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Principles of International Charity

Principles of
International
Charity
Developed by the
Treasury Guidelines
Working Group
of Charitable Sector
Organizations
and Advisors
March 2005

Principles of International Charity1
I
nternational charitable work fills critical gaps in
the global socioeconomic infrastructure. Govern
ments alone cannot solve every social problem.
Businesses alone cannot meet every economic need.
Without international charity, more people in the
world would die of hunger and disease, fewer
children would learn to read and write, and more
people would live in poverty. There would be more
environmental destruction and fewer scientific
advances. The participation of charitable organiza
tions based in the United States is vital to maintain
ing a level of international charity sufficient to
address some of the world’s most critical needs.
Many U.S.based charitable organizations promote
international charity: private foundations, public
charities, corporate foundations, corporate grant
making programs, donoradvised funds, friends
organizations, churches and religious organizations.
In general, the charitable activities of these groups
can be divided into two types: the provision of
resources through grants to domestic or foreign
organizations for use in international work, and the
provision of services through program operations
abroad carried out directly or in partnership with
indigenous organizations. Charitable resources
provided may be monetary or inkind contribu
tions. The range of charitable services provided is
extensive—medical care, food, agricultural training,
disaster relief, shelter, education, clothing, water,
professional exchanges, institutional reform, tech
nical assistance, and supportof human rights and
civil liberties. The budgets of these organizations
range from the thousands to the hundreds of millions
of dollars each year.Many characteristics distin
guish these organizations from each other. These differences, however, pale in the face of the
overriding shared commitment of these organiza
tions to do charitable work wherever it is needed in
the world.
For almost a century, U.S. charitable organizations
have engaged in international work. The Rockefeller
Foundation, for example, was established in 1913
with a mandate “to promote the wellbeing of
mankind throughout the world,” and launched
programs promoting medical education and eradi
cating, after a 30year fight, yellow fever throughout
the world. The Red Cross, first chartered by
Congress in 1900, staffed hospitals and ambulance
companies in World War I, with more than $400
million contributed by the American public. In
1918, the National Information Bureau was created
to monitor the warrelated charitable fundraising.
During World War II, charitable organizations
helped fill the need for international war relief, and
afterwards, they provided humanitarian assistance
to survivors. By the 1950s, charitable organizations
were engaged in fighting poverty and starvation
and promoting health all over the world. When U.S.
charitable organizations pursue activities outside the
U.S., foreign citizens have the opportunity to have
personal contact with U.S. citizens. Consequently,
an important byproduct of the global reach of
charitable work is the goodwill it creates towards
America.
Charitable organizations have vast experience in
overcoming the difficulties associated with carrying
out charitable work in distant lands. Some chal
lenges are merely inconvenient: language barriers,
cultural differences, technological limitations.
Others—disease and hostile fire—may be deadly.
Somewhere along this continuum have always been
those threats posed by persons and organizations—
Preamble

whether donors, employees or recipients—that view
l
egitimate charitable organizations, along with banks
and businesses and virtually any other source of
funds, as the unwitting financiers of noncharitable
private interests. Charitable organizations have
successfully addressed these challenges through
attention to procedures designed to reduce the
risk that charitable assets would be used for non
charitable purposes. Some of these procedures are
mandated by the U.S. tax law, and others are deter
mined by individual organizations’ assessments of
the demands of their charitable activities.
In November 2002, the U.S. Treasury Department
issued “AntiTerrorist Financing Guidelines:
Voluntary Best Practices For U.S.Based Charities”
(the “Guidelines”), indicating that charities could
reduce the possibility that charitable funds would
be diverted to terrorist purposes by following the
Guidelines. While some charitable organizations
had begun reassessing the effectiveness of their
due diligence and monitoring procedures after the
September 11 terrorist attacks, the Guidelines
provoked a sectorwide reexamination. After
consideration of both the effectiveness of existing
procedures and the implications of strict compliance
with the Guidelines, charitable organizations con
cluded that the Guidelines are impractical given
the realities of international charitable work and
unlikely to achieve their goal of reducing the flow
of funds to terrorist organizations, but very likely to
discourage international charitable activities by U.S.
organizations.
The TreasuryDepartment encouraged a dialogue
with concerned charities, emphasizing that the
Guidelines are voluntary and are intended to assist
charities in developing their own procedures to
guard against the threat of terrorist abuse. In April2004, the Treasury Department encouraged charita
b
le organizations to propose alternative ways of
safeguarding charitable funds from diversion to
terrorist uses. This document responds to that
invitation.
The Principles reflect the collective efforts of a
broadly representative working group of charitable
organizations, nearly all of whom are engaged in
international charitable activities. The group’s
deliberations were open to all interested parties, as
reflected in its diverse membership of private
foundations, public charities, religious organiza
tions, grantmakers, operational nongovernmental
organizations, watchdog groups, corporations,
employee matching gift funds, and umbrella groups
representing various parts of the charitable sector
representing hundreds of individual organizations.
The Principles further reflect the collective efforts
and experience of the charitable sector through the
incorporation of suggestions offered during a public
comment period.
Because organizations rightly adopt practices suited
to the demands of their charitable activities and
expertise, due diligence differs somewhat from
organization to organization. Since September 11,
organizations have considered whether their existing
practices are sufficient to protect their assets from
diversion to noncharitable uses. Many have con
cluded that the practices that safeguarded their
assets beforeSeptember 11 continue to provide
ample protection, while other organizations have
chosen to adopt additional procedures. The funda
mental principles below underlie the diversity of
due diligence procedures that effectively minimize
the risk of diversion of charitable assets.
2 Principles of International Charity

