The Wrong Way to Manage Risk Under the New Administration
I will spare our readers a detailed recap of what is going on at this particular moment in history, and what it means for nonprofits. If you’re reading a nonprofit law blog, you probably know that the administration has threatened, directly or indirectly, foundations and charities that care about diversity, equity, and inclusion and progressive principles with loss of federal funding, enhanced enforcement, or revocation of exempt status.
The legal foundations of these threats do not warrant serious consideration. They misstate the law by conflating interest in diversity or combatting racial injustice with unlawful discrimination, criticism of Israel with antisemitism, and concern for immigrants with treason. They are brazenly unfounded arguments advanced by a hateful administration dedicated to oligarchy, resegregation, and hostility to anything other than self-interest, and should be treated as such. If their arguments prevail, it’s only because they’ve broken the system that will consider them.
From that context emerges a pernicious version of “risk management” – namely, asking nonprofits to dance around their mission. Whether that’s private foundations being “silently defiant” (an oxymoron, I’d argue) with respect to DEI or public charities being told by funders or their own Boards to Ctrl-F their way to safety by deleting the words the fascists don’t like (this NYT article has been cited to me a number of times), the premise is consistently that the threats need to be dodged rather than answered.
Why are so many nonprofits and their advisors acting like we are the ones that need to change?
The answer, of course, is fear. And fear is warranted. They might enact their threats and they might win. If the goal is just to avoid harm to your own organization, without regard to your purposes, then managing risk means not sticking your neck out.
I don’t begrudge the small nonprofits with employees depending on them for their livelihoods for playing it safe. I very much begrudge the gigantic accumulations of untaxed capital gains known as ‘private foundations’ that just two years ago were ‘antiracist’ and dedicated to diversity, equity, inclusion, belonging, and many other words on the administration’s “no-say” list but now choose not to use their resources to fight for the lawfulness much less the legal necessity of those concepts.
Again, they are “managing their risk,” but what about the risk to the purposes themselves? If we are taking any other stance than direct, unified, and open confrontation over these concepts when they are most directly under attack, how can we expect them to survive whatever is happening now? And what’s the point of a charitable sector if it can’t be focused on addressing inequity? With all the concern about threats to tax-exemption being yanked away, I find myself more concerned about whether many organizations in the nonprofit sector even deserve it if this is their level of resolve.
If that’s not persuasive, consider what this sort of risk management communicates to the organizations and individuals who have no choice but to be in the middle of the fight. If we are all focused on getting our own organizations to outrun the threat without confronting the threat itself, are we not just feeding the more vulnerable to that threat? And I am not only referring to the organizations devoted to racial justice, gender equity, trans rights, immigrant rights, and Palestinian rights, though they are all, of course, in an impossible situation.
It does not take very long to review the statements and actions of the administration before you realize that the attack on DEI is not an attack on HR programs – it is a rejection of the people whose interests are associated with DEI: anything non-white, non-straight, non-cis-male. The term DEI is used against Black employees, awardees, and public figures as a slur – a substitute for the word they want to use but, at least for now, still will not. Celebrations of non-white holidays and cultures are rejected, but somehow traditional white American celebrations survive. Records of achievements of women and non-white employees no longer celebrated amidst an administration about as far from a meritocracy as one can imagine.
We all know what this is. But only some of us have a choice about whether to dodge it.
Perhaps then, those who meant what they said when they launched these programs should align around a different version of risk management. One that considers the risk as a whole and manages it through trying to defeat it, and treating it as the existential risk that it is. If foundations think beyond their own interests in terms of what managing that risk looks like, that should be making sure any organization that is targeted by the administration or a plaintiff has all the resources it needs to fight it. Managing the risk should mean making it as hard as possible for the threat to succeed, and the ‘wordsmithing’ form of risk management seems to be the opposite of that.
They may still win – those expenses may be for naught, exemptions may be revoked, and funding streams lost. Or maybe not.
But it increasingly feels that we are all being called, in our own ways, to put our bodies upon the gears of a machine that threatens to crush the few just parts of our society. Asking foundations to risk some of their tax savings feels like one of the easiest possible versions of that call. Hopefully the conversation begins to shift in that direction, instead of placing the burden of dealing with the new administration squarely on the most vulnerable.
