Jennifer Lynn Bell Publishes “Terrorist Abuse of Non-profits and Charities: A Proactive Approach to Preventing Terrorist Financing”

Jennifer Lynn Bell (Goodwin Procter LLP) published “Terrorist Abuse of Non-profits and Charities: A Proactive Approach to Preventing Terrorist Financing,” an article arguing that the government should adopt a more proactive role in monitoring terror financing via non-profit organizations.  Here is an excerpt:

The Bush administration reports that more than $139.1 million in assets were frozen worldwide, including $36.7 million in the U.S., and an additional $64 million in terrorist related assets were seized by authorities globally between September 11, 2001 and January 2004. As of the Fall of 2002, $7.3 million was seized from charities that U.S. investigators believe were linked to al-Qaeda or other terrorist organizations and $5.7 million was frozen internationally by countries concerned that “spurious charitable organizations” were functioning within their borders.  Based on figures from the Department of Justice, one scholar suggests that Al-Qaeda received approximately 30% of its financial resources from donations solicited in the United States and abroad.  As of September 2006, the Treasury Department identified 43 charities worldwide and 29 associated individuals as Specially Designated Nationals (“SDN”) for their support of terrorist organizations and operations.  The Treasury Report found that “these seventy-two charities and individuals comprise over fifteen percent of all U.S.-designated terrorist supporters or financiers, indicating the primary importance of charities as a critical means of support for terrorist organizations and activities.”

This article argues that the government should adopt a more active role in monitoring terror financing via non-profit organizations. Part I of this paper addresses the problem of non-profit organizations and terror financing while summarizing the purpose of tax exemption and advantages of operating as a non-profit organization.  Additionally, it briefly defines terrorism and terror financing. Finally, it introduces the relationship between terror financing and non-profit organizations. Part II discusses the current government’s counter-terrorism regulations most relevant to non-profit organizations and the flaws of these initiatives. Part III addresses the need for modification of existing regulations and proposes several proactive initiatives to reduce the revenue stream flowing through non-profits to finance terrorist operations without incapacitating legitimate charitable organizations.

For the entire article, see “Terrorist Abuse of Non-profits and Charities: A Proactive Approach to Preventing Terrorist Financing,” 17 Kan. J.L. & Pub. Pol’y 450 (2008).

DAB