1. Consistent with the privilege inherent in their
taxexempt status, charitable organizations must
exclusively pursue the charitable purposes for
which they were organized and chartered.
2. Charitable organizations must comply with
both U.S. laws applicable to charities and the
relevant laws of the foreign jurisdictions in
which they engage in charitable work.
Charitable organizations, however, are non
governmental entities that are not agents for
enforcement of U.S. or foreign laws or the
policies reflected in them.
3. Charitable organizations may choose to adopt
practices in addition to those required by law
that, in their judgment, provide additional
confidence that all assets—whether resources
or services—areused exclusively for charitable
purposes.
4. The responsibility for observance of relevant
laws and adoption and implementation of
practices consistent with the principles con
tained herein ultimately lies with the governing
board of each individual charitable organization.
The board of directors of each charitable
organization must oversee implementation of
the governance practices to be followed by the
organization.
5. Fiscal responsibility is fundamental to inter
national charitable work. Therefore, an organi
zation’s commitment to the charitable use of its
assets must be reflected at everylevel of the
organization.
6. When supplying charitable resources, fiscal
responsibility on the part of the provider
generally involves:
a. in advance of payment, determining that the
potential recipient of monetary or inkind
contributions has the ability to both accom
plish the charitable purpose of the grant and
protect the resources from diversion to non
charitable purposes;
b. reducing the terms of the grant to a written
agreement signed by both the charitable
resource provider and the recipient;
c. engaging in ongoing monitoring of the recip
ient and of activities under the grant; and
d. seeking correction of any misuse of resources
on the partof the recipient.
7. When supplying charitable services, fiscal
responsibility on the partof a provider involves
taking appropriate measures to reduce the risk
that its assets would be used for noncharitable
purposes. Given the range of services in which
organizations engage, the specific measures
necessarily vary depending on the type of
services and the exigencies of the surrounding
circumstances. The key to fiscal responsibility,
however, is having sufficient financial controls
in place to trace funds between receipt by the
service provider and delivery of the service.
8. Each charitable organization must safeguard its
relationship with the communities it serves in
order to deliver effective programs. This relation
ship is founded on local understanding and
acceptance of the independence of the charitable
organization. If this foundation is shaken, the
organization’s ability to be of assistance and the
safety of those delivering assistance is at serious
risk.
Principles of International Charity 3
Fundamental Principles

4Principles of International Charity
Commentary on the Principles
The following commentary is intended to illustrate the range of practices consistent with the
fundamental principles underlying effective and responsible international charitable activities:
1The laws of foreign jurisdictions aretoo varied for discussion here. Certain organizations provide information about laws and regulations in other
countries. For example, http://www.usig.org, http://www.ICNL.org and http://www.asianphilanthropy.org. Providers may need to consult legal
counsel or other service or resource providers that have more experience in a particular country, or they may seek expert local advice to navigate
this legal terrain. It is important to note that U.S. law does not requirecharitable organizations to abide by foreign laws. For example, a charitable
organization would not violate U.S. law by failing to observe foreign laws restricting civil rights and liberties.
2See I.R.C.§ 4945(h).
3Rev.Rul. 68489, 19682 C.B. 210. Like private foundations, U.S. public charities can support foreign organizations that have been recognized as
public charities by the IRS without undertaking special due diligence procedures.
1.
Consistent with the privilege inherent
in their taxexempt status, charitable
organizations must exclusively pursue
the charitable purposes for which they
were organized and chartered.
Commentary
Charitable organizations are missiondriven. The
mission of an organization defines its purpose, its
program activities, its values and operations, and
the measures of its success. Commitment to mission
can require an organization to engage in activities
involving people and places outside the reach of
United States laws and customs. Activities are no
less charitable, however, just because they might
occur outside the United States or benefit persons
who reside outside the United States. Charitable
organizations retain the discretion to identify those
persons and organizations that are appropriate
recipients of charitable assistance consistent with
each charitable organization’s mission and, there
fore, charitable organizations should develop and
implement proper safeguards to ascertain that this
assistance is in fact reaching the intended recipients.
2.
Charitable organizations must comply
with both U.S. laws applicable to
charities and the relevant laws of the
foreign jurisdictions in which they
engage in charitable work.
1Charitable
organizations, however, are non
governmental entities that are not
agents for enforcement of U.S. or
foreign laws or the policies reflected
in them.
Commentary
Generally, U.S. tax law requires that when a U.S.
charitable organization supports charitable activities
abroad it must satisfy certain criteria designed toreduce the risk that resources would be expended
for noncharitable purposes. The primary way in
which a private foundation may provide supportto
a foreign organization is by undertaking expenditure
responsibility, which focuses specifically on why a
particular grantee is well suited to carry out the
terms of a particular grant, and then monitors the
grantee’s progress in doing so.
2Similarly, a public
charity may provide support to a foreign organiza
tion if it retains control and discretion as to the use
of the funds and maintains records establishing that
the funds were used for charitable purposes.
3
Furthermore, to permit the deductibility of individ
ual contributions made to a U.S. charity, the U.S.

