Anti-Terrorism Compliance

Laws designed to prevent and combat terrorism have complicated the ability of foundations to fund across international borders. Regulations introduced in the beginning of the 21st century, including the USA PATRIOT Act, are designed to prohibit funding of terrorist organizations or their supporters. For U.S. foundations and others making grants overseas, compliance with these regulations is a necessity. However, their restrictions can be onerous, complicated, and even prohibitive to valuable international philanthropic work.

These resources will help U.S. foundations and grantmakers understand and comply with U.S. anti-terrorism laws and regulations.

In-Depth knowledge on Anti-Terrorism Compliance

At the Council, we believe that FATF is a global regulatory body that too many foundations do not understand, especially as it relates to their cross-border giving and advocacy for improved enabling environments for grantees around the world. We are, therefore, excited to share a recent webinar from the Global NPO Coalition on FATF which provides a good overview for foundations about what FATF is and what the new standard (Recommendation 8) may mean for nonprofit organizations (including foundations) in the U.S. and around the world.

After September 11, 2001, many grantmakers and other charitable organizations that were not previously familiar with the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC), learned of its existence. As one of the key U.S. government agencies seeking to shut down terrorism funding around the world, OFAC has focused attention on charities as one mechanism for providing financial support to terrorists. As a result, grantmakers and others have dedicated more time and effort to OFAC compliance.

Legal issues arise when a private foundation makes a grant to an Initial Grantee that is not a 501(c)(3) organization or that re-grants the Foundation's funds to a Secondary Grantee that is not a 501(c)(3) organization. Most of those issues center around IRS expenditure responsibility rules: specifically, which organization—the private foundation or the Initial Grantee—is responsible for adhering to those rules, if any.