BLM Global Network Foundation Sues Tides Foundation Over Alleged Mismanagement of $33M in Donations
Edited by: Fern Sidman
In a major legal battle that could have wide-reaching implications for nonprofit operations and donor relations, the Black Lives Matter Global Network Foundation (BLMGNF) has filed a lawsuit against the Tides Foundation, a longstanding fiscal sponsor known for managing funds for various progressive causes, as was reported on Thursday in The New York Post. The lawsuit, filed in California Superior Court in Los Angeles County, accuses Tides of fraud and withholding over $33 million in donations intended for BLMGNF.
According to the detailed 285-page complaint submitted on Monday, the Tides Foundation, which has been operational since 1976, is alleged to have breached its fiduciary duties by diverting funds meant for BLMGNF to other groups, including a radical faction led by anti-police activist Melina Abdullah, as was noted in the Post report. Abdullah’s group, which previously engaged in a legal dispute with BLMGNF described as “frivolous” by BLMGNF’s attorney, reportedly received funding from the pool of donations under contentious circumstances.
Tides Foundation, with offices in Los Angeles and San Francisco, functions as a fiscal sponsor—a role that involves managing donations on behalf of organizations that may lack 501(c)(3) tax-exempt status. This model is common in the nonprofit sector to facilitate funding for smaller or emerging groups. However, the information provided in the Post report said the lawsuit claims that Tides has failed to operate within the bounds of this role responsibly, accusing it of “engaging in deceptive business practices” and operating in a “quasi-banking capacity” without the necessary regulatory oversight.
Further complicating the scenario is the involvement of high-profile donors like billionaire George Soros and his son Alex Soros, whose Open Society Foundations have reportedly channeled nearly $14 million to Tides. The report in the Post also affirmed that some of these funds were directed to activist groups such as the Adalah Justice Project, which has been actively involved in anti-Israel protests across the United States, highlighting the political and ideological complexities interwoven with the fiscal management allegations.
BLMGNF, established in 2017 and becoming a focal point for donations following the 2020 death of George Floyd, approached Tides Foundation during a period when it did not yet have IRS tax-exempt status. Indicated in the Post report was that Tides, a nonprofit that specializes in managing funds for various advocacy and charitable groups, was to act as a fiscal intermediary, handling the surge in contributions BLMGNF received amid widespread calls for social justice and police reform.
According to the lawsuit, Tides, which controls assets totaling more than $1.4 billion, operates by taking a percentage of the donations it manages—ranging from 3% to 9%. BLMGNF claims that it was verbally assured by Tides that the funds would be returned once BLMGNF secured its tax-exempt status, as was explained in the Post report. The funds were to be held in a “collective action fund” that ostensibly remained accessible to BLMGNF.
The relationship between BLMGNF and Tides Foundation soured and eventually ended in 2022. Despite the severance of ties, Tides has allegedly not complied with returning the remaining funds, which amount to some $33 million. The lawsuit highlights a specific incident where Tides reportedly misdirected funds: on June 9, 2022, Tides officials claimed they had transferred $7.4 million from the collective fund back to BLMGNF. However, the Post reported that BLMGNF has alleged that Tides instead sent $4.75 million to an unaffiliated BLM chapter in Oklahoma City, a move that BLMGNF claims was unauthorized and lacks transparency.
The lawsuit raises significant questions about the ethical management of nonprofit funds, particularly in how Tides has functioned akin to a bank but without adhering to the stringent regulations that govern financial institutions. This lack of regulatory oversight is central to BLMGNF’s allegations of “deceptive business practices” against Tides.
In response to these allegations, a spokeswoman for the Tides Foundation firmly dismissed the claims, characterizing them as “completely false.” The Post reported that according to Tides, the funds in question, collected under the Black Lives Matter collective action fund, were specifically intended for distribution to local Black Lives Matter chapters rather than to large, national entities like BLMGNF. “Resources in the Black Lives Matter [collective action 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,” the Tides statement explained. They argue that BLMGNF’s legal action aims to redirect resources away from grassroots operations, which would counter the original intent of the donors.
On the other side of this legal battle, an attorney for BLMGNF, Byron McLain, stated that Tides overstepped its bounds by reallocating funds earmarked for BLMGNF to other groups or local chapters without proper authorization, as per the information provided in the Post report.
Further complicating the situation is the involvement of BLM Grassroots, a breakaway faction led by activist Melina Abdullah, who previously engaged in legal action against BLMGNF. The report in the Post also revealed that Tides disclosed that it had allocated $12.6 million from the Support Fund to various groups, including BLM Grassroots. Abdullah’s prior lawsuit against BLMGNF, which sought $10 million, was dismissed as “frivolous,” and she was subsequently ordered to cover more than $700,000 in legal fees and costs for BLMGNF.
This legal tangle is underscored by a June ruling from a Los Angeles Superior Court judge, which dismissed the claims of BLM Grassroots to any of BLMGNF’s donations. The Post reported that McLain emphasized that the ongoing lawsuit against Tides encompasses more than financial discrepancies; it is fundamentally about “the principle of rightful ownership and transparency that should govern partnerships in social justice funding.”
“There is an expectation for Black Lives Matter to challenge systems, break barriers and uphold the truth, no matter how uncomfortable,” BLMGNF stated. “Today, that extends into non-profit operations as we call out Tides Foundation and other so-called ‘fiscal sponsors’ who exploit their role.” The Post reported this accusation comes at a time when BLMGNF itself is under scrutiny over how it managed a significant influx of donations following the global response to racial injustice sparked by the death of George Floyd in 2020.
BLMGNF, which brought in an astounding $90 million in donations during 2020, has faced its share of internal financial controversies. Notably, co-founder Patrisse Cullors was implicated in a personal spending scandal involving the purchase of high-value properties. According to the Post report, these acquisitions included two homes in Los Angeles and a substantial property in the Atlanta suburbs, complete with an airplane hangar and runway. These revelations, first brought to light by The Post, have stirred significant public and media scrutiny.
Cullors has consistently denied using BLMGNF donations to fund these purchases. Nevertheless, the Post reported that the timing of these acquisitions, coupled with her resignation from BLMGNF in May 2021, fueled ongoing debates and suspicions about the financial integrity within the upper echelons of BLMGNF.
Further financial decisions by Cullors, such as signing off on a $6 million Los Angeles mansion intended as an office for BLMGNF, and an $8 million property in Toronto for the group’s Canadian chapter, have only added to the controversy. The Post pointed out that these expenditures raised questions about the appropriateness of spending and financial governance within BLMGNF, especially given the organization’s high-profile role in social justice movements.
