As the Charity & Security Network begins its tenth year of operation, it is time to reflect on the accomplishments and challenges of 2017, both to recognize our collective achievements and to inform our priorities and strategies for 2018. The members, Advisory Board and staff all can be credited with contributing to the successes of 2017. Here are the main highlights:
Securing Financial Access for Nonprofits: From Research to Action
In February we published Financial Access for U.S. Nonprofits, which provided the first (and to date only) empirical data showing just how serious a problem “derisking” for nonprofit organizations (NPOs) has become: 2/3 of U.S. charities operating internationally have experienced problems with banking services, affecting all types of programs in all parts of the world. The study, which has been widely disseminated and extensively quoted, also included analysis from interviews with banks, government officials and NPOs that demonstrates the need for greater clarity from regulators. Its recommendations included formation of a multi-stakeholder dialogue aimed at forging solutions.
· Multi-stakeholder dialogue on solutions launched
That process began with the spring-time launch of the World Bank and ACAMS (Association of Certified Anti-Money Laundering Specialists) dialogue, in which government officials, banks and NPOs agreed to work toward solutions in four workstreams that mirror the recommendations from our report:
1) Facilitate information provision from NPOs to banks, including development of common standard information collection items;
2) Explore options to use technology to streamline bank due diligence and support other solutions;
3) Clarify regulatory standards and expectations and develop special financial channels for humanitarian crises;
4) Engage in outreach to secure broad stakeholder participation and buy-in, as well as training and informational materials for all stakeholders.
As part of this work, C&SN coordinated NPO participation in drafting a joint NPO-bank proposal to revise the U.S. Bank Examination Manual section on NPOs. Submitted to U.S. regulators in the fall, the revision would update the manual to reflect the Financial Action Task Force’s 2016 changes to its recommendation on NPOs. This change would instruct examiners and the financial institutions they examine to move away from considering all NPOs as high-risk bank customers to a proportionate, risk-based approach. Because bank behavior is strongly influenced by what bank examiners tell them, this update is crucial to improving financial access for NPOs.
Current projects within other workstreams include researching the potential use of cryptocurrency for cross-border grantmaking as an alternative when banks are unable or unwilling to make timely transfers.
· Engaging Congressional Oversight Committees
C&SN briefed Congressional oversight committees on our research findings and recommendations and is urging them to address this issue in any “modernization” of U.S. banking laws. C&SN has partnered with InterAction’s Together Project and a number of NPOs in educating Hill staff on NPO financial access difficulties and push for reform. Congress is considering updating the Bank Secrecy Act and related laws that impact bank behavior towards NPOs. C&SN is using this opportunity to advocate for steps to improve financial access for NPOs.
· Global scale solutions for a global problem
Working with the nearly 100 members of our Global NPO Financial Access Working Group, C&SN facilitates coordination with NPOs working for financial access in other countries and in bringing the issue before bodies like the FATF. As part of its outreach, C&SN staff spoke on this issue at a conference at The Hague in October and the Global Humanitarian Action Summit in London in November, and Director Kay Guinane appeared in a documentary film on the issue produce by the Womens Peacemakers Program.
Protecting Nonprofits’ Ability to Operate, Supporting Rights to Association, Assembly and Expression
With a new administration and Congress taking office in 2017, C&SN members had concerns that NPOs working on humanitarian, development, peacebuilding and other projects in global hot spots could be the targets of new restrictions or enforcement policies that would impact their legitimate work. To address these concerns C&SN undertook the following projects:
· Statement of Principles sets out clear criteria for protecting NPOs
In October, 50 organizations, including umbrella groups with hundreds of members (Council on Foundations, Alliance for Peacebuilding, InterAction, National Council of Churches) published a statement on the rights of nonprofit organizations. The statement notes the “transformative power” of the work of NPOs both at home and abroad, saying in these times, “a strong and active nonprofit sector is more important than ever. But unnecessary restrictions on nonprofits can limit their ability to carry out their good works.”
