Monday, February 6, 2023

Designated Foreign Terrorist Organizations and Their Nonprofit Fundraisers

Foreign Terrorist Organizations - United States Department of State

Click on the picture to read a CRS report on material support

Just this morning, there was a major earthquake in Syria -- reportedly more than 1600 deaths and buildings collapsing all over the news.  On top of that, there is a civil war raging with no end in site.  Nonprofit organizations will no doubt quickly ramp up to provide critical aid.  But do they have to worry about their aid somehow helping one side or the other in the civil war? Its a legitimate question because that circumstance could end in revocation. 

The Associated Press, a 501(c)(6) according to ProPublica, teamed up with Shomrin, an Israeli nonprofit newspaper, to report that another Israeli nonprofit, Shlom Asiraich, is assisting terrorists -- including Prime Minister Yitzhak Rabin’s assassin, but more often right wing Israeli killers of Palestinians, according to Israeli media reports, and that a U.S. nonprofit, World of Tzedaka, has been collecting donations in the United States to help in all the trouble.  

I did not find the Israeli based nonprofit, Shlom Asiraich, on the State Department List of Foreign Terrorist Organizations.  But the whole story is laid out in the Associated Press, complete with erudite comments from Ellen and Marcus.  Those two nailed the problem with two short sentences set out below.  But first here is a summary from Shomrin:

An Israeli association that financially supports the murderer of Prime Minister Yitzhak Rabin, the murderer of the Palestinian Dawabsha family, the murderer of the girl Shira Banki, and other Jews convicted of a nationalist crime, is collecting donations in the United States. The American donors are entitled to deduct part of their contribution from their income tax payments and the meaning is that the American government indirectly subsidizes these contributions. 

The association that collects the donations, named "Shalom Esirich," was established in 2020, but the collection of donations began at least two years earlier under the name " All of us with the prisoners of Zion." The registration of the association was carried out by the lawyer Hanmal Dorfman, the right-hand man of the chairman of Otzma Yehudit and the Minister of National Security, Itamar Ben Gabir, and who managed the coalition negotiations for entering the government on his behalf. In his response, Dorfman stated that he is not the association's legal advisor and refused to address further questions. 

The AP version continues, rather expertly framing the issues from both sides with help from Ellen and Marcus;

Ellen Aprill, an expert on tax and charities at Loyola Law School in Los Angeles, said convicted criminals and their families could be considered in need and qualify as a permissible charitable purpose.  While supporting someone convicted of acts of terrorism could be seen as encouraging criminal activity, that would need to be proven, she said.  Marcus Owens, a lawyer who ran the IRS’s nonprofit unit in the 1990s, took a tougher stance.  “The U.S. Department of Justice views assistance to the families of terrorists as a form of material support for terrorism,” he said.

Oh man, I love it when nonprofit experts talk that sexy nonprofit talk.  Ellen and Marcus -- maybe they should get a room! -- are talking IRC 501(p), enacted after our traveling innocence was stolen on 9/11.  Used to be, as nostalgialized in this NPR report, we could arrive at O'Hare or LAX a few minutes before the flight, run through the airport like the homicidal OJ Simpson in a rental car commercial, keep our shoes on, and still make our flight.  IRC 501(p) is the airport equivalent for U.S. nonprofits who want to support [legitimately or illegitimately] disfavored causes overseas.  Now, they gotta get there two or three hours earlier, stand in lines, lines, and more lines, just to take your shoes off and your laptop out, and be bombarded with gamma rays that look up your orifices right out there in public, before getting on the exempt organizations plane. I made all that up but you understand.  By the way, here is how the law defines "material support or resources" for terrorists, the provision of which will get your nonprofit's name scratched off the Publication 78 list:

(The term “material support or resources” is defined in 18 U.S.C. § 2339A(b)(1) as ” any property, tangible or intangible, or service, including currency or monetary instruments or financial securities, financial services, lodging, training, expert advice or assistance, safehouses, false documentation or identification, communications equipment, facilities, weapons, lethal substances, explosives, personnel (1 or more individuals who maybe or include oneself), and transportation, except medicine or religious materials.” 18 U.S.C. § 2339A(b)(2) provides that for these purposes “the term ‘training’ means instruction or teaching designed to impart a specific skill, as opposed to general knowledge.” 18 U.S.C. § 2339A(b)(3) further provides that for these purposes the term ‘expert advice or assistance’ means advice or assistance derived from scientific, technical or other specialized knowledge.’’

darryll jones

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A bit more on this piece and the issues raised. As I learned in giving pro bono help to an organization some years ago, getting the State Department to list an organization on its list of terrorist organizations is not easy. As Darryll notes, this Israeli organization is not so listed, part of the reason I did not go as far as Marc in my comments. Also, in this case, I pointed out to the reporter that the US charity was allowing donors to earmark gifts for the foreign charity and that was a non-no, but that point was, apparently, too technical for the purpose of the piece.

Posted by: Ellen P Aprill | Feb 6, 2023 9:30:50 AM

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