In early March 2013 I attended the last in a two-year series of meetings the UN Counterterrorism Executive Directorate (CTED) and the Center on Global Counterterrorism Cooperation held to bring together governments, representatives of the nonprofit sector, bankers and other experts to discuss ways to protect nonprofits from “abuse for the purpose of terrorist financing.”  The meetings began in London two years ago, and five regional meetings were held around the world, involving 80 nonprofits and more than 50 countries.

This was the last meeting but my first experience with this dialog. It seemed to yield positive results, and I benefitted from all the wisdom and articulate advocacy of my nonprofit colleagues in previous meetings. The discussion itself was confidential, but a summary was presented at a March 7 briefing for UN members at the New York headquarters. The presentations demonstrated broad governmental recognition of the importance of the nonprofit sector’s work and the fact that the sector has developed and uses accountability and governance standards that go a long way to protect its assets from diversion by terrorists or anyone else.

But one of the most striking (and welcome) themes that ran through the presentations is the concept of proportionality in government regulation in this arena.  Michelle Russell, Head of Investigations and Enforcement at the Charity Commission for England and Wales, told the audience that it is “important to strike the right balance in regulating the NPO sector in order to avoid suppressing or disrupting the excellent work being carried out by legitimate NPOs or allowing terrorists actors to occupy the NPO ‘space.’”

The statement from Paul Seger of the Permanent Mission of Switzerland to the United Nations took this concept a step further. After noting that nonprofits play a vital role in the world economy and provide essential services, he said:

It is therefore of great importance that this growing, complex and increasingly diverse sector gets the necessary protection, both in terms of making sure that NPO’s are not abused for terrorist financing and in terms of avoiding the overregulation of  the sector, which could hamper its proper functioning. In this regard we find particularly relevant that NPOs aren’t put under pressure for political reasons and that the rights to freedom of expression and association of individuals in civil society are respected at all times. Or in other words there is a need for the regulators to be regulated as well. (emphasis added)

Seger recommended the project follow up with further dialog, including with the Financial Action Task Force.

The representative of Sweden’s statement noted the “negative trend of growing restrictions” on civil society internationally, and urged states to “recall article 22 of the International Covenant for Civil and Political Rights (ICCPR),” which limits governmental restrictions on freedom of association.  He quoted the International Center for Not for Profit Law’s report Defending Civil Society to note such restrictions.

In follow up comments, the distinguished representative of Tanzania made a key point, noting that poverty and ignorance have a negative impact on youth that leaves them vulnerable to terrorist recruitment and that the work of nonprofits can support youth as a way of combatting terrorism.

Going forward I hope that this process does result in ongoing dialog, especially since the human rights issues must be guiding principles for any regulation of the nonprofit sector in any country.  These include freedom of expression and association for people engaged in civil society and open and non-discriminatory humanitarian access to people in need of aid.  These principles have been recognized, but need to be more clearly articulated and emphasized.

But things are off to a promising start.  There is reason to hope the U.S. is listening to this conversation, as it participated in several of the meetings and provided some technical assistance to the process.  But the current U.S. approach to nonprofits and anti-terrorist financing is out of step with the principles of proportionality and protection that shape this emerging international framework.

For example, there has been no proportionality in the sanctions the U.S. Treasury Department has imposed on the nine U.S. charities it has added to the terrorist list.  All funds were frozen, all programs shut down. There was no opportunity to get rid of the problematic board member or employee or sever relationships with the problematic foreign NGO.  Offers to restructure organization’s programs and boards were rejected.  More importantly, Treasury rejected all proposals to establish a process to release frozen funds to charities that could ensure they reached the innocent beneficiaries donors intended to help.  (See our reports Collateral Damage and U.S. Charities and the War on Terror: A Decade in Review)

That is a zero tolerance strategy, not a proportionate one.  It makes the mistake of thinking that if all aid is stopped, the terrorist group in an area will somehow be weakened.  But experience shows us that is not what happens. Instead, actions like this create a vacuum that the terrorist group steps into. It gives them a propaganda point as well.  So the U.S. approach not only lacks proportionality, it also fails as effective counterterrorism.

The UN process can be an opportunity to re-start the dialog between the U.S. government and nonprofit sector on these issues.  It ended in November 2010 when a working group coordinated by the Council on Foundations sent a letter to Treasury ending talks on the anti-terrorist financing guidelines for nonprofits.  These guidelines were released in 2002 without public input and were so counterproductive that the nonprofit sector uniformly called for their withdrawal. Treasury made some revisions in 2006 based on public comments, but they were insufficient, and the call for withdrawal still stands.

Now we have a new Secretary at Treasury and maybe there could be a new strategic approach to nonprofits and anti-terrorist financing as well.  The principles of proportionality and protection that frame the UN dialog are something the U.S. should take a hard look at and seriously consider. I think it would find a receptive ear in the nonprofit sector if it does so.