Frozen Funds

If a charity's assets and funds, including donations, are seized by the government, there is no process to release the charitable funds to programs that respect the intentions of the donors. Frozen charitable funds seized by the government is estimated between $7-19.8 million. 

CSN's Principles and Procedures for the Release of Frozen Funds for Charitable Purposes

Summary of Economic Sanctions Laws and Regulations Authorizing Treasury to Shut Down Charities

Date: 
September 15, 2009

The legal authority for the Department of Treasury to designate a person or organization as a Specially Designated Global Terrorist (SDGT) or freeze assets "pending investigation" is based on laws providing for economic sanctions against foreign nations, going back to the Trading With the Enemy Act in 1917 and ending with the Patriot Act.  

Chart: How Many Children Could be Helped if Frozen Charitable Funds Were Released?

Date: 
November 9, 2009

The Office of Foreign Assets Control report for 2009 indicates up to $19.8 million in assets have been frozen for individuals and entities on its watchlist. There is no public information on how much of that comes from charities, but news reports indicate at least $7 million in U.S. charitable assets are frozen.

Instead of the money remaining frozen at Treasury, the money could be used to help millions of children and families in need. As an example, we used statistics from the US Fund for UNICEF* to illustrate how frozen funds could be used for immunizing children, clean water and shelter for displaced families.

Review of Legislative History Shows Treasury's Position on Frozen Charitable Funds Without Basis

Date: 
June 15, 2011
Author: 
Sahar Aziz, Senior Legal Advisor to the Charity and Security Network

Representatives of the U.S. nonprofit sector have been seeking release of frozen charitable funds for charitable purposes since 2006 when 20 organizations sent a letter to the Department of Treasury asking for release of the funds for charitable purposes. Specific procedures based on current Treasury regulations were proposed. However, Treasury rejected the request, and continues to resist releasing the funds, based on a claim that Congress intended the funds to be held in case victims of terrorism file suit against the shut down charities. Since that has only happened in one case, the rest of the funds remain frozen indefinitely. The Charity and Security Network undertook research of the Congressional Record and the law and found no evidence to support Treasury's position. This memo describes the outcome of that research in detail.

Appeals Court Hears Appeal Over Distribution of Holy Land Foundation Funds

Date: 
November 10, 2012

On Nov. 7, 2012, a federal appeals court heard arguments about the distribution of charitable assets seized by the government from the Holy Land Foundation for Relief and Development’s (HLF) to pay victims of terrorism.  In 2011, a district judge ruled that all HLF’s property, including millions of dollars in charitable funds and other assets seized by the government, could be used to satisfy, in part, a $214.5 million judgment against Hamas by victims of a 1997 suicide bombing in Israel.  The three-judge panel from the U.S. Court of Appeals for the Fifth Circuit did not say when it would make its decision about the seized assets.  Just days before, the Supreme Court denied the charity officials’ petition for appeal. Click here for background and summary of the HLF case.

Foreign Legal Challenges to "Terrorist" Designation Prove Successful

Date: 
April 9, 2009

On Feb. 17, 2009 a Swedish court in Malmo acquitted the head of a charity of charges that he financed terrorism through a charitable group. Khalid al-Yousef, the leader of al-Aqsa Spannmal (Grain Foundation), faced a six year jail sentence if convicted. It has also been reported that $150,000 in donations raised by the charity which had been frozen by the United States and Britain will be returned.

Legal Authority and Process of Office of Foreign Assets Control to Release Frozen Charitable Funds

Date: 
November 6, 2006

The power of the federal government to release "blocked" assets seized from entities designated as Foreign Terrorist Organizations for Specially Designated Nationals derives from the same statutory framework as the power to freeze and seize assets. These statutes — International Emergency Economic Powers Act (IEEPA) as amended by the Patriot Act, and the Anti-Terrorism and Effective Death Penalty Act of 1996 — authorize the President to promulgate regulations governing implementation of these powers.