Charities and Foundations Issue Antiterrorism Principles

A group of nonprofit organizations has developed principles that it hopes the federal government will promote to help prevent charities and foundations from unwittingly providing money or services to terrorists.

The coalition of more than two dozen organizations — including the Council on Foundations, Independent Sector, and InterAction — drafted a paper, called “Principles of International Charity,” at the request of the U.S. Department of the Treasury, which two years ago issued a controversial set of voluntary guidelines with the same goal.

The 11-page paper describes the history of nongovernmental organizations that support charitable work outside U.S. borders and lists eight “fundamental principles” of accountability that have guided such work.

The principles “underlie the diversity of due-diligence procedures that have proven effective in minimizing the risk of diversion of charitable assets,” says the paper’s preamble. “Because organizations rightly adopt practices suited to the demands of their charitable activities and expertise, due diligence differs somewhat from organization to organization,” the paper says.

Treasury Department

In 2002, the Treasury Department released procedures — called “Anti-Terrorist Financing Guidelines: Voluntary Best Practices for U.S.-Based Charities” — that drew criticism from charities and foundations.

The government’s procedures asked U.S. nonprofit organizations working abroad to collect and report additional information about grant recipients, such as identifying the financial institutions at which foreign grantees maintain accounts.

Many nonprofit organizations said the procedures — especially if they became hard-and-fast requirements — would discourage their work overseas, place aid workers in life-threatening situations, and put a chill on their partnerships with indigenous aid groups (The Chronicle, August 7, 2003).

In the wake of the criticism, the Treasury Department in April asked nonprofit organizations to propose alternatives that the government could consider adopting (The Chronicle, May 27).

One principle developed by the group of nonprofit organizations says that a U.S. organization providing services in another country — by itself or in partnership with a foreign group — should make sure that it assumes fiscal responsibilities by adopting sufficient financial controls.

For example, a U.S. relief organization that distributes food and other supplies following a natural disaster “would put into place an auditing system for reducing the risk of diversion as supplies are transported from port of entry to warehouse to village storeroom, as well as a ration-card system for individuals or households, so that the aid reaches its intended recipients,” according to the paper.

Representatives of the organizations that devised the principles say that they have sent them to Treasury officials and expect to continue discussing the proposal in coming months.

To read the principles, go to the Council on Foundation’s Web site at http://www.cof.org.