Combating terrorism by constraining charities? Charity and counter‐terrorism legislation before and after 9/11

Published date01 September 2017
Date01 September 2017
AuthorAnika Gauja,Nicole Bolleyer
DOIhttp://doi.org/10.1111/padm.12322
ORIGINAL ARTICLE
Combating terrorism by constraining charities?
Charity and counter-terrorism legislation before
and after 9/11
Nicole Bolleyer
1
| Anika Gauja
2
1
Department of Politics, University of
Exeter, UK
2
Department of Government and International
Relations, University of Sydney, Australia
Correspondence
Nicole Bolleyer, Department of Politics,
University of Exeter, Amory Building, Rennes
Drive, Exeter EX4 4RJ, UK.
Email: N.Bolleyer@exeter.ac.uk
Funding information
BA/Leverhulme Small Research Grant, Grant/
Award number: SG-132160; European
Research Council under the European Unions
Seventh Framework Programme, Grant/Award
number: FP7/200713; ERC grant agreement,
Grant/Award number: 335890 STATORG.
How does counter-terrorism legislation enacted in democratic
states impact upon charities, intentionally or unintentionally? To
address this question, we present a new analytical framework that
allows us to compare, across established democracies, how charity
legislation and counter-terrorism legislation are connected,
enabling us to assess how charitieslegal environments have chan-
ged since 9/11. Comparing legislation across six long-lived democ-
racies (the UK, US, Australia, New Zealand, Canada and Ireland),
we distinguish between three types of legislative connection: over-
lap, direct intersection and indirect intersection. These categories
differ in terms of the visibility of the connection established
between the two areas of law. As high-profile reform exercises,
both overlap and direct intersections have been predominantly
introduced post-9/11. But it is through indirect intersections that
intensified post-9/11 which are most vague and difficult to
manoeuvre, that the day-to-day activities of charities are most
likely to be affected, with important empirical and normative
repercussions.
1|INTRODUCTION
To what extent does legislation aiming to combat terrorism in democratic states apply, either intentionally or
unintentionally, to charities? To address this question, this article proposes a novel, organization-centred analyti-
cal framework that can be used in comparative analysis to comprehensively assess how charity and counter-
terrorism laws connect and, if so, how they constrain charities across different jurisdictions. Distinguishing
between legislative overlap, direct and indirect intersection, we then apply these categories to legislation adopted
in six long-lived democracies: Australia, Canada, Ireland, New Zealand, the UK and the US in the post-9/11
period.
1
1
Note that charity legislation in the UK is devolved with separate laws in place in Scotland and in Northern Ireland. We refer to leg-
islation adopted in England and Wales as the largest jurisdiction.2011).
DOI: 10.1111/padm.12322
654 © 2017 John Wiley & Sons Ltd wileyonlinelibrary.com/journal/padm Public Administration. 2017;95:654669.
The article focuses on legislation applicable to voluntary organizations that enjoy charitable status (charities) for
several reasons.
2
Charities are an important subset of civil society; traditionally less regulated than for-profit organi-
zations (Hopt and von Hippel 2010), but since the 9/11 attacks have been considered particularly vulnerable to abuse
in several ways (Krahmann 2005). Terrorist groups may pose as charities to have a legitimate front for their activities,
for example, to channel funding or to collect donations (e.g. Raphaeli 2003). Charitable status is particularly attractive
since these organizations receive privileged treatment by the tax authorities, both through tax relief granted to the
organization directly and indirectly to its donors (e.g. Salamon 1997; Bater et al. 2004). Another scenario sees poten-
tial for terrorist abuse in the exploitation of humanitarian charities that operate internationally (including in areas
where terrorist groups might be active), with the purpose of channelling money to supporters abroad, and with the
charity being unaware of this activity (e.g. Bricknell 2011; Freeman 2011; FATF 2014).
3
However, the vast majority of organizations that make up the charitable sectors of democracies match none of
these scenarios,
4
but are still affected by the consequences of enhanced counter-terrorism legislation, for example,
through exposure to increased regulatory burdens, leading to fewer donations and/or the loss of services supplied by
financial providers (such as banks).
5
Charities are particularly sensitive to compliance costs as they are less able than
for-profits to pass on these additional costs to donors or government grantors, thereby decreasing public good pro-
duction (Garton 2009). Consequently, they have responded to the real or perceived threat of criminal liabilityby
pre-emptively withdrawing from some of the activities that could bring them into conflict with counter-terrorism leg-
islation before it is even invoked (Bloodgood and Tremblay-Boire 2011; Burniske 2014, pp. 68; Carter 2004, p. 1).
Systematically assessing the organizational impact of counter-terrorism legislation is crucial as the costs and
unintended side effects of charity regulation post-9/11 become increasingly recognized. For example, in June 2016,
the Financial Action Task Force (FATF), an international standard-setting body producing (non-binding) recommen-
dations on anti-money laundering and counter-terrorism financing, removed its advice in Recommendation VIIIthat
non-profit organizations were particularly vulnerableto terrorist exploitation a much criticized claim backed by
little empirical evidence (Cortright et al. 2012, p. 249).
6
Previously considered influential in pushing its member
states towards a stricter regulation of charities and non-profits (Howell 2012, p. 46; NCVO 2009), the FATFs revi-
sion acknowledged that not all non-profits are at risk and directed countries to take a risk-based, proportionate
approach towards the sector, a move considered to be a major reorientation by stakeholders.
7
Any such reorienta-
tion of the regulatory approach presupposes, however, an understanding of the extant risks and costs faced by
innocentcharities as generated by the national legislation and sanction regimes that evolved in the post-9/11
period.
8
This article provides such an assessment.
The article also builds on previous scholarship by systematically specifying mechanisms of howlaws
affect organizations, and proposing a comparative methodology for analysing these. A range of excellent in-depth
2
The specific definition of a charity varies across jurisdictions, but generally refers to a non-profit organization that exists to under-
take a charitable purpose beneficial to the general public (e.g. advancing health or education). For so doing it is granted a particular
legal form and/or receives preferential treatment under tax law (see on this, for instance, OHalloran 2011).
3
For empirical examples, see Goodstein 2008; Moor 2010; Young 2013; Charities Services (NZ) 2016; Cole 2016; CRA 2016a.
4
See, for instance, a recent report by the Charity Commission of England and Wales (2015). While terrorist and extremist-related
allegations accounted for 22 per cent of all disclosures in 2014/15, compared to 14 per cent the year before, only two of 11 serious
incident reports that related to extremism involved charities whose staff or goods had been seized by terrorist groups. (In contrast,
nearly 1,500 serious incident reports related to safeguarding and financial mismanagement.) Similarly, experts indicate that of 1.8
million charitable organizations in the US only a handful have been alleged to have links with terrorism financing (Cortright
et al. 2012, p. 249).
5
See on this, for instance, Cortright et al. 2012; Mackintosh and Duplat 2013; FATF 2014; Rutzgen 2015.
6
See http://www.fatf-gafi.org/media/fatf/documents/recommendations/pdfs/FATF_Recommendations.pdf, accessed 30 October
2016.
7
See, for instance: http://www.icnl.org/news/2016/2016%2006%20NPOs%20applaud%20important%20changes%20in%20Financial
%20Action%20Task%20Force%20(FATF)%20policy.pdf, accessed31 October 2016.
8
An important debate concerns the attempts of governments of non-democratic regimes to use legal means to control or actively
manage civil societies (e.g. Rutzen 2015). That said, in democratic states that we focus on we can assume that those effects are
unintended or at least considered undesirable.
BOLLEYER AND GAUJA 655

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