Council on Foundations Testimony submitted on “Enhancing the Foreign Agents Registration Act of 1938”

Tuesday, April 5, 2022
Washington, DC

Thank you for the opportunity to provide written testimony for the record on the subject of “Enhancing the Foreign Agents Registration Act of 1938.” We commend the committee for holding a hearing on this important topic as nonprofit organizations continue to respond to global crises and seek clarity on the laws that govern international philanthropic flows. 

The Council on Foundations is a nonprofit leadership organization of more than 800 grantmaking foundations and corporations. We work to build trust in philanthropy, expand pathways to giving, engage broader perspectives, and help create solutions that will lead to a better future for all.  

Each year, philanthropy invests tens of billions of dollars in nonprofit organizations throughout the United States and around the world. In 2020, charitable giving by foundations reached a high of $88.5 billion, according to a GivingUSA report. In fact, total giving has grown over the last forty years, and the World Giving Index recently named the U.S. the most generous country of the past decade. And as the world economy becomes ever more interconnected, philanthropic funds increasingly cross borders, with global philanthropic outflows reaching $68 billion in 2018. Cross-border giving allows charitable organizations to act on shared values to respond to challenges around the world, from natural disasters like the recent drought in Eastern Africa to the Russian invasion of Ukraine to the COVID-19 pandemic. But the already complicated rules governing financial flows become even more complicated and burdensome for organizations operating or with stakeholders in multiple countries, particularly with the global rise in authoritarianism and illiberalism often targeting civil society, including nonprofits and NGOs.  

As Congress considers modifications to the Foreign Agents Registration Act (FARA), the Council strongly encourages you to consider the effects of both current law and any changes to these laws on the nonprofit and philanthropic sector. Our foundation members and nonprofit partners have expressed concerns that the sweeping language and overbreadth of the law could have the unintended consequence of capturing legitimate charitable efforts, suggesting many organizations should register as foreign agents despite little influence from foreign governments or political parties. For many nonprofits, foreign agent registration would create a stigma of foreign control, burden protected rights under the First Amendment, and negatively impact their ability to advance the greater good. For smaller foundations and nonprofits in particular, even the threat of foreign agent registration imposes undue administrative costs that significantly hinder their operations. 

FARA, which had the initial goal of exposing Nazi propaganda efforts and is now often cited as an important mechanism for transparency and accountability for tracking foreign lobbying, lacks the precision needed to explicitly target those attempting to influence American politics on behalf of a foreign government. Instead, it is a blunt tool that can be and has been politicized against nonprofits with a global reach, including non-political partnerships and collaborations with international organizations and individuals. 

We urge Congress to prioritize legislation that ensures FARA is better targeted toward those acting on behalf of a foreign government or political party. Specifically, it should specify the definition of “foreign principal” and clarify the principal-agent relationship. Currently, the definition of “foreign principal” includes not only foreign political actors but also non-Americans more broadly; a revised FARA should more precisely define “foreign principal” as a government of a foreign country or foreign political party, or a person or entity acting on their behalf. In addition, Congress should better tailor the definition of “an agent of a foreign principal” to target agents acting specifically on the direction or orders of a principal rather than the current broad language that includes an agent acting merely “at the order” or “request” of a foreign principal.  

Alternatively, Congress could consider revising the exemption for “[a]ny person engaging or agreeing to engage only in … religious, scholastic, academic, or scientific pursuits or of the fine arts,” which excludes from the exemption broadly defined “political activities” that capture the work of most nonprofit organizations operating globally. A revised law could additionally exempt those engaging in humanitarian, development, or charitable purposes while creating an exclusion when such activities are funded by a foreign government or foreign political party and directly promoting the public or political interests of that government or political party. 

As nonprofits respond to crises and natural disasters around the world, it is imperative for Congress to protect those organizations with non-American stakeholders, partners, and funders—particularly when those international relationships are nonpolitical in nature. The Council urges Congress to continue engaging with nonprofit stakeholders on FARA’s effects on the charitable sector and consider the effects of the law and any revisions on nonprofit organizations, including philanthropic foundations. 

Thank you for this opportunity to submit comments for the record.  

Respectfully submitted, 

David Kass 
Vice President, Government Affairs and Legal Resources 
Council on Foundations