Council on Foundations Calls on Treasury to Withdraw Anti-Terrorism Financing Guidelines

The Washington, D.C.-based Council on Foundations and a group of more than forty U.S. charities, advocacy groups, and advisers have called on the U.S. Treasury Department to withdraw the latest version of its anti-terrorism financing guidelines.

Revised in September for a third time since 2002, the guidelines, "Anti-Terrorist Financing Guidelines: Voluntary Best Practices for U.S.-Based Charities," are intended to help charities prevent the misuse of their funds by terrorist groups. The latest version includes revisions that respond to some of the previous concerns raised by the council-led Treasury Guidelines Working Group. However, many U.S.-based charities are concerned that the costs of complying with the new guidelines will mean fewer dollars are devoted to program activities, many of which address issues of poverty and other factors that fuel the growth of terrorism.

In its letter to Treasury Secretary Henry M. Paulson Jr., the working group said the guidelines significantly exaggerate the extent to which U.S. charities have served as a source of terrorist funding and further argued that the restrictions continue to impose onerous requirements on charities. While the Treasury Department characterizes the guidelines as voluntary, Internal Revenue Service agents — both in the context of audits and applications for tax-exempt status — have questioned organizations about their compliance. In response, the working group has asked Treasury to adopt its Principles of International Charity in place of the guidelines.

"We appreciate that Treasury has made significant improvements to the guidelines and we agree wholeheartedly with the stated purpose of assisting charities that operate in good faith to safeguard their assets from diversion to terrorism," said CoF president and CEO Steve Gunderson. "But we believe the practices suggested do not offer protection of charitable assets beyond what is already required by existing law, and in some respects may actually impede charities' efforts to combat international terrorism. For example, charities are already required by the IRS to take steps to ensure their assets are used for charitable purposes by partners and grantees."