Ease Restrictions on Charitable Giving
(CNN) — A year ago on June 4 in Cairo, Egypt, President Obama pledged to ease rules that impede American Muslims’ ability to engage in charitable giving. His laudable commitment was in response to donors’ fears of donating to humanitarian causes abroad, especially in conflict zones where aid is most needed.
One year later, the draconian legal regime remains unaltered. Not only are donors still afraid to donate, but past donations collected for charitable purposes languish in frozen accounts.
The economic downturn, coupled with increasing poverty worldwide, makes charitable donations all the more urgent. The number of ailing, impoverished people in need of humanitarian aid, which could be provided by American charities, grows. Whether for building girls’ schools in Afghanistan or food programs in post-earthquake Haiti, charitable donations are in high demand.
Yet, one year after Obama’s Cairo speech, the government estimates that $3.2 million from well-intentioned American donors remains frozen and another $4 million has been forfeited to the government.
According to Kay Guinane’s recent testimony before the Subcommittee on Oversight and Investigations in the House Committee on Financial Services, $7 million could provide 11 million children with basic health supplies, 12 million children with vaccinations against polio or 25 million malnourished children with food. That the monies are frozen indefinitely is tragic.
As a result of overreaching laws, donations collected by charities that are designated as supporting terrorism or under investigation for it might never reach the intended beneficiaries. In addition to violations of due process rights, as highlighted in a 2009 ACLU report, no legal structure exists to determine a timeline or process for the disposition of these funds.
The KindHearts case illustrates how any scrutiny of a charity’s operations is effectively its death knell. The Treasury Department, under the USA Patriot Act, has kept the charity’s donations frozen for more than four years, pending an investigation of whether it provided material support to Hamas.
Notwithstanding Obama’s pledge, funds meant to provide aid languish, despite repeated requests to transfer the money to other charities. For instance, the Department of Treasury has rejected requests to transfer frozen funds to charities to assist earthquake survivors in Pakistan and Hurricane Katrina victims on the Gulf Coast.
Practical solutions exist. A brain trust of over 60 diverse nonprofits has come together under the Charity and Security Network to develop solutions that infuse transparency, accountability and proportionality into anti-terrorism finance laws. These solutions have been proposed to the Obama administration, to no avail.
First and foremost, reform measures must include the judicial branch in the designation process to ensure an independent review of the executive branch’s decisions. Treasury’s role as prosecutor, judge, jury and executor is untenable and dooms Obama’s pledge to fall short. By de-politicizing the decision making, the focus rightly becomes how to direct the funds toward a charitable purpose.
Adopting time-tested legal mechanisms found in bankruptcy law, the Charity and Security Network has proposed that courts be granted authority to appoint
independent, third-party conservators or receivers. They would oversee the disposition of money and ensure that it goes to legitimate charities that are in keeping with the donors’ intentions.
Under the proposed reforms, a court could permit a charity that is not designated as supporting terrorism to operate under the supervision of third-party nonprofit professionals who report directly to the court. For those charities whose designation is final after an exhaustive and fair adjudication process, the appointed third party would transfer the money to another similar charity.
Under the proposed reforms, an investigation, which may ultimately result in full exoneration, would not inevitably end the charity’s lawful operations. Nor would it deny the intended beneficiaries much-needed humanitarian aid.
What better way for the administration to commemorate the one-year anniversary of Obama’s historic speech in Cairo than to translate rhetoric into action? The hurdles to charitable giving can be overcome and practical solutions exist. The question is: Does the political will exist?
Sahar Aziz is an Associate Professor at Texas Wesleyan School of Law. Professor Aziz serves as the president of the Egyptian American Rule of Law Association (www.earla.org) where she works on rule of law projects in support of Egypt’s post-revolution transitions to democracy.
This article was published by CNN on June 4, 2010: http://www.cnn.com/2010/OPINION/06/04/aziz.cairo.charities/index.html