Antiterrorism Policies Hurt Philanthropy

As Americans rushed to provide aid to the victims of the Asian tsunamis, President Bush praised their generosity and encouraged individuals, companies, and foundations to do more. But it is likely that far more money might have been given far more effectively if the Bush administration had not previously imposed rules that deter charitable giving to overseas causes.

Even before the catastrophe in Asia, giving to international projects had been stymied by the federal government’s overzealous efforts to ensure that nonprofit groups do not aid terrorists. Muslim Americans have cut back their donations to organizations abroad because they fear they, or the organizations they support, could land on the suspected terrorist lists that Washington now keeps — no matter how innocent their efforts or benign the charity.

In addition, many foundations and corporations, including many of the biggest and most prominent, are now wary of supporting international causes out of fear that the U.S. Justice Department will accuse them of supporting terrorism. Several foundations now require charities to sign pledges that no grant money will go to any person or organization connected with terrorism.

Many of the new security rules have impinged not just on the civil rights and liberties of Muslims and Islamic organizations, but also on nonprofit advocacy groups critical of the Bush administration. All this furor is based on questionable evidence that charities and foundations in the United States are a significant source of money for terrorist activities. The damage that has been done to nonprofit groups that could be at the forefront of promoting peace cannot be overestimated.

The federal government’s crackdown on nonprofit groups began soon after September 11, 2001, when the Bush administration took steps to cast a wide net to ensure that charities in the United States were not transmitting funds to any groups it deemed terrorist. Washington now blocks people and organizations suspected not only of terrorism, but also of materially aiding or associating with terrorists. In other words, it has created a new kind of fellow traveler, not unlike the thousands of people in the 1950s whose constitutional rights were violated for no apparent cause.

An executive order President Bush issued immediately after the 2001 attacks introduced a blacklist of people and organizations suspected of terrorism or association with terrorists. By September 2004, the names of people on this list filled 86 pages. Two years ago the Treasury Department issued antiterrorist financing guidelines for charities and foundations in the United States, without any public dialogue or comment, urging them to monitor those lists to ensure they were not supporting terrorists. Those guidelines were a response to Arab-American and Muslim-American organizations seeking direction on how to avoid legal penalties.

The government also started 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 an indication of potential trouble could be transfers between bank accounts of related entities or charities. Many nonprofit organizations that have nothing to do with terrorists make such transactions as a regular part of doing their work, and they should not have to worry that they will be investigated for doing so.

Soon after the 2001 attacks, the Treasury Department shut down two of the largest Muslim charities in the United States. The Global Relief and Benevolence International Foundations had millions of dollars in assets frozen and were ordered by the federal government to shut their doors. According to The 9/11 Commission Report, no one involved with those charities has been convicted, and the government has proven neither charity guilty of any terrorism-related crime. With no charges and a lack of substantial evidence, the charities have no recourse to defend themselves. The contributions made by thousands of Americans will never go toward the charitable purposes that they intended.

The task of rounding up and shutting down Muslim charities has fallen to the Department of Treasury’s Office of Foreign Assets Control, which has little experience in monitoring nonprofit groups or Muslim activities.

That office was also in charge of issuing the guidelines that were supposed to explain how nonprofit groups can stay out of trouble when they finance overseas groups.

Going well beyond what President Bush’s executive order called for, the guidelines encourage foundations and corporations, as well as other grant makers, to be sure their grantees are checking the names of their employees, service providers, subcontractors, and recipients against three government lists, and any other list of possible terrorists that might be available. Many of the names on the list are people who have no connection with terrorism, but the government has offered no way for a person to remove his or her name once it is added incorrectly. What’s more, some evidence suggests that foreign governments are requesting that names be added to the list, presumably hoping that would intimidate opposition groups and insurgents.

Although the guidelines for grant makers are supposed to be voluntary, statements by government officials suggest that foundations are being expected to be an enforcement arm of government when it comes to checking the lists. Foundations are worried that if they do not take action the government could hold them liable for any misuse of funds or freeze their assets. As a result, they are scrutinizing every action they take, large or small. One leader of a major international group recently told me that a grant maker was so nervous about the terrorism rules that it asked the nonprofit organization to remove from a descriptive report references to the few indigenous movements that had advocated violence in Latin America, and then refused to consider a request to give money to a group in Bolivia. The grant maker was worried about the possibility that in the future groups in Bolivia would use violent methods that could be labeled terrorist.

The politics of fear waged by the White House, such as the constantly changing color-coded threat levels, the courting of informants, and the idea of weeding out a threat from within, is reminiscent of some of the darker days in American history. It is the same approach the government took with immigrants during World War I, the interned Japanese-Americans in World War II, and suspected communists in the cold war. In particular, the checking of lists is reminiscent of McCarthyism. All that goes against the core of the American views of justice, the idea that people are innocent until proven guilty, and the belief that charities play a significant role in expanding civil society.

Charities rely on the generous spirit of Americans to foster their goals. In an insidious manner, federal agencies with little real knowledge of nonprofit groups have found charities and foundations to be a vulnerable scapegoat. By aiming regulations at Islamic nonprofit groups, relief organizations, and advocacy groups, the government paints a discriminatory broad brush in defiance of constitutional principles as well as common sense. Current Bush administration policy is both ineffective and misguided. Has the Bush administration learned nothing from history?

No one is arguing that terrorism is not a real and dangerous threat. But, by enforcing elaborate, draconian rules, Washington is doing mightily what it claims to be against: harming charities and the people they serve while doing little to stem terrorism. In light of an international crisis such as the tsunamis, where the need is enormous and speed of aid organizations essential, it would probably make a difference if Americans could more easily channel money to groups that have experience working in parts of the world that have a large Muslim population. Perhaps the tsunami disaster can lead to more debate about the antiterrorism guidelines for international giving by nonprofit groups and raise public concern and public pressure to change those measures.

Teresa Odendahl holds the Waldemar A. Nielsen Chair of Philanthropy at the Center for Public and Nonprofit Leadership at Georgetown University and chairs the board of the National Committee for Responsive Philanthropy, a watchdog group in Washington.