The story behind Thousand Currents, the charity that doles out the millions of dollars Black Lives Matter generates in donations

© Thousand Currents A screenshot from Thousand Currents' website. Thousand Currents

• The Black Lives Matter Global Network Foundation is a non-profit organization — but it is not tax exempt. 
• But organizations can borrow another non-profit's tax-exempt, 501(c)(3) status while raising money or building out its structure, better known as a fiscal sponsorship.
• So Black Lives Matter has a fiscal sponsorship set up with the 501(c)(3) non-profit organization Thousand Currents.
• A fiscal sponsor receives donation money on the non-profit's behalf, and decides how and where the money is spent, according to Internal Revenue Service requirements.
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In recent weeks, following the police killing of George Floyd, millions of dollars in donations have flooded into bail funds for protesters, Black-owned businesses, and the Black Lives Matter movement itself.

The Black Lives Matter Global Network Foundation, the organization's official name, is a non-profit — but it is not tax exempt. In the eyes of the Internal Revenue Service, such an organization is treated as any normal corporation, and still has to pay income tax.

But organizations like Black Lives Matter can team up with and borrow another non-profit's tax-exempt, 501(c)(3) status, known as a fiscal sponsorship, while building out its own structure. Fiscal sponsorships are typically between two organizations that share a similar mission statement — and that's where Thousand Currents comes in.

What is Thousand Currents?

Thousand Currents is a 501(3)(c) non-profit that provides grants to organizations that are led by women, youth, and Indigenous people focused on building food sustainability, fighting climate change, and developing alternative economic models for their communities across the world, according to its website.

Executive Director Solome Lemma said the Black Lives Matter Global Network Foundation approached Thousand Currents in 2016 to create a fiscal sponsorship agreement and provide "the legal and administrative support to enable BLM to fulfill its mission."

© Alain Pitton/NurPhoto via Getty Images Several organizations and collectives called for a gathering to pay tribute to Georges Floyd killed by police in Minneapolis. Alain Pitton/NurPhoto via Getty Images

Thousand Currents essentially acts as a quasi-manager for Black Lives Matter: It provides "administrative and back office support, including finance, accounting, grants management, insurance, human resources, legal and compliance," Lemma said.

Fiscal sponsorships are not common, but also not "rare", tax attorney Kelly Phillips Erb told Insider. This type of tax arrangement is typically used by newer non-profits on a project basis while they fundraise and apply for their own tax-exempt status. The fiscal sponsor also takes an administrative fee.

In this case, Black Lives Matter agreed to make a donation to grassroots efforts led by Thousand Currents.

Charity Navigator, a non-profit organization that rates charities on their transparency and financial health, gave Thousand Currents four out of four stars, noting that 79% of their finances go toward program expenses.

Where do donations to Black Lives Matter go?

Any and all donations made to the Black Lives Matter Global Network Foundation go to it — but not entirely directly.

Under IRS requirements, any charitable funds donated to a non-profit using a fiscal sponsor are first given to the fiscal sponsor, which then doles out the money in the form of grants to the non-profit.

For example, when you donate to the Black Lives Matter movement, you are directed to its fundraising partner ActBlue. Then, ActBlue distributes the money raised to Thousand Currents, which is then granted to Black Lives Matter.

Though, there is one caveat: Phillips Erb said one of the main rules of being a fiscal sponsor per the IRS is directing where charitable funds go within the non-profit it is supporting.

"The one who is borrowing status cannot direct where the money goes,"  Phillips Erb said.

© Carlos Barria/Reuters Demonstrators gather at the Lincoln Memorial during a protest against racial inequality in the aftermath of the death in Minneapolis police custody of George Floyd, in Washington, DC, on June 6, 2020. Carlos Barria/Reuters

Because Black Lives Matter does not have its own tax-exempt status, donations filter through various channels before resources are dispensed across BLM's 16 chapters. And where and how that money is allocated, is up to Thousand Currents, and likely agreed upon beforehand.

In an emailed statement to Insider, Lemma said, "Donations to BLM are restricted donations to support the activities of BLM." Black Lives Matter Global Network Foundation did not respond to Insider's requests for comment about whether or not it plans to apply for tax-exempt status.

Some have desired more budgetary transparency from Black Lives Matter in the past. In 2018, one of its New York City chapters left the organization citing its need for more monetary autonomy.

With a resurgence of donations, corresponding with nationwide protests and calls to end police brutality, the Black Lives Matter movement is seeing millions of dollars flooding in on behalf of its mission.

It's unclear how much money Black Lives Matter has received in the last four weeks, but it's likely in the multi-millions (for example, they announced a $12 million grant fund last week).

Thousand Currents' 2019 financials show that the organization brought in $6.8 million, which included the money earned through the fiscal sponsorship of Black Lives Matter. Both organizations could end up seeing their highest donations ever by the end of this fiscal year.

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