Federal Campaign Flap

Antiterror rules prompt withdrawals from annual drive

As the federal government intensifies its efforts to discover charities that support terrorist activity,

a new government regulation has come under scrutiny.

The rule requires the more than 10,000 nonprofit organizations that participate in the Combined Federal Campaign, the federal government’s annual charity drive, to certify that they do not knowingly employ people whose names appear on three terrorist watch lists put out by the government.

They must also guarantee that they do not give money to any of the groups on the lists. One of the lists is 143 pages long and contains the names of thousands of people with alleged connections to terror groups. Many nonprofit officials object to the government’s use of such lists because they say the lists include some people who have not been charged with a crime or given a chance to appeal the allegations.

“If the government believes an organization is supporting terrorist activities, it has extensive powers to investigate and prosecute those organizations,” says Jon Small, executive director of the Nonprofit Coordinating Committee of New York, which represents 1,300 groups in New York City. “It should use those powers and not a blacklist that convicts people without due process.”

At least four organizations opposed to the lists — the Alliance for Justice, the American Civil Liberties Union, Amnesty International, and the Center for Constitutional Rights — have withdrawn from the federal campaign during the past two weeks, and Independent Sector, a coalition of about 600 nonprofit foundations and charities, also might pull out or fight the measure, casting a shadow over a campaign that last year raised about $250-million for charities nationwide.

The ACLU — and possibly other charities — plans to sue the government to prevent it from requiring charities to certify that their employees are not on terrorist watch lists.

Measure Finds Supporters

Some charities, however, do not oppose the government measures at all.

Boys & Girls Clubs of America, in Atlanta, says its local clubs that participate in the program have complied with the government’s new stipulation, and the organization fully supports the need to add such a change. And Catholic Charities USA, in Alexandria, Va., which raised more than $680,000 in the campaign last year, found the government’s request “pretty simple” to handle, says its spokeswoman, Shelley Borysiewicz.

Adding to the controversy, two former senior officials at the Office of Personnel Management, which oversees the Combined Federal Campaign for 4 million federal workers, say the government has overstepped its legal authority by imposing a new rule on nonprofit groups without first seeking public comments on a proposed change. They say that the federal agency could be forced to rescind the new rule because it didn’t follow the government’s customary procedures.

Confusion Abounds

Assuming the regulation stands, many nonprofit officials say they are confused about how they are supposed to comply with it. Some groups — including Doctors Without Borders, Eagle Forum Education and Legal Defense Fund, and United Way of America — have failed to check their employees’ names against the watch lists, according to a spot check of about a dozen organizations.

Officials at several nonprofit organizations, including Aid to Children, Youth, and Families, a Colorado Springs group that helps spread Christianity by providing orphan care and other programs in former Communist countries of Eastern Europe, said that their organizations don’t need a government watch list to certify that their employees have no association with terrorist activities.

“We know our people intimately and the churches they’re a part of,” says Hank Paulson, the organization’s president. “If there’s a loose connection of any kind, red flags would go up and we would check things out then.”

The Office of Personnel Management, the government’s human-resources agency, says that organizations that falsely certify that they have complied with the rule could be removed from the campaign. The government says that it expects nonprofit organizations to completely and honestly fill out their campaign applications, but that it has no way to determine if groups falsely certify. Charities already have to meet numerous other requirements to participate in the campaign. For example, they must certify that they do not spend more than 25 percent of their income on administrative expenses and that they have received an annual independent audit by a certified public accountant within the past year.

Some nonprofit groups that have checked their employees’ names against the watch lists express concern that it takes too much time and too many resources to monitor the lists. Oxfam America, in Boston, which raised $230,000 in the 2003 federal campaign, says it took two of its employees three days to check all 175 of its staff members’ names against the watch lists.

Oxfam America “philosophically” opposes the regulation, says Janet Van Zandt, the group’s director of institutional support. “We’re disturbed by the requirement and feel that it could potentially hold up humanitarian assistance for people who need it,” she says. “We have to do a lot more internal thinking about whether we can continue to comply with the rule.”

Some charities also complain that if the government holds them accountable for discriminating against people on the lists when they hire new employees, they could face lawsuits from people whose names mistakenly appear on the lists.

All the concerns about the new rule have left some nonprofit groups with the difficult choice of going against their principles and taking the money — or withdrawing from the campaign and forgoing the contributions donors have given them, says Matt Howe, executive director of the National Alliance for Choice in Giving, a Portland, Me., group that represents 53 federations that participate in the federal charity drive.

“No one is happy about this,” Mr. Howe says. “But if you withdraw from the campaign over an undesirable requirement, who wins? Federal employees lose, charities lose, and, worst of all, people who need the services lose.”

Government’s Expectation

Two weeks ago, a front-page article in The New York Times highlighted objections that some board members at the American Civil Liberties Union had raised over the charity’s decision to participate in the 2004 Combined Federal Campaign. Anthony D. Romero, the organization’s president, said that when he signed the campaign application, he didn’t think he had to check his employees’ names against the government lists.

