Ray Madoff is a law professor at Boston College and the director of the Boston College Law School Forum on Philanthropy and the Public Good.

Someone was paying acting attorney general Matthew G. Whitaker, and we don’t know who it was. 

As The Post reported earlier this week, Whitaker — who was chosen in 2014 to lead a mysterious charity with undisclosed funders — received more than $1.2 million over the course of three years before he joined the Justice Department.

We don’t know who funded this charity, called the Foundation for Accountability and Civic Trust, or why they chose to do it. But what we do know is that the way it reportedly operated under Whitaker’s leadership raises questions as to whether the organization acted as a conservative political campaign operation. We also know that those who funded the organization were able to do so entirely anonymously while writing off their donations on their taxes, all thanks to an increasingly popular charitable vehicle called the donor-advised fund.

This should not be allowed. 

By design, charities are not supposed to be mysterious. Because the federal government heavily subsidizes these organizations through generous tax benefits to both donors and the organizations, they are subject to broad disclosure requirements to ensure that they are fulfilling a recognized charitable purpose. These include listing their largest donors on their annual tax returns.

Different charities are subject to differing levels of disclosure depending on what type they are. Public charities — for instance, the Red Cross — are required to disclose their largest donors on their tax returns, but this information is only made available to the Internal Revenue Service and to states that request it. But private foundations — such as the Gates Foundation or any of the smaller foundations that wealthy individuals and families commonly create — are required to also make this information available to the public.

Donor-advised funds undermine these rules by obscuring the true source of funds. They operate like charitable checking accounts. Donors transfer cash or property to a donor-advised fund sponsoring organization and receive an immediate charitable deduction for their donation. Donors then “advise” the sponsoring organization to make a payment from their accounts to their chosen charities. Because a donation received from a donor-advised fund is reported as a donation from the sponsoring organization, and not from the individual who directed it, regulators and the public are left in the dark as to the true funders of charitable organizations.

This is the case in Whitaker’s organization. DonorsTrust, a supporter of conservative causes and a donor-advised fund sponsoring organization, reportedly channeled $600,000 to Whitaker’s charity. DonorsTrust explicitly touts on its website its ability to provide anonymity to its donors. As a result, neither the public nor regulators know who was behind Whitaker’s paycheck.

Just this year, two federal appellate courts ruled in favor of state regulators requiring charities to disclose the identities of their large donors. While some donors might not like the idea of having their identities revealed, these courts recognized that this information is important for regulators to have so they can ensure charities are operating for public, and not private, purposes.

Because its funding comes from a donor-advised fund, Whitaker’s organization was able to also avoid public disclosure of its large donors. If it were categorized as a private foundation (instead of a public charity), it would have been required to report to the public — not just to regulators — the names of any donor who contributed more than $5,000.  

This is not what Congress intended in 1969, when it separated private foundations from public charities. It did so because lawmakers believed that charitable organizations funded by a small number of donors were more susceptible to engaging in self-dealing than organizations that received broad public support. The problem is that in defining what constitutes “public support,” Congress included not just significant funding from small donors, but also contributions from the government and other public charities. Since contributions made through a donor-advised fund are technically donations from the fund’s sponsoring organization (which itself is a public charity), a small number of donors can easily create a new public charity that avoids the public disclosure that would otherwise come with private foundation status.

Whitaker’s organization is particularly concerning because of the prohibition against charitable organizations engaging in political activities. The Post reports that Whitaker, while serving as executive director of his charity, focused most of his media comments against Hillary Clinton during the 2016 campaign. His organization also targeted Democrats with ethics complaints. The identity of its funders could be relevant in evaluating the political nature of these activities. For example, if the funding had come from Donald Trump or another candidate, it could indicate that the true purpose of the organization was political in nature and that it should not qualify as a charity at all.

It is time for Congress to stop allowing donor-advised funds to make a mockery of our charity oversight rules. If purportedly charitable organizations want to benefit from generous tax breaks, we deserve to know who’s really funding them.

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