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Black Lives Matter Global Network Foundation Sues Its Former Fiscal Sponsor

   Jun 05, 2024

Black Lives Matter Global Network Foundation (BLM GNF), a 501(c)(3) public charity, sued its former fiscal sponsor, Tides Foundation (Tides), for breach of oral contract; fraud in the inducement; negligent misrepresentation; conversion; unfair competition; accounting; unlicensed banking activities; and breach of fiduciary duty, according to a Complaint filed May 3, 2024.  

 

Black Lives Matter started out as a decentralized grassroots social justice movement, lacking a formal legal structure and 501(c)(3) public charity status in its early days. This meant that donations received by the movement were not exempt from income tax and donors were unable to take tax deductions on their donations.

 

In such situations, would-be nonprofits often enlist the aid of a fiscal sponsor, essentially borrowing that sponsor’s tax-exempt status and using its legal, accounting, administrative, and other support services in exchange for a fee. Black Lives Matter Global Network Foundation incorporated on October 16, 2017 but did not receive its 501(c)(3) exemption status from the IRS until December of 2020, according to the Complaint.

 

According to the Complaint, BLM GNF claims that during the time Tides served as its fiscal sponsor, Tides “refused to honor its promises and continues to commandeer BLM GNF’s donations” rather than following through on the charity’s expectations that Tides would direct donations based on BLM GNF’s requests. The charity also claims that Tides “engaged in egregious mismanagement of BLM GNF’s charitable funds, which exceeded $33 million,” and that the sponsor “engaged in deceptive business practices and has operated in a quasi-banking capacity without appropriate regulatory oversight or licenses,” according to the Complaint.

 

BLM GNF states in its Complaint that it is suing Tides “to demand that Tides return the funds that donors intentionally directed to BLM GNF” and “stop Tides from continuing to unfairly and improperly profit from funds it obtained through misrepresentations and a failure to honor its promises to BLM GNF and the Black community.” BLM GNF alleges in its Complaint that $33.4 million is the amount Tides refuses to return to the charity.

 

In its May 2024 article “As Civil War Consumes Black Lives Matter, $8.7 Million Goes Missing,” the Washington Free Beacon (the Free Beacon) reported that close to $9 million in funds collected by Tides on behalf of the national Black Lives Matter group “have seemingly disappeared.”

 

At the Free Beacon’s request CharityWatch analyzed several years of Michigan-based charity One Love Global’s tax filings. The Tides Foundation in its tax filings reported granting a combined $8.7 million to the charity between 2020 and 2022: 1.4 million in 2020, $100,000 in 2021, and $7.2 million in 2022. One Love Global reported to the IRS that it never received the funds, according to its tax filings of the same years. It is unclear which organization's tax forms are incorrect or what happened to the funds.

 

In an interview with the Free Beacon "CharityWatch CEO Laurie Styron offered a blunt assessment."

"'This doesn't make any sense,' Styron told the Free Beacon after examining One Love Global's tax returns. 'At best, it has extremely sloppy reporting. This is not good. It calls into question the reliability of the financial reporting.'"

"Curiously, One Love Global also reported it had 'deferred revenues' ranging from $1.9 million in 2020 to $5.6 million in 2022. It's unclear if those figures represent the Tides contributions. But even if they did, it's still millions of dollars less than what Tides said it gave to One Love Global. Regardless, Styron said it's inappropriate for a charity to report such grants as 'deferred revenue,'" the Free Beacon reported.


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