Treasury Department Warns Charities to Avoid Aiding Terrorist Organizations

The U.S. Department of the Treasury has 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. Those organizations argued that the rules, adherence to which is voluntary, stifle international philanthropic efforts, especially in war-torn areas.

After the recent conflict 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 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, the Treasury Department added an attachment that emphasizes the threat of terrorists’ misusing charity money, a connection that some nonprofit leaders 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 resources to terrorists. Those individuals and organizations make up more than 15 percent of all terrorist financiers and 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 the Treasury Department collects information about how charities are used by terrorists, but is unable to show whether the guidelines have ever prevented philanthropy from flowing to nefarious causes. “That would be a really hard thing to measure,” he said.

Mr. O’Brien said that the Treasury Department 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, the department added a line that says, “Charities are independent entities and are not part of the U.S. government.”

Continuing ‘Conversation’

The new rules, however, have not quelled the criticism from the nonprofit world.

Gary D. Bass, executive director of OMB Watch, a government-watchdog organization in Washington, said the Treasury Department needs to be more explicit about how a charity can show it is aboveboard to avoid scrutiny, and if a group does become the subject of a federal investigation, how it can prove its innocence.

“Clearly in some respects they’re better than the last version,” he said about the guidelines. “But they don’t deal with the underlying issue of ambiguity.”

What’s more, the 16-page document continues to include a controversial provision that advises 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.

The guidelines cover a wide range of procedures, from governance practices to accounting standards.

Some are common practice, such as making annual reports available to the public, 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 charities outside the United States. 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 may be revised again as the department talks further with representatives of 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,” he said.

The Treasury’s antiterrorism guidelines are available online.