The Giving Review has published a series of conversations with experts in philanthropy, nonprofit law, and civil society during the second half of 2025. The discussions address legal boundaries for charitable organizations, challenges facing the nonprofit sector, and debates over philanthropic reform.
Andrew Grossman of BakerHostetler spoke about the legal implications for foundations that may inadvertently fund groups engaged in unlawful activities. He noted that while illegality is clearly defined, there are cases where actions contrary to public policy can also violate the doctrine against illegality. “The classic example is a school for pickpockets. It’s certainly legal to operate a school, but that’s clearly not going to be in the public interest and it’s not something that should be subsidized through the tax code or through the way that charities are addressed under state law.”
Grossman highlighted differences between conservative and progressive philanthropic strategies: “Conservative and free-market foundations don’t tend to have relationships with community-organizing-type groups. They don’t tend to have relationships or fund groups that engage in direct action. They don’t tend to fund or have relationships with groups that operate in areas overseas that are controlled by foreign terrorists.” He continued, “there really is this asymmetry…a very serious matter for a lot of the progressive philanthropic movement,” but less so for others due to differing approaches.
Addressing concerns about potential bias in enforcement, Grossman said: “It’s really an application of neutral principles because it’s always been the principle that … charitable funds shouldn’t be used for unlawful conduct. … It’s not something, I think, that’s appropriate for a charity to do—to turn a blind eye to grant recipients using the money, resources, connections, and so forth to carry out unlawful activities.”
He clarified liability standards: “If a foundation simply gave money to a group that subsequently happened to be involved in some sort of criminal activity, those bare facts alone would never support criminal liability…Generally, there has to be a greater intent that is involved. So at a minimum, that’s going to be knowledge.” He added there could be tax-fraud charges if an organization knowingly allowed its assets to support illegal acts.
Tal Fortgang from the Manhattan Institute discussed abuse of nonprofit status when organizing unlawful activity: “If you’re using your nonprofit status to organize unlawful activity, you are abusing the implicit deal…about using your special nonprofit status for good…” He distinguished between civil disobedience during historic civil rights protests and recent acts such as blocking bridges or vandalism by noting current activists have access to democratic processes.
Fortgang warned about vulnerabilities within nonprofits regarding criminal liability if they knowingly fund illegal activities: “[T]here is not an enormous history of grantors being held liable…But theoretically…it is plausible that you could be prosecuted for conspiring to advance those acts.” He emphasized enforcing rules within nonprofits: “Americans are not going to stand for tax deductions subsidizing domestic terrorism…We need to be able to trust the system.”
Greg Berman addressed declining trust as central crisis facing nonprofits: “I’ve always basically worked in the nonprofit sector and so…the crisis for the nonprofit sector is ebbing trust in nonprofits.” Berman suggested leaders focus on rebuilding trust rather than only responding politically. He pointed out communication failures with large parts of American society and increasing polarization linked partly back upstream toward philanthropy itself.
Berman also commented on mission drift among major organizations: “[P]laces like the Sierra Club have done themselves a huge disservice over the past decade by losing their narrow focus on…what their core mission is.”
Jan Masaoka from Philanthropy Project critiqued private foundations’ focus on perpetuity over supporting charities directly: “Why is perpetuity the purpose of policy? Isn’t it helping charities?” She raised concerns about donor-advised funds (DAFs) being used potentially for private gain due lack of oversight mechanisms.
Masaoka compared fundraising around DAFs unfavorably with more traditional methods and called attention to regulatory challenges similar those faced by agribusiness versus family farms. She argued reformers need clearer differentiation between large-scale operations and smaller community efforts.
She concluded by stressing how fundamental freedoms—speech, religion, assembly—are realized through nonprofits: “If we got rid of the tax deduction…we would lose mid-level locally based organizations and I think those are really important.”
