Making Charity Pay

The Sallie Mae corporate family funnels charitable contributions to the Sallie Mae Fund, the donor-advised fund managed by the non-profit Community Foundation for the National Capital Region in Washington, D.C.

The Community Foundation, in turn, is paid a management fee, which it says it uses to serve the “compelling charitable needs of Metropolitan Washington.” Forty percent of all its grants are made outside greater Washington.

The Sallie Mae donor advised fund was set up with a $2 million contribution in 1992.  Fund vice president Erin Korsvall would not disclose how much has been contributed since or how it was spent.

Donor-advised funds allow donors to “recommend” which charities will receive donations and how much money they will be given.  While the donor’s advice can be overridden, rejecting a recommendation is “frowned upon” by donors, according to the Journal of Accountancy.

Spending recommendations by the Sallie Mae corporate family were followed without exception, Korsvall said. Later, she said she couldn’t say every recommendation since 1992 was followed.

Public filings by the Community Foundation don’t list how much money was received by or donated from any of the donor-advised funds it manages. One 574-page tax return lists hundreds of contributions to charities, but doesn’t disclose the contributor.

“Because we know so little about these Donor Advised Funds and there are such minimal requirements,”  said Niki Jagpal, the research director of the National Committee for Responsive Philanthropy said, “you have no way of telling whether there’s insider dealing or a conflict of interest of whether the donor receives a benefit.”

“It all comes down to accountability and transparency,” she added. “What is the public purpose.”

On average, the donor-advised fund contributed $2.6 million each year from 2002 through 2007 to its charitable partner, the Sallie Mae Fund, Inc. The non-profit Sallie Mae Fund Inc. receives no money directly from the Sallie Mae corporate family.

Public records don’t disclose how the remainder of the charitable contributions were used. The Sallie Mae Fund trumpets some of its giving in more than 150 pages of press releases, good deeds that it says total more than $125 million since 2001. There’s no detailed accounting from the non-profit.

Here’s a breakdown of how the money was spent from public tax filings through 2007:

  • 20 percent on salaries, or $2.8 million
  • 6.4 percent on expenses, or $891,963.
  • 24 percent on the high-tech bus tour, or $3.4 million.
  • 31 percent on paying for college workshops, or $2.9 million.
  • 12 percent on education materials, or $1.6 million

The 2008 tax filing is not yet available.

Korsvall said the Fund now is staffed by employees from the SLM corporate family and has no employees.

Scholarship applications are directed to either the Community Foundation or individual charities that are sponsored by The Sallie Mae Fund, she said.

Four of the largest scholarship funds are handled this way:

  • The American Dream Scholarships are awarded by the United Negro College Fund. It also employed the United Negro College Fund as a consultant.