Treasury Department Issues Revised Antiterrorism Guidelines for Foundations and Charities

By Ian Wilhelm

The U.S. Department of the Treasury today released revised guidelines to help nonprofit groups prevent their charitable dollars from unwittingly being used to support terrorism and other violence.

The federal government first issued the guidelines in 2002 but has revised them several times due to objections from foundations and charities that work overseas. These organizations argued that the voluntary rules stifle international philanthropic efforts, especially in war-torn areas like the Middle East.

After the recent war in Lebanon, for example, relief charities complained of the difficulty of adhering to the rules while operating in the southern region of the country where Hezbollah — which has been designated as a terrorist group by the United States — acts as the de facto government.

In the latest version of the guidelines, which replaces the version issued last year, Treasury added an attachment that emphasizes the threat of terrorists misusing charity money, a connection that some say has been exaggerated by the federal government.

The new section points out that 43 charities and 29 nonprofit officials worldwide have provided money or other resourcesto terrorists. These individuals and organizations make up more than 15 percent of all terrorist supporters designated by the U.S. government to date.

What's more, the new section emphasizes that even when donations are used for charitable purposes — building a well, providing food, or other aid efforts — nonprofit groups must be sure the people providing the assistance are not connected to terrorist causes.

"Even if charitable aid is in fact delivered, if it's delivered by a terrorist organization then it is getting the benefits of that grass-roots support, that recruiting base, etc.," said Patrick O'Brien, the department's assistant secretary for terrorist financing and financial crime. "It's more than just making sure a school is actually built, but also looking at who was doing that work."

Mr. O'Brien said Treasury collects information about how charities are abused by terrorists, but is unable to show whether the guidelines have ever prevented philanthropy from flowing to nefarious causes. "That would be really hard thing to measure," he said.

Mr. O'Brien said that Treasury responded to concerns raised by nonprofit organizations. He said the agency reinforced the voluntary nature of the guidelines and made one change in response to a major criticism — that the rules paint charitable organizations as a part of the government, which could undermine trust for U.S. charities working abroad and endanger humanitarian workers.

Near the beginning of the document, Treasury added a line that says, "Charities are independent entities and are not part of the U.S. government."

Ongoing 'Conversation'

It is unclear whether the new rules will quell the criticism from the nonprofit world.

Indeed, the 16-page document continues to include at least one provision that nonprofit officials have objected to previously. The guidelines advise charities to collect data on all the branches of a grant recipient's organization, rather than just its principal office. The Council on Foundations, a Washington association of about 2,000 philanthropies, and other groups have said collecting such information is too onerous.

Robert L. Buchanan, director of international programs at the council, which has led a coalition of about 40 nonprofit groups to resolve differences with Treasury, said he could not comment on the revised guidelines because they just became public. He did say the council has been meeting with government officials about the antiterrorism suggestions and will review the document.

"We're following this very closely," he said.

The guidelines cover a wide range of procedures, from governance practices to accounting standards. Some are considered common practice within the nonprofit world, such as making annual reports publicly available, or are basic, if obvious, requirements, such as: "Charitable organizations must comply with the laws of the United States."

But they also include information on how such groups should review the backgrounds of senior employees and board members at foreign charities. And the document asks nonprofit groups to call a toll-free telephone number to inform federal authorities if a name appears on terrorist watch lists.

Mr. O'Brien, the Treasury official, said the guidelines released today may be revised again as the department talks further with the nonprofit world. "We expect our conversation with the sector to continue, and to the extent there are new ideas or better information or whatever, we'd be open to further revisions," said Mr. O'Brien.