled fund that DonorsTrust’s five-member board uses to make direct investments. The hope was to jumpstart some initiatives that foundations and larger donors could then pick up and resource over the longer term. Think of it as rapid-response funding for conservative economic policy.

The post-Trump era

As the pandemic dies down, DonorsTrust is contending with another seismic shift: the aftermath of Donald Trump’s presidency and the beginning of the Biden era. When we spoke, Bader seemed to downplay the election cycle’s effect on the DonorsTrust donor, saying instead that what matters to folks are nuts-and-bolts issues like potential changes to estate or tax law. Still, a glance at DonorsTrust’s grantee roster shows just how deeply its clients care about politics, whether they’re Trump-supporting culture warriors or Trump-doubting free market types more concerned with the specter of big government.

It’s still early to predict with certainty how the Biden presidency will influence giving patterns, but Biden’s massive spending proposals are certainly a motivation for the conservative policy donor to step up. “Donors who value investing in ideas-based public charities (i.e. ‘think tanks’) are likely to continue to do so,” Bader said. He also noted that there’s been a geographic shift in policy giving that has favored state and local groups—similar to what happened on the liberal side when Trump entered the White House and Obama exited. 

Post-election, more DonorsTrust money is also flowing to conservative public interest law firms, which will challenge rules and laws coming from the Biden administration and a Democratic-controlled Congress. In addition, Bader said, “it appears that there may be newer policy-centric groups starting that are more closely aligned with Trump-specific policies. Some of those will take funds from Trump-oriented donors that otherwise may have gone to traditional conservative groups. But it is unclear what the long-term impact of this will be.”

It’s worth noting that the right has, since the 1970s, put a strong focus on broad, issue-based movement building, with substantial backing from conservative philanthropy. Activists and advocates on the left have long called for liberal donors to embrace a similar approach, seeing the results the conservative movement has yielded.

Looking at the hot-button issue of voting rights—Republican state lawmakers have filed hundreds of bills that would restrict access to voting—Bader talked about a downward trajectory in giving around those questions as the 2020 election recedes. It won’t be until tax filings for 2020 (and 2021) become available that we can confirm that trend. But Bader did emphasize that it’s hard to delineate which general support grants end up supporting voting-related work, since a lot of conservative policy shops include that as just one element of what they do.

Massive contributions, little transparency

DonorsTrust isn’t just a solution for the modestly affluent conservative policy donor. Some of its largest contributions are true whoppers. The schedule of contributors included in DonorsTrust’s 2019 990 lists several massive eight-figure contributions and one in the nine figures—just over $150 million. The same schedule from 2018 shows one $123 million contribution, listed as non-cash, as well as another for $11 million and many more in the eight-figure range.

Together, these mega-contributions make up a significant fraction of DonorsTrust’s annual intake. Even as DonorsTrust markets to smaller and younger donors, it’s also a conduit for some of the biggest conservative giving out there. And it’s all anonymous, of course, courtesy of current DAF rules. 

When I queried Bader about these contributions, he suggested that they might be accounted for by one-time bequests or rollovers of private foundations into DAF accounts, money which doesn’t necessarily go straight to conservative policy groups. “I will say that any assumptions people make about who may be behind such large contributions—at least assumptions focused on oft-named ‘political donors’—will be completely mistaken,” Bader said.

Still, there’s no way for outside observers to confirm that. And even if they’re the result of relatively innocuous estate planning, these gifts would be significant stories in their own right if they were transparent, revealing policy-interested donors we may never have heard of.

Of course, these shadowy DAF mega-gifts aren’t just the province of the right. In recent years, unaccountable contributions on a similar scale have flowed through left-leaning entities like the nonprofit funds associated with Arabella Advisors, which include the 501(c)(3) New Venture Fund and the 501(c)(4) Sixteen Thirty Fund. The New Venture Fund’s 990 for 2019 lists no less than nine contributions in the low eight figures, as well as one exceeding $83 million. And as with DonorsTrust, we have no way to tell who’s behind these massive gifts. 

A question of ownership

As the folks over at the Capital Research Center have been so keen to document, the Trump years saw so-called philanthropic “dark money” on the left equal and even exceed “dark money” on the right. From a progressive perspective, that’s not wholly bad—liberal philanthropies have long sidestepped values-based giving to their detriment, and that’s becoming less true today. 

What we have on the left is an odd dynamic where opaque DAF gifts often back advocates who are pushing against money in politics and even calling for greater philanthropic disclosure. No such cognitive dissonance exists on the right. For DonorTrust, the wealthy are truly entitled to their wealth, having earned it, and should be empowered to use it in service of their individual conceptions of a better society. Contrast that with some progressive givers, who question the very basis of their wealth and seek, in effect, to disempower themselves. 

What’s also interesting is that from opposite ends of the political spectrum, both DonorsTrust and places like the spend-down Kataly or Chorus foundations are challenging the traditional perpetuity model. For DonorsTrust, it’s all about preserving intent; for the progressives, it’s about transferring power. But in both cases, giving philosophies are gaining steam that promise a more charged, politicized norm in philanthropy. 

It’s kind of ironic: DonorsTrust was founded never to change, but it’s part of larger trends that are upending traditional philanthropy, whether that’s the growth of politically adjacent and often anonymous giving—or the fast-paced, low-overhead firehose of funding coming from the new apex donors like MacKenzie Scott. Meanwhile, the Fords and Kelloggs of the world, so invested in social change, are still embedded in the old-school perpetual legacy model. 

In that sense, DonorsTrust and its rival funds on the left are on two sides of the same coin. As Bader put it, “Arabella [Advisors] and I kind of share the same sympathy to [the idea that] people should be able to do what they want with their money and if they lose, they lose, and if they win, they win—but frankly, if they wait 10 years it’s all going to change anyway.”

After Trump, What’s Happening at DonorsTrust, the Right’s Favorite DAF?