III. What anti-terrorism actions and policies of the U.S. Government relate to international grantmaking?
The U.S. government took a number of steps to ensure that charitable funds were not diverted to terrorists and their organizations in the United States and around the world following the terrorist attacks of September 11, 2001. These included Executive Order 13224 and the USA Patriot Act, both issued shortly after 9/11, as well as the Treasury Department’s “Anti-Terrorist Financing Guidelines: Voluntary Best Practices for U.S.-Based Charities,” originally issued in November 2002 and most recently re-issued on September 29, 2006. This section provides a brief description of U.S. government anti-terrorism initiatives:
Executive Order 13224
U.S.A. Patriot Act
U.S. Department of the Treasury Anti-Terrorist Financing Guidelines: Voluntary Best Practices for U.S.-Based Charities
For a comprehensive summary of anti-terrorism measures and how they affect international grantmakers, consult the Handbook on Counter-Terrorism Measures (in PDF) published by Independent Sector, InterAction, the Council on Foundations and the Day, Berry & Howard Foundation.
a. What does Executive Order 13224 do?
Executive Order 13224 was signed by President George W. Bush on September 24, 2001, to cut off resources to terrorists and terrorist organizations through asset blocking. The Executive Order prohibits transactions with those entities deemed by the Executive Branch to be associated with terrorism and freezes all assets controlled by or in the possession of these entities and those who support them. The EO prohibits the provision of any financial or material support to any entity specifically listed in an Annex or determined by the Secretaries of State or Treasury as well as any associated entities. Several U.S. government agencies have created lists of known or suspected terrorists, as has the United Nations and the European Union. The most comprehensive of the U.S. lists is the Treasury Department's Specially Designated Nationals (SDN) list. Both the Treasury Department and Executive Order lists are physically included in the Executive Order. The open-endedness of the prohibitions contained in the EO is worrisome for grantmakers. No distinction is made in the EO between domestic and international terrorism.
b . How does the U.S.A. Patriot Act relate to grantmaking?
The U.S.A. Patriot Act was enacted in October 2001 and reauthorized in 2005. Among its many provisions, the Act increased existing criminal penalties for knowingly or intentionally providing material support or resources for terrorism. For grantmakers, these criminal statutes open the possibility that they could be found -- despite their best intentions -- to have knowingly or intentionally provided material support or resources for terrorism. Another concern for grantmakers is potential civil liability should their grants end up in the wrong hands. Nonprofit grantmaking organizations are not immune to potential legal liability because of the inherent charitable or humanitarian nature of their missions.[1]
c. What are the Treasury Department’s Voluntary Anti-Terrorist Financing Guidelines?
On September 29, 2006, the U.S. Department of the Treasury issued an updated version of the “Anti-terrorist Financing Guidelines: Voluntary Best Practices for U.S.-Based Charities.” The “Guidelines” were originally issued in November 2002 and revised in December 2005 to assist charitable organizations in complying with Executive Order 13224 and the USA Patriot Act following 9/11. The new Guidelines may be accessed here: Revised Anti-Terrorist Financing Guidelines: Voluntary Best Practices for U.S.-based Charities
These comments include a submission by the Treasury Guidelines Working Group, a broadly representative group of more than 40 U.S. charities, foundations, religious organizations, corporations, umbrella associations, watchdog groups and advisors, created in the spring of 2004 and coordinated by the Council on Foundations. In February 2006, the Treasury Guidelines Working Group submitted comments in response to the invitation for public comments on the revised “Anti-Terrorist Financing Guidelines: Voluntary Best Practices for U.S.-based Charities” issued on December 5, 2005. Download the comments (PDF).
The working group developed the Principles of International Charity (PDF) that identifies eight principles to guide the anti-terrorism efforts of charities. The Principles of International Charity were submitted to the Treasury Department, as an alternative to the Guidelines in March 2005.
The Council is currently assessing the Guidelines and will convene the Treasury Guidelines Working Group shortly to discuss them. If you have any initial reactions, please feel free to share them with Rob Buchanan, director of international programs at the Council on Foundations.
d. How should grantmakers respond to these various anti-terrorism measures?
Despite the attention paid in the media to a handful of charities alleged to have helped finance and aid terrorist activities, the Executive Order and the U.S.A. Patriot Act are not targeted directly at grantmaking organizations. As a result, they do not spell out specific procedures that grantmakers should undertake in order to comply with the law.
In the absence of such guidance, grantmakers will have to rely a good deal on common sense. Some useful ideas to consider include:
Know as much as you can about your grantees and their associates.
Know what you can about donors who play a role in identifying grantees.
Involve your donors and grantees in the compliance process.
Educate board and staff about internal anti-terrorism measures.
Consider developing an anti-terrorism policy statement.
Discuss concerns with legal counsel.
Document steps taken to comply with the Executive Order and the Patriot Act.
Keep informed about anti-terrorism developments.[2]
International grantmakers are responding to the federal anti-terrorism policies in many ways. The Council’s International Programs staff conducted an informal survey
of a representative sample of approximately thirty-five of the
Council’s international grantmaking members to determine what, if any,
changes they had made or were planning to make in their procedures
because of the government’s anti-terrorism actions. Read the results of this survey in: "Federal Anti–Terrorism Measures:
How Foundations and Corporate Grantmakers are Responding."
Visit Legal Publications for a list of resources made available by the Council on Foundations to provide general guidance to grantmakers responding to federal anti-terrorism initiatives.
