Joint Statement from the Council on Foundations, Independent Sector, National Council of Nonprofits and United Philanthropy Forum

The Council on Foundations, Independent Sector, National Council of Nonprofits, and United Philanthropy Forum express our opposition to Section 4 of HR9495 and its predecessor, HR6408. We do not object to the provision in the bill that postpones tax deadlines for those who are unlawfully or wrongfully detained or held hostage abroad. And we strongly support stopping bad actors using nonprofits to fund terrorism. Unfortunately, as drafted, this legislation also contains language from HR6408 that creates redundancies and confusion while providing the executive branch with sweeping new powers that can be abused.

This legislation would allow the Secretary of the Treasury to designate Section 501(c) nonprofits as “terrorist supporting organizations” at the Secretary’s discretion, without requiring the Secretary to share their full evidence or reasoning with accused non-profit organizations. Furthermore, the legislation violates constitutional due process protections by placing the burden of proof on the accused organization and giving organizations only 90 days to prove their innocence before revoking their tax-exempt status.

Even if the Minister’s decision were successfully reversed, the designated individuals would risk irreparable damage to their activities and reputations. The implication that an organization could be associated with terrorism could cause it to lose not only access to banks and other financial institutions, but also the trust of donors and the communities it serves. Ultimately, the beneficiaries of nonprofits’ work would suffer the most.

In addition, under HR9495, law-abiding organizations could be stripped of their tax exemption for providing humanitarian assistance in conflict zones, even when operating under authorization from the Office of Foreign Assets Control. These permits protect non-profit organizations under sanctions legislation, but not under tax legislation.

It is already illegal to provide material support to foreign terrorist organizations. Organizations suspected of violating the law are rightly subject to criminal investigation and prosecution. Section 4 of HR9495 may achieve the goal of expediting these cases, but at the expense of fairness and transparency. If the investigative process needs refinement or expedition, we stand ready to work with policymakers on changes that protect nonprofits’ due process rights and protect them from future abuse.