From Whitehall Road to Chancery Lane, government officials and charity leaders from numerous countries navigated London’s fashion week chaos last month in their most orthopedic shoes and ill-fighting business attire to discuss barriers to international grantmaking. Specifically, they discussed barriers related to terrorist financing, such as due diligence procedures delaying legitimate charitable funding and programs in places like Syria. The Council on Foundations attended this meeting to represent our members’ challenges to making international grants.
The meeting followed Chatham House Rules, but there was a clear issue regarding market forces and government compliance creating a bottleneck to international humanitarian aid and grantmaking. Whether this bottleneck is necessary continues to be an intensely debated topic.
What’s next for breaking down barriers to international grantmaking?
1. Recommendation 8 Revisions
Recommendation 8 is the main section of the Financial Action Task Force (FATF) guidelines that applies to charitable organizations. It requires laws and regulations governing nonprofit organizations be reviewed so that these organizations cannot be abused for the financing of terrorism. This year, the recommendation was amended to take out the words “particularly vulnerable” in reference to nonprofit organizations, which was a major accomplishment after years of public philanthropic conversations in the U.S. and abroad. That previous language ignored existing grantmaker due diligence and led to overregulation and inappropriate restrictions on NPOs, hampering their legitimate and essential work around the world.
The Council was gratified to see that the new wording of Recommendation 8 clearly acknowledge that not all NPOs are at risk and directs countries to undertake a risk-based approach when considering counter-terrorism financing measures. We advocated for this revision, and copies of our recommendations and letters submitted to FATF can be found on our Global Regulation of Philanthropy page.
Now it needs to be determined how each county that follows FATF will change their behaviors, laws, or regulations to align with this change.
2. Conversations Needed in the United States Regarding Barriers to Grantmaking
- Does increased oversight of international grantmaking in China and India affect U.S. grantmaking?
- What does the change in Cuba’s sanctions mean for U.S. grantmaking in Cuba?
- How did the regulations allowing for an equivalency determination repository help or hurt the sector?
- Can U.S. grantmakers fund peacebuilding between the Colombian government and FARC if FARC is classified as a terrorist organization?
3. Stay Tuned, the End of October Is Around the Corner
The U.S. government is currently engaged in a voluntary country assessment with the intergovernmental organization, Financial Action Task Force. The results will be public in late October. The Council will announce the release and key findings in Washington Snapshot.
For more information on international grantmaking compliance, check out:
- Council on Foundations Priority Guidance on International Issues
- Council on Foundations FATF R8 Press Release
- FATF International Grantmaking Regulations Website
- Charity & Security Network website
- Webinar Recording: New Chinese Laws Regulating Domestic Charities and International NGOs: What do you need to know?
- Council on Foundations Country Notes - Summaries & Analysis of Foreign Civil Society