MacArthur President John Palfrey and Joshua Mintz, Vice President, Chief Counsel, and Secretary, write about how we respond to potential grantee indictments and the implications for funders after a recent indictment of a nonprofit.
On June 2, the U.S. Department of Justice filed an amended indictment of the Southern Poverty Law Center (SPLC) asserting SPLC committed wire and mail fraud and conspiracy to commit money laundering arising from a program SPLC discontinued three years ago.
SPLC has moved to dismiss the case as a “vindicative prosecution.” A motion is pending. In the meantime, some donor advised funds have halted grants to SPLC sparking significant controversy. Reactions have ranged from full-throated criticism of the donor advised funds to muted understanding of the complexities. Many have decried the indictment as a politically motivated prosecution and act of retribution, while others have chosen to wait to comment or act until more facts are disclosed.
MacArthur has been clear about protecting the rule of law and the freedom to give and invest in the face of myriad challenges.
While SPLC is not a MacArthur grantee, the indictment under these circumstances raises fundamental questions for grantmakers, including donor advised funds and foundations, that may wish to support organizations that are under indictment or formal charges.
Our Approach
MacArthur has been clear about protecting the rule of law and the freedom to give and invest in the face of myriad challenges. We have also remained consistent with our mission and values and continue to be in compliance with applicable law.
Our processes include a robust due diligence approach, one rooted in working cooperatively and respectfully with prospective grantees and investees. We focus on understanding strengths, identifying opportunities for improvement, and sharing resources where appropriate.
Allegations of grantee misconduct require a measured framework, not bright-line rules, and we have standard policies and approaches in such cases. The same applies to indictments of grantees, investees, or contractors: should they occur, they will be taken seriously and handled with nuance given today’s legal and political environment.
An indictment is an accusation, not a conviction.
When a grantee, investee, or contractor is charged with a crime, the Foundation must balance two obligations: the presumption of innocence—a cornerstone of American jurisprudence—and our stewardship responsibilities to ensure charitable funds are not used in furtherance of criminal activity.
An indictment is an accusation, not a conviction. As we have seen recently, indictments can reflect retribution or political signaling rather than genuine criminal conduct.
Our response to an indictment will be calibrated to the specific circumstances, not triggered automatically by the filing of charges. The central questions are whether the alleged conduct, if true, implicates Foundation funds, the integrity of the organization funded, or the Foundation’s legal or reputational standing.
Responding With Integrity and Nuance
The factors we will assess include the following:
Connection to Foundation. Charges directly involving Foundation funds—such as embezzlement—are categorically more serious than charges unrelated to the funded work, such as a personal tax matter.
Nature of the charges. Financial crimes (fraud, embezzlement, money laundering), public corruption (bribery, extortion), serious moral offenses (crimes involving children, sex trafficking, slavery), and crimes related to the funded program area all raise substantial concern and may warrant stronger action.
Individual vs. organizational indictment. An indictment of the organization itself is more serious, as it suggests systemic conduct and may affect the organization's legal capacity to enter into contracts to receive funding. An individual indictment, while serious, may not implicate the organization's operations if appropriate personnel actions are taken promptly.
Political sensitivity. We will be especially cautious about treating politically sensitive indictments—including those with plausible allegations of selective or retaliatory prosecution—as automatic triggers for suspension or termination. Where the Foundation determines that such targeting is occurring, we may continue support if we can do so legally. That determination must be explicit and documented.
The situation involving Southern Poverty Law Center will continue to evolve, as legal cases always do. When such situations arise, our approach will iterate as needed. In all cases, MacArthur will consider a range of responses based on the specific facts of each case, and we will communicate openly with our grantees, investees, and contractors—expecting the same in return. The rule of law and fealty to our mission demand no less.
