Protesting Antiterrorism Rules Could Backfire on Nonprofit Groups

Charging that “the government’s ‘war on terror’ now threatens America’s nonprofit charities,” the American Civil Liberties Union and more than a dozen organizations are fighting a new policy that requires participants in the federal government’s annual charity drive to check the names of their employees against lists of suspected terrorists. That follows protests by Harvard, Yale, and other leading universities against the Ford and Rockefeller Foundations, which now require grant recipients to certify that their institutions do not “directly or indirectly” foster terrorist activity.

It’s not hard to sympathize with the nonprofit critics, who say that new requirements will be burdensome and difficult to carry out. But at a time when the public accountability of nonprofit organizations is already under scrutiny, the reluctance of charities to ensure that they will not be used by terrorists seems an invitation to greater monitoring and regulation by the federal government.

The need for antiterrorism rules to apply to charities became clear after investigators found that a large portion of the money for Al Qaeda and similar terrorist groups came from donations for seemingly humanitarian causes.

As a committee appointed by the Council on Foreign Relations observed not long after the September 11, 2001, attacks, “Al Qaeda’s financial backbone was built from the foundation of charities, nongovernmental organizations, mosques, Web sites, fund raisers, intermediaries, facilitators, and banks.”

Money raised in the United States, as well as in other countries (particularly Saudi Arabia), ostensibly to help the needy or support religious institutions, wound up — with or without the connivance of the contributors — supporting the terrorist infrastructure instead. A report released last month by the National Commission on Terrorist Attacks — better known as the 9/11 Commission — said its investigations found that to be the case.

For example, one of the organizations that allegedly had ties to terrorist groups was the Benevolence International Foundation, an Illinois group that said its mission was to provide relief for suffering Muslims throughout the world. Its director eventually confessed to using some of the organization’s money to outfit fighters in Bosnia and Chechnya, though the Justice Department did not pursue the ties to Osama bin Laden it said it had discovered among the group’s leaders. The group had many prominent donors, including Microsoft and Compaq, which matched its employees’ gifts to the organization, as they would routinely send money to any charity.

Through an executive order, the USA Patriot Act, and Treasury Department guidelines, the Bush administration and Congress have tried to force donors to exercise more responsibility to ensure that their gifts will not be used to assist terrorism. Other countries, including Britain and Saudi Arabia, have taken similar steps.

How successful these efforts will be remains to be seen. As the 9/11 Commission said in its final report, “Trying to starve the terrorists of money is like trying to catch one kind of fish by draining the ocean.”

New sources of support or new ways of converting it from legitimate to illegitimate uses can always be found, and, apparently, have been. In any event, most of the charitable donations that have gone to terrorist groups seem to have been generated outside the United States. Still, by preventing “open fund raising,” the 9/11 Commission concluded, “public designation of terrorist financiers and organizations” has helped reduce the money available to Al Qaeda.

To be sure, these measures have also increased the workload for grant makers, charities, and others involved in collecting and receiving private donations. The “watch list” of suspected terrorists that participants in the federal charity drive are supposed to check runs to 143 densely printed pages of names, including many that are hardly uncommon. International financial and intelligence agencies have developed several different lists of groups that supposedly sponsor terrorist activities, many of which are loosely organized and barely known.

In addition, some groups or people might be wrongly listed, while others who should be avoided may not appear at all. And, as the universities argued in criticizing the foundation rules, a wide range of activities could conceivably be considered as unacceptable, from the relatively innocuous, such as a student-run Palestinian film festival, to the potentially illegal, such as helping lead a terrorist group, as a Florida professor has been accused of doing. Where to draw the line that might lead to a loss of donations?

Yet, it is easy to exaggerate these problems. In the wake of the September 11 attacks, a prominent association of nonprofit groups scheduled a roundtable at its annual meeting to discuss how its members could help. Among the invited speakers was a well-known leader of a Muslim organization. But when a quick Internet check uncovered a record of statements in support of terrorist groups (and the rejection of a campaign contribution from him by Hillary Rodham Clinton for her Senate campaign), his invitation was promptly withdrawn. Not all connections will be so clear-cut, but the developing of more user-friendly information, as the Web site GuideStar has proposed to do, and providing clearly written guidelines, such as the handbook on counterterrorism published earlier this year by Independent Sector, the Council on Foundations, and others, will make the job of keeping tabs on where donations are really going more manageable and effective.

The alternative would almost certainly be increased government oversight of charitable contributions. Indeed, that is where a similar effort to keep terrorists off commercial airplanes seems to be headed. Partly in response to a lawsuit pursued by the American Civil Liberties Union, the Department of Homeland Security is now preparing to take over from the airlines the task of scrutinizing passenger lists for suspected terrorists, ostensibly to reduce the likelihood that innocent people will be hassled. But that would also give government agents unprecedented information about the traveling habits of the public.

If the Treasury or Justice Department were to take charge of ensuring that charitable contributions do not fall into the hands of terrorists, the result would be no less worrisome for the privacy of philanthropic giving. Opposition to the well-intentioned efforts of the federal charity drive, private foundations, and others not only brings that day closer, but also reinforces the already widespread belief that the nonprofit world is incapable of policing itself.

Leslie Lenkowsky is professor of public affairs and philanthropic studies at Indiana University and a regular contributor to these pages. His email is llenkows@iupui.edu.