Washington D.C., – On Nov. 14, 2023, Congressman David Kustoff (R-TN) and Congressman Brad Schnieder (D-IL) introduced H.R. 6408, bipartisan legislation that would “revoke the tax-exempt status for any organization that provides financial support or resources to designated terrorist groups.” The accompanying press release claims “Recent reports have indicated that U.S. based, tax-exempt nonprofits may be providing funding and support to Hamas.” The key word in this quotation is “may,” as there is no concrete evidence of these allegations.
Charitable organizations, especially those who work in settings where designated terrorist groups operate, already undergo strict internal due diligence and risk mitigation measures and – thanks to misguided categorizations of nonprofits being labeled as “particularly vulnerable” to terrorist financing abuse in rushed policy directives immediately following 9/11 – face extra scrutiny by the U.S. government, the financial sector, and all actors necessary to operate and conduct financial transactions in such complex settings. While these categorizations have since been revoked, the scrutiny remains the same.
As the prohibition on material support to foreign terrorist organizations (FTOs) already exists, and is applicable to U.S. nonprofits, this proposed legislation is redundant and unnecessary. The potential harms far outweigh any potential “benefit” that its sponsors seek from the political parading or publicity that the bill produces. This legislation presents dangerous potential as a weapon to be used against civil society in the context of Gaza and beyond. As noted by the Foundation for Middle East Peace (FMEP), H.R. 6408, if passed, would “[enable] a new category of legal harassment of NGOs, focused in the first instance on those that engage with Palestinians or on Palestinian issues, but also enabling attacks on NGOs working in any sector and on any issues,” similar to the baseless False Claims Act cases that charities have faced over the years.
Furthermore, this legislation contributes to the continued false narrative that nonprofit organizations (NPOs) are vehicles for abuse by terrorist organizations. In fact, the U.S. Department of Treasury itself and the Financial Action Task Force (FATF) have both publicly stated that NPOs historically face little to no risk of terrorist financing abuse. Officials in the U.S. government and Congress must recognize that this type of rhetoric and discourse, without proper evidence to substantiate claims of abuse, is damaging to the charitable sector as a whole, and undermines the diligent work done by experts in the field of NPO operations to ensure that aid goes only to innocent civilians caught living in areas where terrorist groups operate. As has been stated a number of times, “NPOs themselves have the most to lose” if funding is redirected or does not end up in the hands of intended beneficiaries, and thus go to great precautionary lengths to prevent this.
C&SN urges Congress to reject this bill, as it is not only duplicative and its claims are not evidence-based, but also creates a tool that may be manipulated against NPOs by bad actors with political motives.