The Voldemort Protocol Problem – Charity Lawyer Blog

Anonymity in philanthropy is not unusual. Many donors prefer privacy. Sometimes it is humility. Sometimes it is security. Sometimes it is simply temperament.

But sometimes anonymity is not about the donor at all.

When Anonymous Gifts Signal a Governance Failure

The reporting surrounding MIT’s acceptance of funds from Jeffrey Epstein illustrates a different governance problem. In 2020, MIT released the results of an independent fact-finding review detailing its interactions with Epstein, including the acceptance of funds after his 2008 conviction. National outlets such as TIME reported on internal awareness of reputational risk and the resignation of the MIT Media Lab director following the disclosures.

The issue was not the size of the gifts. The issue was that institutional processes were adjusted to accommodate a donor already recognized as high-risk. That is where foundation boards should focus their attention.

Two Types of Anonymous Giving

Not all anonymous gifts are the same. Boards should distinguish between two categories:

• Donor-requested anonymity. The donor seeks privacy, and the organization complies.
• Institution-driven anonymity. The organization prefers not to publicly associate with the donor.

The first is routine and unremarkable. The second should trigger scrutiny.

When an institution concludes that public acknowledgment of a gift would create reputational harm, the board must ask why the gift is being accepted in the first place. Anonymity in that circumstance is not a courtesy. It is containment and containment rarely stays contained.

The New York Times described internal emails reflecting awareness that Epstein’s name could not be publicly associated with certain gifts. Once those emails became public, the narrative shifted from the donor’s misconduct to institutional judgment.

The question became whether the institution had engineered a workaround.

Red Flags – When Systems Are Modified for One Donor

The MIT fact-finding report made clear that internal systems were modified to manage a controversial relationship. That is the inflection point.

Whenever an organization creates a special process for a single donor, governance has entered dangerous territory. It does not matter whether the adjustment is described as:

• A coding change in the donor database
• A deviation from standard vetting procedures
• A recognition decision made off the public record
• A quiet handling protocol known only to senior staff

What matters is that normal controls have been suspended.

Harvard faced similar scrutiny after acknowledging it had received Epstein-linked funding and conducting its own review, as reported by Nonprofit Quarterly. Once national reporting begins, review processes and internal controls become the story.

Private foundations are particularly vulnerable to this dynamic. Many operate with concentrated governance structures, overlapping donor and trustee relationships, and cultures built on trust rather than formal compliance. In that environment, it is easy to rationalize exceptions.

It is also easy to lose objectivity.

The Fiduciary Dimension

Trustees have legal obligations that do not disappear in difficult fundraising environments.

The duty of care requires informed decision-making. The duty of loyalty requires that institutional interests come first. When boards allow exceptions to donor vetting protocols without formal review and documentation, they create exposure.

The risk is not limited to regulatory action. It includes:

• Reputational harm that affects other donors and partners
• Litigation framed as failure of oversight
• Leadership instability
• Long-term damage to institutional credibility

Once scrutiny begins, it does not remain narrowly focused. Emails and text messages become evidence. Minutes are examined. Silence is interpreted.

Questions Boards Should Be Asking

In executive session, trustees should periodically ask:

• Are there donors whose gifts we would prefer not to publicly acknowledge?
• Have any standard vetting procedures been modified for specific relationships?
• Is there documentation of board-level review for high-risk donors?
• Would we be comfortable defending this relationship under public scrutiny?

These are not hypothetical exercises. They are governance tests.

If the answers reveal discomfort, that discomfort is information. It signals the need for stronger process, clearer escalation protocols, and better documentation.

The Core Lesson

Anonymity should protect donors who legitimately seek privacy. It should not protect institutions from the consequences of their own risk tolerance.

When anonymity becomes a tool for managing reputational exposure rather than honoring donor preference, the underlying issue is not public relations. It is governance.

Boards exist to recognize that difference. And when they fail to do so, the eventual scrutiny is rarely anonymous.

Ellis Carter is a nonprofit lawyer with Caritas Law Group, P.C. licensed to practice in Washington and Arizona. Ellis advises nonprofit and socially responsible businesses on federal tax and fundraising regulations nationwide. Ellis also advises donors concerning major gifts. To schedule a consultation with Ellis, call 602-456-0071 or email us through our contact form.