High Alert: The Government's War on the Financing of Terrorism and its Implications for Donors, Domestic Charitable Organizations, and Global Philanthropy

Abstract:     
Within days after the September 11 terrorist attacks, the U.S. government extended its already existing commitment to combat terrorism. President Bush declared a financial war on terrorism, with the aim of depriving terrorists of financial support. He issued Executive Order 13,224, which ordered the blocking of assets of "Specially Designated Global Terrorists." Congress enacted legislation that not only fortified previously existing criminal and civil laws, but also added new ones, for use in combating terrorists and terrorism. The Bush administration dedicated resources to existing and newly created governmental structures that would be responsible for enforcing these laws and for waging the financial war on terrorism. This enhanced legal and structural arsenal contains multiple means by which the U.S. government, as well as citizens injured by activities of foreign terrorists, can pursue economic or criminal sanctions against terrorists and their private sponsors, including individuals, as well as foreign non-governmental organizations, domestic charitable organizations, and their governing bodies.

Awareness of this greatly expanded potential exposure to liability, and even criminal sanctions, has already engendered unforeseen side effects. Some well-intentioned donors reportedly are now reticent to make charitable contributions to domestic charitable organization. Law-abiding Muslim charities have documented a decline in contributions received, and charitable organizations are struggling to maintain their pre-September 11 levels of commitment to global philanthropy. As the financial war on terrorism evolves and the arsenal of weapons is strengthened, the government's successes not only may financially starve terrorists, but also may have the unfortunate and unintentional consequence of significantly reducing resources committed to legitimate global philanthropy. Such a result, ironically, would contribute to fundamentalists' and radical terrorists' goal of disrupting globalism, which, if otherwise uninterrupted, could help to achieve social and economic security and prosperity abroad that would lessen much of the appeal of terrorist groups.

Preventive measures thus are essential to minimize potential negative consequences of the government's financial war on terrorism. To guard against exposure to liability, donors and leaders of domestic charitable organizations must undertake adequate due diligence. Moreover, the government must take great care to protect against overzealous legislation and enforcement actions. Absent sufficient safeguarding, the government's actions may exacerbate, rather than diminish, the ultimate effects sought by terrorists.

Number of Pages in PDF File: 112

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