But after Mara T. Patermaster, the director of the federal charity drive, told the Times that all participants must make sure that their employees’ names do not appear on the three government watch lists, the civil-liberties union withdrew from the campaign.

“We expect that the charities will take affirmative action to make sure they are not supporting terrorist activities,” Ms. Patermaster told the newspaper. “That would specifically include inspecting the lists. To just sign a certification without corroboration would be a false certification.”

“If an organization is found to falsely certify their eligibility for inclusion,” she added, “they could be ruled temporarily ineligible for inclusion or they could be permanently excluded.”

Last week, a dozen nonprofit organizations, including Amnesty International, the National Committee on Responsive Philanthropy, OMB Watch, and People for the Ethical Treatment of Animals, planned to join the civil-liberties union in issuing a statement opposing the new government rule. (People for the Ethical Treatment of Animals plans to remain in the federal charity drive.)

It is unclear which, if any, groups, would join the civil-liberties union in a lawsuit, but some legal experts say the civil-liberties union has no legal ground on which to sue because it dropped out of the federal campaign.

Charities’ Role

One of the largest coalitions of nonprofit groups, Independent Sector, which has opposed the two other major requests by the federal government requiring nonprofit groups to take extra steps to make sure their assets are not used for terrorist activities, intends to meet this month to decide how it will proceed on the latest government action.

Last year, Independent Sector voiced concern when the Internal Revenue Service asked nonprofit groups that conduct international work to explain how they keep their assets from being used for terrorism. In 2002, it opposed voluntary guidelines issued by the Treasury Department designed to help charities assure donors that their money was not being used to support terrorist activity.

Diana Aviv, president of Independent Sector, called the action by the civil-liberties union and others a “wake-up call that we need to look closely at this policy ourselves.”

Like many charity officials, Ms. Aviv questions whether nonprofit groups should support a policy that does not assure due process for the people and groups put on watch lists.

“Part of the role of government is oversight over the voluntary sector,” Ms. Aviv says. “But part of our role as an organization is to challenge government if it takes steps that undermine the democratic process.”

Other charity officials also expressed deep concerns at what they consider an unnecessary government intrusion into the nonprofit field.

“We’ve reached a point where the number of government restrictions has started to have a smothering effect on nonprofit organizations,” says Jon Pratt, executive director at the Minnesota Council of Nonprofits, in St. Paul. “No U.S.-based organization I know of has any interest in supporting terrorists, but they don’t need a list to tell them not to do that.”

Questioning Process

While many charities are debating the new rule, two legal experts suggest that the Office of Personnel Management might have overstepped its authority by imposing the rule on nonprofit groups without first seeking public comments through the Federal Register. Instead, the federal agency asked its Combined Federal Campaign National Committee, which includes representatives from about 30 nonprofit organizations, to comment on the change before putting it into effect for this year’s campaign.

Jeff Lee, a lawyer who worked in the Office of Personnel Management handling the Combined Federal Campaign from 1991 to 1996 and now oversees the federal charity drive at Christian Service Charities, in Springfield, Va., a federation with 65 members, thinks that the government could have to rescind the new rule because of a legislative change Congress approved in 1987 preventing the Office of Personnel Management from changing the eligibility requirements of the Combined Federal Campaign.

“I would say that the change OPM has made, by definition, makes the eligibility requirements more restrictive for charities than they were in 1986, which OPM is prohibited by law from doing,” he says.

Don Sodo, president of America’s Charities, in Chantilly, Va., whose 110 charities raised $25-million in the federal campaign last year, says he helped to draft the 1987 legislation and he agrees with Mr. Lee. “I don’t see how OPM can justify the new rule, given how clearly the legislation defined eligibility,” says Mr. Sodo, who is not a lawyer. “This adds an eligibility criterion, and as I understand it, that isn’t allowed.”

Congress took action in 1987 to restrict changes in the Combined Federal Campaign after the Supreme Court upheld President Ronald Reagan’s effort to exclude certain political, advocacy, and legal-defense groups from the charity drive.

Another former senior employee of the Office of Personnel Management, who insisted on anonymity, says that to introduce a new rule such as this one, the federal agency must first seek public comments on the proposed change. Because it did not do that, the agency could have to rescind the rule and reintroduce it through the Federal Register.

Representatives of the Office of Personnel Management declined requests from The Chronicle for comment on whether the agency had the legal authority to introduce a new rule, citing concerns that the government might soon face a lawsuit by charities disputing the regulation.

Regardless of whether the Office of Personnel Management had the legal authority to introduce the new rule, the pressure to raise money in a competitive fund-raising environment is causing some groups to continue to participate in the campaign despite their objections to the rule.

Says Jennifer McClure, a spokeswoman for People for the Ethical Treatment of Animals: “We’re not happy about it, but it’s tough out there and we need the money.”