October 25, 2010; Source: Charlotte Business Journal | This has been a question in the nonprofit sector for as long as we at NPQ can remember. This recent example involving the Wells Fargo’s Housing Foundation is a case in point.

The Wells Fargo’s Housing Foundation is donating a total of $5 million to nonprofits in 34 communities, including Charlotte, reports the Charlotte Business Journal. “We are committed to helping communities grow and thrive,” says Jon Campbell, head of Wells Fargo’s social-responsibility group.

But let’s look at this donation in context.

Wells Fargo is one of the banks recently ensnarled in the so-called “robo-signing” scandal—a painful second act to the deepening mortgage crises. The Financial Times and others reported recently that “robo signers” had rubber-stamped thousands of mortgage documents without checking their accuracy. According to a deposition, one mortgage signer signed as many as 500 mortgages a day.

Attorneys-general in 50 states have launched a joint investigation into the matter, though Wells Fargo hasn’t stopped foreclosing on houses affected by the scandal—all other banks involved in the scandal have put a halt to foreclosures.

One of the biggest dealers in the subprime businsess, Wells Fargo shut down its subprime operation this July ending a dark chapter in the bank’s history. According to the New York Times, the bank routinely targeted black and Latino communities in Baltimore for high-interest sub-prime loans.

In an affidavit, former Wells Fargo loan officer, Beth Jacobson said that bank employees often referred to African Americans as “mud people” and called subprime mortgages “ghetto loans.”

City and state officials across the nation have investigated and sometimes sued Wells Fargo over its practices, according to the Times. And the N.A.A.C.P. has filed a class-action lawsuit charging systematic racial discrimination by more than a dozen banks, including Wells Fargo.

NPQ has often written about grant money that is tainted by the source. For more about this issue, read “When a Donor becomes Tainted” from the Spring 2010 edition of the Nonprofit quarterly or search our archives.—Aaron Lester