Why Tides and Black Lives Matter Are Fighting Over $33 Million

A rift between the most prominent Black Lives Matter organization and its money manager, the Tides Foundation, provides a glimpse into legal gray areas surrounding fiscal sponsorships and the difficulties that decentralized movements can face when becoming fully established nonprofits.

Black Lives Matter Global Network Foundation argued in a complaint filed May 8 in California Superior Court for the County of Los Angeles that its money manager, the Tides Foundation, is operating as an unregulated financial institution that “derives significant financial benefit at the expense of the Black-led organizations it sponsors.”

The complaint outlines various oral promises that the Black Lives Matter Global Network Foundation claims the Tides Foundation made about what would happen to donations once the BLM foundation’s tax-exempt status was approved, which happened in December 2020.

“Tides refused to honor its promises and continues to commandeer” more than $33 million in donations intended for Black Lives Matter Global Network Foundation, the complaint reads.

The Tides Foundation called the allegations “completely false,” in an email to the Chronicle. Tides added that its handling of BLM-focused donations was conducted through a collective-action fund, which it says has a unique operating structure different than conventional fiscal sponsorships.

Tides said Black Lives Matter Global Network Foundation was seeking to siphon money for its own use that was intended to benefit the broader Black Lives Matter movement. Tides decided through its BLM Collective Action Fund advisory committee to make donations intended to benefit the movement to a separate group, Black Lives Matter Grassroots, and directly to some of the dozens of BLM chapter organizations. Tides provided the Chronicle with documentation of grants made to chapter organizations, but all of the grants were from 2020 and 2021.

The lawsuit “seeks to circumvent the intent of the Fund’s donors and deprive grassroots Black Lives Matter chapters [of] critical resources, for its own benefit,” Tides said in an email to the Chronicle.

In a fiscal sponsorship agreement, an established nonprofit manages donations to projects that have not received tax-exempt status, as was the case with the Black Lives Matter Global Network Foundation. According to a 2023 survey by the National Network of Fiscal Sponsors, 100 fiscal sponsors managed more than $3.1 billion in philanthropic and government funding for more than 12,000 projects nationwide. Tides manages nearly $1 billion in assets.

Back in 2020, BLM leaders received a deluge of small donations, totaling $90 million, per the organization’s own report. But since the Global Network Foundation and Grassroots groups, which referred to themselves as “sister” organizations, did not have tax-exempt status, they were unable to provide affirmation letters that allow donors to claim a tax deduction for their gifts without a fiscal sponsor. Black Lives Matter’s arrangement with Tides also allowed the growing movement to have the donations invested by professionals and have access to fee-based legal, accounting, and human resources services.

Black Lives Matter Global Network Foundation’s lawsuit is a rarity, experts said. But problems between fiscal sponsors and sponsored organizations, or “sponsees,” have cropped up over the past few years. The leader of a fiscal sponsor, Strong City Baltimore, was indicted for wire fraud and money laundering in 2023, to the detriment of mostly Black-led groups. And in 2020, Mobilize Green lost a case on appeal against its fiscal sponsor, the Community Foundation of Greater Washington, which it had accused of breach of contract.

The cases are the exception, experts say. Usually, money raised and managed under a fiscal sponsorship agreement is turned over once a project receives its nonprofit status. Or, the two parties enter into a contract that allows the sponsee to make grant decisions if it never formally becomes a nonprofit.

While a fiscal sponsor controls the money it has raised, it is usually assumed that the sponsee will eventually get it, said Cicley Gay, chair of the Black Lives Matter Global Network Foundation.

“Who would sign up to fundraise only to have their money held by a fiduciary for eternity?” she said. “A lot of us small, Black- and brown-led organizations are at the mercy of their fiscal sponsor.”

Decentralization Meets Fiduciary Duty

The Black Lives Matter movement began in 2013 when organizers protested the murders of Trayvon Martin, Michael Brown, and others in altercations with law enforcement, to condemn the racial discrimination and inequality long experienced by Black people. Following the videotaped police murder of George Floyd in 2020, millions of dollars in donations flooded into the Black Lives Matter Global Network, which was started by Patrisse Cullors, Alicia Garza, and Opal Tometi, who is now known as Ayọ Tometi.

To accept tax-deductible donations, the group turned to a fiscal sponsor, Thousand Currents. When that organization got out of the fiscal sponsorship business to concentrate on its own grant making, Black Lives Matter Global Network Foundation turned to the Tides Foundation.

