Philanthropic Patriot Games
How the U.S. Government Targets Charities in its War on Terror
By Teresa Odendahl
Recent front page stories in newspapers such as the Washington Post document the Bush Administration's use of misleading statistics in the war on terrorism, lack of evidence for convictions, the difficulties of removing a name from a watch list once it has been added, and a heavy-handed use of immigration law. Although it is covered far less in the mainstream press, nonprofit organizations are also a target of Bush's new security regime. Shortly after 9/11, a Treasury official declared, "Our fight against the financing of terror has expanded to the abuse of charities."
In an inconsistent but insidious manner, disorganized, uncoordinated U.S. government agencies with little real knowledge of the charitable sector have found it to be a vulnerable scapegoat. Rather than dissenting, major foundations are inappropriately acting as anti-terrorism enforcers, creating a funding chill in international grant making and perhaps even encouraging advocacy groups to be less open in their criticism of the current administration.
My interviews between January and May 2005 with officers of ten of the largest foundations making international grants determined that a series of federal orders leads them to regularly check terrorist watch lists and require grantees to certify that they are not associating with or supporting terrorism. Grantees, particularly in the Global South, reported to me that they are being defunded, especially if they refuse to sign the certification agreement. But they will not go on the record for fear of further funding cuts or attracting unwanted attention.
What is creating this climate of fear? Executive Order 13224, signed by President Bush on September 24, 2001 — right after the 9/11 attacks and a month before Congress passed the USA Patriot Act — broadly prohibits "transactions with persons who commit, threaten to commit, or support terrorism."
The authority for this Executive Order comes from the International Emergency Economic Powers Act (IEEPA), which dates back to 1977.
Nonprofit and nongovernmental organizations are covered in the section that reads: "The term 'person' means an individual or an entity… an association, corporation, organization, group or subgroup."
In our dire political climate, could overly broad language of another section make it illegal for advocacy groups to dissent or try to counter "patriotic" policies? That is the section that reads:
"[T]he term 'terrorism' means an activity that… involves a violent act," or "appears to be intended" among other things "to influence the policy of a government by intimidation or coercion."
The Executive Order introduced a blacklist of individuals and organizations suspected of terrorism, materially aiding terrorism, or associating with terrorists. IEEPA, and international law permit humanitarian assistance for these suspects, including food, clothing and medicine. But this is outlawed under the 2001 Executive Order. Even children of suspected terrorists are not entitled to assistance under 13224.
Watch lists and the names on them are proliferating since Bush enacted the Executive Order. 13224 actually included the first "list" of only 27 names. When I checked in June, that one list had grown to some 202 pages (more than doubling since the fall of 2004). Additionally, there is some question as to the political motivations behind new entries on the lists, with foreign governments such as Columbia, Indonesia and Mexico allegedly lobbying the Bush Administration to add opposition groups and insurgents from their countries.
nonprofit organizations or other groups is not required by the Executive Order. But by attaching the lists to the order, the government implies the need for such a review. So does the threat that the government will prosecute them under anti-terrorism laws for providing "material aid."
In November 2002, with Executive Order 13224 and the Patriot Act as the presumed legal basis, new government oversight of charities came in the form of the Treasury Department's "Anti-Terrorist Financing Guidelines: Voluntary Best Practices for US-Based Charities." These confusing guidelines affect foundation funding especially abroad), international charitable organizations, Muslim-American groups, and potentially any nonprofit undertaking. My research confirms that it is now commonplace for foundations to voluntarily" require grantees to certify that they are not supporting terrorists, and to check board members and employees against multiple terrorist lists.
This is even as funders and international relief groups call the guidelines unrealistic, impractical, costly and potentially dangerous. The guidelines put the onus of ferreting out terrorists and terrorist activities on grant makers and nonprofit groups, rather than the U.S. government.
Here's an example. The Treasury guidelines specifically advise international funders to gather information on potential grantee groups, their employees, subcontracting organizations, and vendors, as well as to check the blacklists. In several references, the guidelines suggest that: "The charity should run the names through public databases…" They presume that charitable organizations are primarily laundering money, and demonstrate little understanding of charitable intent, mission or grant making practices.