public charity must conduct its own review of the
p
rojects in advance to determine that they would
further its exempt purposes.
4
While tax rules prevent U.S. charitable organizations
from supporting noncharitable activities, U.S. laws
also prohibit any person—including charitable
organizations—from engaging in transactions in
support of terrorism and provide for civil and
criminal penalties in the event of violations. Most
of the counterterrorism measures have been in
place for nearly a decade, and others were enacted
in response to the terrorist attacks of September 11,
2001.
5
Under antiterrorism laws in place before September
11, all U.S. persons—including organizations
engaged in charitable work abroad—arebarred from
knowingly providing material support for specific
acts of terrorism.
6“Material support” includes
money,financial services, lodging, training, expert
advice or assistance, safe houses, false documenta
tion, personnel, transportation, and any goods
except food and medicine.
7It appears to capture
grants, microfinance assistance, and many types of
technical assistance provided by charitable organi
zations. In addition, under antiterrorism laws in
place before September 11, all U.S. persons areprohibited from providing material support to over
3
5 organizations listed as foreign terrorist organiza
tions, without the limitation that the material
support be intended to promote terrorist acts.
8
Days after the terrorist attacks of September 11,
2001, President Bush signed Executive Order
13224 prohibiting transactions by U.S. persons
with individuals and organizations deemed by the
Executive Branch to be associated with terrorism
and blocking any assets controlled by or in the
possession of such entities and those who support
them.
9The effect of the Executive Order is that
U.S. charitable organizations may not engage in
“prohibited transactions” with persons designated
under the Executive Order or placed on the list of
Specially Designated Nationals (“the SDN List”).
10
In addition, transactions are prohibited with per
sons “otherwise associated with” listed persons.
Prohibited transactions include financial support,
inkind support, material assistance, and technical
assistance. While generally permitted under the
International Emergency Economic Powers Act,
humanitarian assistance, including food, clothing
and medicine, to listed persons and those asso
ciated with listed persons is also prohibited under
the Executive Order.
Principles of International Charity 5
4Rev. Rul. 6679, 19661 C.B. 48.
5Acomplete discussion of these measures and related amendments is beyond the scope of this document. For a layman’s guide to the measures
adopted since September 11, 2001, see the Handbook on CounterTerrorism Measures: What U.S. Nonprofits and Grantmakers Need to Know ,available
from the Council on Foundations at http://www.cof.org.
618 U.S.C. §2339A, captioned “Providing material support to terrorists,” lists federal crimes, material support for which is itself a crime.
7The USA PATRIOT Act added to the list of prohibited material support “monetary instruments” and “expert advice or assistance.” Section 806,
Uniting and Strengthening America by Providing Appropriate Tools to Intercept and Obstruct Terrorism Act (USA Patriot Act) of 2001, Pub. L. No.
10756, 115 Stat. 272 (2001).
818 U.S.C. § 2339B. The constitutionality of these laws and executive orders has been challenged on the grounds that the government cannot pro
hibit support intended for the lawful, nonviolent activities of these individuals and organizations. Such challenges are moving through the courts
and have not yet been addressed by the Supreme Court.
9Exec. Order No. 13224, 66 Fed. Reg. 49,079 (Sept. 25, 2001). The Executive Order is an exercise of a grant of authority under the International
Emergency Economic Powers Act, 50 U.S.C. §§ 170107, and the National Emergencies Act, 50 U.S.C. §§ 160151.
10The SDN list is maintained by the Office of Foreign Assets Control of the U.S. Department of Treasury and may be accessed at
http://www.treas.gov/offices/enforcement/ofac/sdn/.