Accordingly, the statement sets out five principles that should govern any action taken by government that impacts NPOs’ ability to work. They are:
• Government rules and regulations should encourage nonprofit activities and not unduly disrupt or discourage them.
• Any restrictions on nonprofits’ activities should be based on a risk-based approach that is proportionate and consistent with Constitutional principles.
• The ability of nonprofits to protect and aid civilians affected by armed conflict should be respected, consistent with international humanitarian law.
• Any nonprofit subject to government enforcement action should have a meaningful opportunity to defend itself.
• All assets of nonprofit organizations should be protected and used only to support a legitimate charitable purposes
Going forward, C&SN will measure all proposed legislation, rules and policies against these principles to determine whether or not they merit support or need revision.
· Know Your Nonprofit Rights Project
During 2017, C&SN worked to make sure its members have the information and tools needed to protect against hostile or retaliatory action by government by presenting a series of well-attended webinars on key topics, such as Steps My Organization Can Take to Protect Itself and How to Prevent or Prepare for an IRS Audit. A special section of the website was created to post webinar recordings and new informational guides developed by staff. This series will continue in 2018.
C&SN developed a rapid response plan to assist organizations subjected to hostile government action, which was implemented in the late summer when the NPO community successfully pushed back against proposed legislation targeting a Muslim charity.
Building Global Civil Society Connections: Joint Advocacy in Multi-lateral Bodies
· Continuing leadership on FATF issues
As co-chair of the Global NPO Coalition on FATF, C&SN plays an important role in facilitating civil society engagement with that key body, which sets anti-terrorist financing standards that impact regulation of NPOs around the world. In 2017, C&SN staff spoke at FATF’s annual consultation with NPOs in Vienna, on U.S. NPOs’ experiences with the process for FATF’s evaluation of the U.S. A memo summarizing lessons learned from these experiences and suggesting better ways FATF can get information from NPOs was published in the fall. C&SN organized several webinars for coalition members and helped launch a bi-monthly newsletter for coalition members.
· Engaging on civil society rights globally
In December, C&SN testified in a hearing held by the InterAmerican Commission on Human Rights on U.S. restrictions on freedoms of assembly and association. We used research on financial access to show how account closures and wire transfer delays severely impede NPOs’ ability to carry out their programs, noting that access to funds is integral to the right to freely associate. C&SN testified alongside CIVICUS Alliance and the International Center for Not-for-Profit Law.
C&SN continues to provide research support to the CIVICUS Monitor, a portal of information on freedom of expression, association and assembly throughout the world. C&SN serves as the Monitor’s North America research partner.
A Vigilant Watchdog: Monitoring, Reporting and Responding
Keeping an eye on U.S. government, FATF and other bodies that can impact NPOs’ ability to operate is one of our most important core functions. We continuously monitor proposed legislation, rules, policy developments, court cases and other actions, reporting new developments through our newsletter, website and social media outlets. Where needed, we respond, coordinating advocacy and providing technical support.
For example, 2017 publications included analyses and background materials on emerging issues, including the Foreign Agent Registration Act, and how U.S. NPOs are regulated, to inform and avoid unnecessary duplication in bank due diligence. We also produced a detailed analysis of permissible peacebuilding activities, drawing on statements made by U.S. government officials to the Supreme Court in the Humanitarian Law Project case.
The Road Ahead: 2018
In 2018, the Charity & Security Network will build on this momentum in the following ways:
· Continue to protect the rights of NPOs and guard against new restrictions from the Trump administration and Congress.
· Promote the risk-based approach to national security rules impacting NPOs over strict liability legal restrictions and advocate for implementation of FATF R8
· Build on momentum to address financial access problems for NPOs by facilitating and supporting robust NPO participation in the World Bank/ACAMS process
· Pursue special financial channels to address humanitarian emergencies
· Promote rules and policies that protect NPO access to civilians in need of assistance, particularly in conflict zones
We hope you will continue to support these efforts with your participation in the network and organizational membership. We look forward to working together in 2018.
You can support our work by donating here.