Panama Papers, Dark Money, and Nonprofits

(The Panama Headquarters of Mossack Fonseca, the law firm at the center of the Panama Papers leak)

In a provocative op-ed appearing originally in The Clyde Fitch Report (and reprinted in The Nonprofit Quarterly), Jason Tseng – a nonprofit professional with years of experience with arts and LGBTQ organizations – draws an intriguing connection between the Panama Papers and the role of dark money in philanthropy.

From a profile on the International Consortium of Investigative Journalists (the group that broke the Panama Papers story) to a breakdown of the scandalous details relating to the head of FIFA (who only recently took over the reins from the highly corrupt Sepp Blatter), Key Elements Group has featured a number of stories showing how the Panama Papers tie directly into the world of Philanthropy.

In Tseng’s op-ed, the writer explores a similiar theme to one we explored in a piece on the ulterior motives of politicians who both influence tax policy and hold financial assets in offshore tax havens. Titled “The Panama Papers, Philanthro-Capitalism, and the Arts,” Tseng’s article discusses the role of dark money in obscuring the transferral of ideology from wealthy funders to the institutions they fund.

Using the DeVos family as an example, Tseng details the billionaire family’s relationship with the controversial DeVos Institute, a think tank operated by family associate Michael Kaiser which has released controversial reports decried by critics as racist. The particular priorities of the DeVos Institute – which implore organizations serving minorities to gear their operations toward the concerns of wealthy white donors – have immense reach. Bloomberg Philanthropies, for example, requires all of its 200+ grantees to undergo DeVos Institute training.

Tseng makes the argument that the DeVos family, which made its wealth through a poorly regulated market that enabled them to effectively run a legal ponzi scheme, actively influences the ideological drive and framework of its vassel organizations. While certainly conjecture, it is hard not to see a parallel between the ethos exhibited by the family’s namesake institution and its conservative politics (the DeVos’ have long been considered key king-makers in the Republican party).

His stronger point is that the lack of transparency is what makes the philanthropic funding of the financial elite most noxious. He describes the incompatibility of dark money with the social and cultural vision of arts professionals:

…[I]f, as artists and administrators, we are committed to a world free of oppression, where creativity is unbound by the circumstances of your birth, then we must be prepared to enter a world in which we are not made subservient to our very oppressors by virtue of their unexamined finances. Thanks to the Panama Papers, those very finances are about to enter the light.

The “unexamined” characteristic of philanthropic funding is what ultimately empowers hidden agendas. The billions of dollars poured into worthy causes by businesses that exact some sort of negative toll on society can make a degree of positive difference (the DeVos family has spent millions on the arts), but this impact is severely curtailed if the financing is submerged in secrecy. In this case, the funding can transmit the influence of a particular special interest in the guise of promoting the Social Good.

Nonprofits do well to acknowledge the sources of their funding. Doing so creates trust and enables stakeholders and constituents to keep nonprofits on the right path for pursuing their missions to the fullest. Without the public’s trust, administrators face an uphill battle in making meaningful positive change in their areas of focus, thus shortchanging the demographics they serve and leaving urgent problems unaddressed to the detriment of future generations.

The Panama Papers have laid bare the sheer immensity of dark money across the globe. As nonprofit professionals continue to pursue their respective missions promoting the Social Good, they should take a keen interest in this ongoing debate, as it will continue to have a direct impact on the nonprofit world.

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