Following criticism that the group spent $6 million on a mansion and did not direct enough money to the victims of police violence, Cullors left Black Lives Matter Global Network in 2021 and the organization reconstituted its board.

In the meantime, dozens of groups had coalesced around the movement. Many took similar names, using the phrase “Black Lives Matter,” which had never been trademarked.

The movement’s intentionally decentralized leadership has made it more difficult to fundraise and contributed to the disagreement with Tides, BLM Network chair Gay said.

“Anyone can start a Black Lives Matter organization with their own mission, their own motives, their own speaking points, agenda, and their own relationships,” she said. “It has made it extremely challenging for us to move the foundation forward.”

James Joseph, an attorney who represents nonprofits and is an expert in fiscal sponsorships, said the nebulous shape of the Black Lives Matter movement might make it difficult for a specific organization to lay claim to funds raised for the cause. The fiscal sponsor, Tides Foundation, clearly has legal control of the money in question, because of its established nonprofit status.

“Tides could argue that by looking for who is best in the Black Lives Matter movement to give the money to, it was in fact fulfilling its fiduciary duty of making sure the money went to its highest and best charitable use,” he said.

But James said, in practice, fiscal sponsorships operate under the assumption that the sponsored project will control its donated money. If fiscal sponsors held money raised for a specific project, he said, and then diverted the money to another similar group, “no one is going to use them any more as a fiscal sponsor.”

Fiscal sponsors can withhold money from projects if they determine the sponsee lacks the wherewithal to properly manage the funds or suffers from management problems.

In its email responding to the complaint, Tides Foundation did not suggest that it withheld money because of management concerns at Black Lives Matter Global Network Foundation. Instead, Tides said it wanted to reserve money in what was called the Black Lives Matter Support Fund for smaller groups, including Black Lives Matter Grassroots, which had an acrimonious split from the Black Lives Matter Global Network Foundation.

“Resources in the Black Lives Matter Support Fund were never intended to be granted to large, well-funded national organizations like Black Lives Matter Global Network Foundation, and were always intended to be granted to local Black Lives Matter chapters,” Tides wrote.

A July 2020 memorandum of understanding between the Tides Foundation and Black Lives Matter Global Network, which was provided by Tides, lays out the fees Tides charged, the frequency of financial reports Tides had to make to Black Lives Matter Global Network Foundation, and the process for making grant decisions. Black Lives Matter Global Network Foundation was to name an advisory panel for grants, subject to the approval of the Tides Foundation, which also had the right to dissolve the panel, according to the memorandum.

Once Cullors left the organization, Black Lives Matter Global Network Foundation’s Gay told the Chronicle that members tied to Black Lives Matter Grassroots took over the panel.

In response to Black Lives Matter Global Network Foundation’s complaints, the Tides Foundation said it had moved $12.6 million in support of the Black Lives Matter movement in the past four years. About two-thirds of that money went to BLM Grassroots, according to Tides, which declined to provide a specific figure for grants that eventually flowed to chapter groups.

Although they were created as sister organizations, the relationship between Black Lives Matter Grassroots and Black Lives Matter Global Network Foundation has deteriorated since 2020. The grassroots group unsuccessfully sued Black Lives Matter Global Network Foundation last year. Its founder, Melina Abdullah, did not respond to multiple requests for comment.

According to Jorden Giger, head of the Black Lives Matter South Bend, Ind. chapter, there are many benefits to working with a fiscal sponsor.

“They offer you credibility and legitimacy, because they are an established organization that has accountants and lawyers and staff,” he said.

But Giger, who sat on the Tides grant-making advisory panel, said Black Lives Matter Grassroots effectively took it over after Patrisse Cullors left Black Lives Matter Global Network. When he and Black Lives Matter Canada co-founder Sandy Hudson questioned whether money from Tides was actually reaching Black Lives Matter chapters, Giger said they were kicked out of the group.

In response, Tides said the composition of the panel changed “following Tides’ standard governance procedures for such transitions and were voted for by a majority of [panel] members.”

Gay, Black Lives Matter Global Network Foundation’s chair, said she first learned that the Tides Foundation made grants of $12.6 million to the grassroots group, BLM chapters and other groups from a news story about the lawsuit.

Said Gay: “They have not given us accounting of our finances.”

Only members of the advisory panel are privy to the Black Lives Matter fund’s finances, Tides said.

Karl Mill, an attorney with nonprofit expertise, said parties in fiscal sponsorship agreements sometimes talk “more loosely than they should” about what will happen to the money and raise expectations among sponsored organizations.

“The legal reality on paper is different than the reality in practice,” Mill said.