A similar approach is central to Operation Green Quest, an effort involving many federal agencies, to follow the money trail between American organizations and terrorists abroad. In a brochure designed to encourage banks and other financial institutions to report suspicious activity, the government urges them to watch out for charity or relief organizations that could be channeling funds to terrorists and notes that transfers between bank accounts of related entities or charities could be signs of trouble. Many nonprofit organizations that have nothing to do with terrorists make such bank transfers as a regular part of doing their work, and they should not have to worry that they will be investigated for doing so.
Added pressure comes from the USA Patriot Act and the secret and wide-ranging power it gave the government to spy on any person or entity, including nonprofit organizations. The government can now seize property and freeze assets without first producing any evidence of wrongdoing. Making matters worse, the government can label evidence collected in these raids as confidential for national security reasons, which puts organizations in the untenable position of having to defend themselves against claims to which they are not privy.
The nation's Islamic foundations and public charities are under particular suspicion. The government froze the assets of several such as The Holy Land Foundation, Global Relief, the Benevolent International Foundation, and the Islamic African Relief Agency and placed them and their principals on terrorist watch lists. According to the 9/11 Commission, however, the government has not proven that these groups are guilty of any terrorism-related crimes and there have been no convictions to date. Ironically the Treasury guidelines were released in response to Arab-American and Muslim-American organizations that had asked the Treasury Department for a roadmap on how to avoid legal penalties.
In the course of interviews with ten of the largest international foundations, several said things similar to this officer: "Everyone agrees that the voluntary Guidelines are impossible to deal with… It would be difficult to make any grants if we followed [them]." Yet, the threat of liability, the penalty of frozen assets, and the advice of attorneys lead most corporate funders, major foundations, international relief organizations and large nonprofits to pay them serious attention, in part because there is no "safe harbor."
While the largest foundations claim that they have not changed their priorities and processes for giving as a result of new security rules, they almost all check the watch lists on a regular basis. According to my research, some do it daily, while others do it weekly or monthly on every current and potential grantee. Just a month ago, however, the Justice Department's Inspector General confirmed that the country's main terrorist watch list contains incomplete and inaccurate information. And foundations are confused by the multiplicity of black lists – not just the State Department's and the Treasury's, but the European Union's and those of individual countries.
In "voluntarily" requiring that the organizations they fund sign a document "certifying" that they will not "knowingly permit any portion of the grant to go to terrorism or violence," many employ language that has been all but codified.
Even while crafting these requirements, compliance officers at foundations scoff at the practice. "What does certification do? Wouldn't a terrorist just sign the letter?" There is a widespread sense that these administrative formalities are unlikely to yield effective results. Program officers view certification language as "useless and embarrassing," damaging trust in their work with the very groups that could make a difference in improving the conditions that lead to terrorism. Ironically, some also fear it "doesn't really protect you from being designated as having provided material aid."
Yet while inconvenient for them, the practice has led to the defunding of groups, particularly in the Global South, which have refused to sign. Other grantees tacitly agree with the funders to ignore the inane and untenable by complying.
No one is arguing that terrorism is not a real and dangerous threat. But, by enforcing elaborate, draconian rules, Washington is doing what it claims to be against: harming charities and the people they serve while doing little to stem terrorism. The left hand of the government doesn't seem to know what the right hand is doing, creating a mess for funders, while also achieving the aims of conservatives who want to tame the NGO sector. (see Jean Hardisty and Elizabeth Furdon, "Policing Civil Society: NGO Watch," Public Eye, Spring 2004).
The civil rights and liberties of charities — especially those of Islamic relief organizations — are infringed upon by a policy that is both ineffective and aimed at the wrong enemy. Charities, foundations, international relief organizations, and nongovernmental groups are not a major source of funding for terrorism. Rather, their work holds out the hope of positive social change in the world.
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