The Left in particular, which is where I live and a lot of artists also, has a broadly held theory that provenance matters. In particular, if the source is tainted the result must, somehow, inherit flaws and failings.
First, a digression about ethics. Ethics are a social construct. The religious might claim that they originate with God or Gods, and I won't dispute that, because it doesn't matter: God-given ethics are laundered through the machinery of society, and are in the end still a social construct. An ethical dispute is at its very basic level simply disagreement about essentially arbitrary positions. It isn't quite the same as disagreeing, you and I, about how much we like tacos, because a social construct has more weight in a bunch of dimensions than does my love of tacos.
Ethics, unlike my personal tastes, offers the hope of judging everyone the same way which I certainly do not offer on the taco question.
So ethics are not isomorphic to my personal love of tacos, but there is a similarity at a basic level. The two are not unrelated.
We can dig through some examples.
There are, it is widely believed, ethical problems with building scientific work on Nazi science on account of the Nazis being awful. There were human experiments performed in concentration camps, and the question "can we even look at this data?" was a real question back in the day. As I recall the conclusion was that the experimental setups were so shitty that the experimental results were useless anyways. Not so the rocket guys. It turns out that Werner von Braun and his crew of Nazis and slaves built fine rockets.
Lewis Bush is working on a book tracing the taint of that activity through the US Space Program, which got von Braun after the war. Whether or not ethical taint carries along the thread, the line from Peenemunde to the moon is pretty direct.
The cry of "taint!" is usually accompanied by "the work is shit anyways!" which probably was not true for the rockets.
Among the academic or semi-academic hordes that crowd for warmth against the gates of the high end Fine Art community, there are at least two threads which are relevant here, and these are of course my main point.
The first thread is that work made on the basis of questionable ethical choices is inherently bad.
There are photographs taken (or other Art made) in ways which do not suit the ethical stance of the critic. Souvid Datta and his pictures of underage prostitutes (and also his plagiarism) come to mind. The critic in these cases has never, ever, concluded his tirade with "but god damn, the pictures are excellent." The conclusion is invariably that the pictures, the work, is shit.
The second thread that pops up a lot is that of Dirty Money. The Sackler family spends a great deal of money on the arts, money which they obtained by selling drugs, at least so we are led to believe. One dollar being interchangeable with another freely, one can't be quite sure, of course. Anyways, Art Institutions are being given the opportunity to signal their virtue by rejected Sackler money. Notably, the Tate organization bravely turned down all the money the Sacklers have not yet offered them, although they're definitely keeping the money they've already gotten. As Mike C. has remarked, the Tate fortune isn't exactly squeaky clean.
Ok, so, anyways. What are the various logics in play here?
The first and simplest is "bad people do bad work" which isn't always wrong, nor is it always right. Josef Mengele was an awful creature, and did awful things. His alleged science seems to have mainly been just fancy forms of torture. His awfulness did in fact directly impact his scientific efforts, and converted them in to garbage. Werner von Braun, probably also not a terrific human being, seems to have been able to build a pretty damned good rocket, though. Whatever his character flaws, they did not translate into lousy engineering.
Souvid Datta's pictures certainly never struck me as particularly awful, they seemed to be just fine. Maybe not brilliant, but at least workmanlike.
Chuck Close, one of the darlings of Fine Art, was revealed to be pretty crass with female models from time to time. The response varied, and included the idea that his work shouldn't be displayed. Does the fact that Close is an asshole, or Satan, somehow change the nature of his work? Only, I think, if you are willing to literally include the character of the artist in your judgement of the work. God knows I am all about context, but this seems to me to be pushing it.
It is very attractive to believe that work done by people you don't approve is inherently flawed, but I don't see how that follows. Sometimes the character flaws show up in the work, and sometimes they don't.
The second logic is essentially Upton Sinclair's: It is difficult to get a man to understand something, when his salary depends on his not understanding it. Again, this ain't wrong. It is possible, albeit unlikely, that the Tate organization could be seen to be promoting opioid use by taking Sackler money. It is possible, albeit unlikely, that they could be subtly coerced into some sort of excuse-making labors. I'm not sure how that would work. Could Sackler money somehow induce the Tate into actively contributing (more) to evil in the world?
The Tate seems to have rejected the Sackler money specifically to soothe the tender feelings of Nan Goldin, so they could show her work, which (as Mike C. noted) can be construed as among other things explicitly glamorizing drug use. Not sure how well their program of avoiding opiates is going here?
Institutions like the Tate are, to first order, organizations that more or less successfully strain the money out of the mixture of aspirations-&-money that are offered them by the wealthy. The Sacklers probably have no interest in promoting opioid use, or particularly in cleansing their names. Most likely, they have a trainload of shitty paintings by Junior, or Grandma, that they would love to sneak into the Tate's permanent collection, and it is the Tate's job to get the money, and decline the paintings.
That said, probably when a starving artist wins the Deutsche Börse prize that artist might feel a little odd about criticizing Deutsche Börse. Or, possibly (likely?) the opposite is true. The prize-granting Foundation's function is to launder the reputation of Deutsche Börse, and therefore it seems to award prizes to whichever of the usual suspects hits some perfect balance of anti-authoritarian and wunderkind. So these artists are maybe not directly propping up Deutsche Börse but are complicit in the reputation-laundering?
Upton Sinclair's notion strikes me as sometimes applicable, sometimes not. Depending on, um, factors. Of some sort.
Honestly, these things seem to be all over the place.
What does seem certain, though, is that blanket assertions about tainted provenance seem to be risky.
Not to sound like some dumb relativist, but at the end of the day all money is tainted, and no artist is a perfect human being. You're gonna have to take it case by case, and if you want to persuade me that someone's work is shit you're going to have to do better than point out what an asshole the artist is.