See Kay Guinane’s Response (Part 1) to Matt Levitt here.

Matthew Levitt of the Washington Institute for Near East Policy may be an expert on terrorist financing, but his June 13, 2010 blog in the Chronicle of Philanthropy commenting on charities shows he is not an expert in the field of international philanthropy, aid or development. For instance, he writes that there are two types of charities “exploited” by terrorists- the first are “founded with the express purpose of financing terror” and the other is made up groups that are “infiltrated by terrorist operatives” and covertly sabotaged. Despite this critical distinction, Levitt’s analysis fails to account for it.  Instead, he takes a one-size-fits-all approach that essentially throws out the baby with the bathwater. It doesn’t make sense for him or the Department of Treasury (Treasury) to treat both categories the same way.

There is a second and critical distinction Levitt fails to make. He repeatedly accused the charitable sector of being vulnerable to terrorist “exploitation” because “charities are subjected to lesser regulatory requirements than other entities.” But he offers no supporting evidence of this claim. Levitt fails to make the crucial distinction between U.S. charities and foreign groups that may not be subject to the same kind of transparency and accountability standards. For example, the IRS requires specific due diligence procedures when a U.S. charitable organization supports activities of foreign charities and all foreign grants must be reported to the IRS on an annual basis.

Finally, Levitt describes the problems charities and donors have with Treasury’s regulatory regime as more of a “misunderstanding” or “the result of misinformation,” and not one of “enforcement.” He has conveniently overlooked two federal court decisions that found the lack of basic due process for charities designated by Treasury violates the Fourth and Fifth Amendments of the Constitution. Those rulings are not mere misunderstandings, but an indication that Levitt (and Treasury) need to listen to the U.S. charitable sector rather than continue to assume it knows what’s best.

The Chronicle of Philanthropy blog full text is available to subscribers. For essentially the same content, see Levitt’s posting on the Counterterrorism blog.