On Aug. 1, 2008 the United States Agency for International Development (USAID) and Americans for Charity in Palestine (ACP) signed a Memorandum of Understanding establishing a public-private partnership to channel charitable donations from U.S. individuals and entities to the West Bank and Gaza Strip. Since the announcement the U.S. government has heavily promoted the agreement as a way to direct humanitarian aid to Palestine without violating U.S. counterterrorism laws. While many of the details, including the contents of the Memorandum of Understanding (MOU) are not yet known, preliminary information raises significant concerns and questions for private philanthropy and the independence of the nonprofit sector. This memo is intended to share information and generate discussion of the issues raised.

WHO:
U.S. Government: USAID — Administrator Henrietta Fore attended the signing ceremony, and the agreement was signed by George Landato, Administrator’s Special Assistant for the Middle East. The Departments of Treasury and State were involved in developing the agreement.

ACP: Founder Dr. Ziad Asali, who is also a founder of ACP’s parent organization, the American Task Force on Palestine (ATFP) signed for ACP. Both are 501(c)(3) organizations. According to its website ATFP was established in 2003 “to provide an independent voice for Palestinian-Americans and their supporters and to promote peace.” It is based in Washington, D.C. and supports a “negotiated agreement that provides for two states — Israel and Palestine…” According to Asali’s remarks at the signing ceremony, ACP was established specifically for the joint project with USAID. The ACP press release says the two groups “share a number of common board members.” (Links to ACP’s press release, Asali’s remarks and the MOU on the ATFP website are not currently working, but OMB Watch downloaded copies in late August 2008.)

WHAT:
Although a copy of the MOU was originally posted on the ATFP website, it is no longer available online. We have requested a copy from both USAID and ACP, but have not yet received it.

The USAID press release says the project “seeks to offer a secure and efficient means of transferring charitable donations from individuals and entities in the U.S. to USAID-managed programs for the Palestinians” (emphasis added). The ACP press release contains a similar sentence, but describes the programs as “humanitarian” rather than “USAID-managed.” However, USAID’s intention to control the funds and the programs was further clarified in remarks Treasury Deputy Secretary Robert M. Kimmit made on Sept. 25, 2008 at Treasury’s Iftaar dinner. He cited the USAID-ACP project as an example of “alternative distribution mechanisms”, saying ACP “raises funds from the American charitable sector and donor communities and transfers these funds to USAID in order to finance specific projects….” (emphasis added)

HOW:
The USAID press release said the MOU “marks the first step” and next ACP “will collaborate with USAID to jointly program the funds in direct support of mutually agreed upon projects and activities in the West Bank and Gaza, particularly in the areas of health and education.” The ACP press release quotes Asali saying, “Our immediate next step is to finalize robust administrative and financial structures to carry our mission forward.”

This implies that the practical problems of delivering charitable services under the current U.S. counterterrorism legal regime have not yet been addressed. However, USAID has proposed rules for its grantees working in the same region, known as the Partner Vetting System (PVS) that rely heavily on watchlist checking rather than the due diligence private philanthropy uses to ensure resources are actually used for charitable purposes. The USAID-ACP project could end up imposing PVS on private charitable resources.

There is also a question of whether USAID will turn the funds over to agencies controlled by political parties or factions favored by U.S. foreign policy. This would politicize private philanthropy in violation of long-standing principles of neutrality and independence of civil society.

WHY:
In his remarks at the signing ceremony ACP’s Asali said the project has been in the works for six years. Citing the shut down of U.S. charities designated as supporters of terrorism he said, “this has been a sore subject for all because there were no substitutes available to the public to express its generosity and its support to the Palestinian people and others….We have established the American Charities for Palestine precisely to offer a safe, reliable and meaningful way for people to make their contributions with the full confidence that they can be sure not be harassed and not to be questioned about their patriotism, or their contributions to the national interest.”

The U.S. government’s policies and enforcement actions toward charities have been consistently criticized by OMB Watch and many others in the nonprofit sector. The increasing public attention to the issue may have pushed Treasury and other agencies to look for a mechanism that enables charitable programs. Unfortunately, they developed this project without input from experts on international philanthropy, and the apparent built-in flaws are the result.

Even though the USAID-ACP project has not gotten any programs off the ground, the U.S. government is promoting it as an example of its support for humanitarian aid in the West Bank and Gaza Strip. A summary of the project, along with statistics on USAID aid to the region, appears on State Department websites and a number of news sources re-published their press release. Treasury officials have held it up as an example, both in Kimmitt’s remarks referred to above, and in meetings with U.S. nonprofits.

IMPLICATIONS:
Is the USAID-ACP project a unique collaboration, a potential option or a future requirement? Treasury officials have not given a clear answer, but initial remarks indicate they believe this is a potential solution to the barriers U.S. laws create to humanitarian aid delivery. For example, Treasury Assistant Secretary for Terrorist Financing Patrick O’Brientold a group of Muslim charities on Aug. 15 that:
“In some circumstances, effectively and safely operating in regions where there are known terrorist activities may require creating alternative distribution means. Essentially, this type of partnership allows individual U.S. donors to tap into the government resources and distribution networks, thereby leveraging counterterrorism mechanisms only available to the government. The aim is straightforward — to provide a safe and effective way for individuals to contribute to critical regions where aid is desperately needed, such as the West Bank and Gaza…It is our hope that this type of collaboration will take root and serve as a model for other areas of concern as well as encompass other funding streams including that of the international community.” (emphasis added)
O’Brien assumes that independent aid distribution mechanisms operated through civil society are not as “safe” or “effective” as those provided by the government when in fact they may do a better job. In addition, aid distribution closely tied to U.S. government personnel can put aid workers in danger and hinder aid delivery.

In a conference call with a group of charities, grantmakers and legal experts in late September, a Treasury official said it is not clear where this project is going, but this is a potentially necessary way of getting aid into the region because of the threat of “terrorist abuse.” Then, seeming to contradict himself, he said Treasury wants to make this an option, not a requirement.

The USAID-ACP project has the potential to entangle private philanthropy in highly charged internal Palestinian political disagreements as well as U.S. foreign policy. For example, a Google search on ATFP brought up a detailed and highly critical assessment of their close ties to Bush administration foreign policy objectives, lack of effectiveness and highly partisan positions on Palestinian politics. The article appeared in the Electronic Intifada and was written by Osamah Khalil, a doctoral candidate at the University of California at Berkeley. Whatever ones opinions on Middle East foreign policy issues, the article raises a red flag that demands projects such as the USAID-ACP pilot get close scrutiny from the U.S. nonprofit sector before any expansion is considered.