Billionaire hedge fund mogul Bill Ackman’s been busy lately. He’s waging an increasingly unhinged and pathetic campaign against MIT — its faculty, directors, and any reporters bold enough to challenge him — and strong-arming his preferred presidential candidates. But let’s set all these antics aside for a moment: Ackman’s power tripping has brought to light an important and glaring failure in the regulation of donor-advised funds (DAFs).
Ackman has alleged that MIT’s chairman Mark Gorenberg, by routing very large personal contributions to his wife’s nonprofit through a donor-advised fund administered by MIT, is both scamming the tax system and maintaining the nonprofit as a public charity when it does not merit that status.
In Ackman’s words, “In this case, the Chairman of MIT made a donation to the MIT DAF, which in turn funneled the money to Parity.org, the Founder, CEO, and CFO of which is his wife, and where Gorenberg serves as treasurer.”
To allow their donors to receive the biggest tax breaks for their contributions, nonprofits classified as public charities need to show that at least one third of their funding comes from a range of public sources, not just a few individuals.
But there’s a loophole. Since the groups that administer DAFs (known as sponsors) are themselves classified as public charities, if mega-donors route their money through a DAF instead of giving directly, then bingo: They reap the additional tax benefits and the grantee’s public charity status isn’t in jeopardy.
Tax filings show that, between 2019 and 2022, Gorenberg indeed appears to have used his MIT donor-advised fund to donate over $1.8 million to the nonprofit Parity.Org. These contributions represented over 80 percent of the group’s total revenue over those years. (I say “appears” because DAF sponsors are not required to identify which donors make which grants, though Forbes has verified the basics with MIT.)
And in addition to Gorenberg’s wife, Cathrin Stickney, serving as a director and CEO of Parity.Org — a role for which, contrary to Ackman’s assertions, she does not appear to have received any compensation — Gorenberg himself also serves as a director on the group’s board and is listed as treasurer in 2021 and 2022.
Source: inequality.org
