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Treasury Guidelines for International
Charitable Activity
On December 18, 2006, the Council on Foundations, on behalf of the Treasury Guidelines Working Group, submitted a response to the U.S. Department of the Treasury's updated Anti-Terrorist Financing Guidelines.
The Treasury issued a revised
version of its Anti-Terrorist
Financing Guidelines: Voluntary Best Practices for U.S.-based Charities
(PDF) on September 29, 2006. The revised
guidelines respond to extensive comments and suggestions provided
by a variety of organizations, including comments
(PDF) submitted in February 2006 by
the Council on Foundations, Independent Sector, and others participating
in the Council’s Treasury Guidelines Working Group. The comments
identified key concerns with the guidelines and suggested they be
withdrawn and replaced with Principles of
International Charity developed by members of the Working Group in March 2005.
Treasury declined to withdraw the guidelines, but made some amendments
in response to comments. Treasury's response
(PDF) was released in a second document.
The Working Group's comments focused on three principal concerns:
1) the impression created by the Guidelines that charitable organizations
are agents of the government, inadvertently exacerbating the safety
risk for charities and humanitarian workers; 2) the additional information
on individuals and organizations suggested to be collected in the
Guidelines; and, 3) the Guidelines contain broader guidance to charities
than may be necessary to comply with anti-terrorist financing obligations.
Principles for International
Charity Released
Independent Sector and many other charities
expressed deep concerns about the "Voluntary Guidelines"
issued by the U.S. Treasury Department in 2002 to assist nonprofits
and funders in complying with anti-terrorism financing requirements.
After meeting with the Treasury Department in April 2004, Independent
Sector joined with over 40 other charities—including the Council on Foundations, InterAction, and Grantmakers
Without Borders—to
develop an alternative to the guidelines. The Working Group finalized
the Principles
of International Charity (PDF) in March 2005 which were then submitted to the Treasury Department
with a request that they replace the 2002 guidelines.
Handbook on Counter-Terrorism Measures
In 2004, Independent Sector, InterAction, the Council on Foundations, and
the Day, Berry & Howard Foundation released a handbook to help
nonprofits and foundations meet new U.S. requirements for preventing
their funding or activities from inadvertently being used for illegal
acts, such as terrorist activities. The
Handbook on Counter-Terrorism Measures: What U.S. Nonprofits
and Grantmakers Need to Know, (PDF)
discusses the laws, regulations and enforcement measures in place
in the post-September 11, 2001, environment.
The Handbook examines the Executive Order issued in response to
terrorist attacks of 2001, the Patriot Act, embargoes and trade
sanctions, IRS rules and the Treasury Department’s voluntary
guidelines, as well as special requirements for organizations funded
by the U.S. Agency for International Development. For example, Executive
Order 13224 gives government the authority to freeze assets of organizations
associated with terrorist activities—even when the organizations
did not have knowledge of the link.
The Handbook was written by a team of lawyers with the law firm of Day, Berry & Howard LLP and produced for Independent Sector, InterAction and the Council on Foundations under the auspices of the Day, Berry & Howard Foundation.
IS Comments to the IRS on Regulation of International Charitable Activities
In July 2003, Independent Sector filed comments in response to an Internal Revenue Service request for comments on international grantmaking and overseas activities of U.S.-based organizations. The IRS asked for guidance from the nonprofit sector about whether additional reporting or guidelines are needed to reduce the possibility of diversion of charitable resources to other purposes, particularly to terrorist activities.
To develop the comments, Independent Sector worked with InterAction and with other IS members who indicated interest in participating in a working group on this issue. These comments were designed to reflect the concerns of public charities that engage in any kind of international work, including grantmaking, transfer of funds, or humanitarian relief or development.
Printer friendly version of IS comments to IRS.
The High Risk Nonprofit Security Enhancement Act
On October 18, 2004 President Bush signed into law a Homeland Security appropriations bill (Public Law 108-334) that contains $25 million in funding to provide security enhancements and training to nonprofit organizations determined to be at high-risk of international terrorist attacks. Funds will be distributed by the Department of Homeland Security based on risk assessments, in consultation with state and local authorities.
The Senate Governmental Affairs Committee passed related legislation, the High Risk Nonprofit Security Enhancement Act of 2004 (S 2275) on July 21, 2004. The bill would have provided homeland security assistance for high-risk nonprofits to protect them against foreign terrorist attacks. This legislation was introduced in the Senate by Senator Barbara Mikulski (D-MD) and in the House (HR 4108) by Rep. George Nethercutt (R-WA). It would authorize the Secretary of Homeland Security to make funds available in FY 2005 for security enhancements and technical assistance to 501(c)(3) organizations demonstrating a high risk of terrorist attack based upon: specific threats, prior attacks against similar organizations, vulnerability of the site, the symbolic value of the site, or the role of the institution in responding to terrorist attacks. The funds could be used for security enhancements such as concrete barriers and “hardening” of window and doors, as well as technical assistance to assess needs, develop plans and train personnel. Funds could not be used for security enhancement for protection from neighborhood crime. Supporters of the legislation include United Jewish Communities, the American Red Cross, United Way of America, the American Hospital Association, the American Association of Museums, the National Association of Independent Colleges and Universities, American Jewish Congress, YMCA of the USA, and the American Symphony Orchestra League.
Suspension of Tax-Exempt Status of Designated Terrorist Organizations
On November 11, 2003, President Bush signed into law the Military Family Tax Relief Act (HR 3365), which contains a provision requiring the IRS to suspend the tax-exempt status of an organization that is exempt from tax under section 501(a) of the Internal Revenue Code for any period during which the organization is designated or identified as a terrorist organization. More
Last Updated: November 19, 2007
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