3.
Charitable organizations may choose
to adopt practices in addition to
those required by law that, in their
judgment, provide additional confidence
that all assets, whether resources or
services—are used exclusively for
charitable purposes.
Commentary
Many organizations adopt practices that provide
an additional level of confidence that they have
complied with legal requirements because they
have determined—based on their experience and
commitment to the charitable use of assets—that
certain measures are helpful in achieving that goal.
Organizations may identify such practices based on
their own experiences and those of other organiza
tions. The following examples illustrate practices
that various organizations have found useful and
appropriate.
Some organizations undertake additional monitoring
efforts. A private foundation may send staffto
observe the performance of a foreign organization’s
charitable activities to monitor compliance with
expenditure responsibility rules under the tax law,
even though site visits are not legally required.
Similarly, a U.S. charitable organization may require
narrative and financial reports from foreign organi
zations that have been recognized as charitable
organizations by the Internal Revenue Service, even
though such reports are not required under the tax
law.
Some organizations establish ongoing or oneonone
relationships. An organization may rely on its long
standing relationship with the prospective recipient,
the recipient’s history of legitimate charitable
achievements, the high quality of the recipient’sinternal financial controls, and other factors related
t
o the prospective recipient’s legitimate use of the
resources to be provided. An organization might
make a similar judgment when working in a small
group environment. For example, the close scrutiny
of individual borrowers by program managers and
knowledgeable community members may provide
sufficient confidence that a microcredit loan presents
no risk of diversion. Similarly, the almost immediate
consumption of charitable resources makes diversionapractical impossibility in disaster relief situations.
Some organizations check the SDN list or other ter
rorist watch lists and/or require recipients to certify
that they do not and will not knowingly provide
material support or resources to any individual or
entity, knowing or intending that they be used for
the furtherance of terrorist activities as defined in
18 U.S.C. section 2339A.
The decision to implement any proceduremust be
based on each individual organization’s experience
and circumstances. For example, some organizations
decline to check government lists, while some
others do so with reservations, because they believe
the practice raises fairness, legal and practical con
cerns. Information about why a name is placed on
aterrorist list is usually kept secret for reasons of
national security, although the Treasury Department
does provide some explanation in press releases on
its website about why a very limited number of
names have been listed. If Treasury has relied on
flawed information, a name may be wrongly listed.
There are administrative procedures available to
challenge an inaccurate designation, but names are
rarely removed once listed.
11 If identifying informa
tion provided by Treasury is insufficient, a legitimate
organization may be denied charitable assistance
based on the similarity between its name or the
name of a person with whom it is associated and a
name on a terrorist list.
12 Moreover,the fact that
6 Principles of International Charity
11While the administrative records to support designations are compiled by the Treasury Department, necessary secrecy surrounding those records
hinders effective independent verification and pursuit of the administrative reconsideration afforded designated entities and individuals.
12The listing of individuals and entities on the SDN list usually includes some form of identifying information such as address, date of birth, place of
birth, and sometimes even passport number to help resolve “false positives.” Sometimes, much of this information is absent. OFAC provides
resources to help resolve false positives, including contact phone numbers: http://www.treas.gov/offices/enforcement/ofac/contacts.shtml.

there is no single authoritative list issued by the
U
.S. Government presents practical difficulties for
charitable organizations
13
Certain procedures that will prove effective in one
situation will not in another. A range of procedures
may provide additional confidence that assets will
be used exclusively for charitable purposes. No
single approach will be appropriate in every case.
4.
The responsibility for observance of
relevant laws and adoption and
implementation of practices consistent
with the principles contained herein
ultimately lies with the governing
board of each individual charitable
organization. The board of directors
of each charitable organization must
oversee implementation of the gover
nance practices to be followed by the
organization.
Commentary
Good governance, disclosure, transparency, and
financial accountability arehallmarks of responsible
charity. There is, however, no single set of “best
practices” by which to govern all charitable organi
zations. The board of directors of each individual
charitable organization is responsible for establishingaculture of compliance with laws and regulations
and for empowering the organization to adopt
suitable governance practices. Some membership
groups and coalitions of charities have specific
standards with which members areexpected to
comply.Responsible charitable organizations engaged in
i
nternational charitable work should follow princi
ples of governance and accountability such as the
following:
Governance by a board of directors that
oversees the management of the organization
in furtherance of its charitable mission and
maintains minutes or other records of its
decisions.
Adoption of procedures for accounting for
all funds which adequately document the
uses of such funds in furtherance of the
organization’s charitable purposes.
Fully informed directors, officers and staff
members with respect to understanding of
and compliance with the legal requirements
affecting international charity.
Consideration of the particular risks of
diversion of charitable assets to terrorist
purposes associated with the activities of
each individual organization and, if deemed
appropriate, adoption of antiterrorist
financing measures beyond those required
by law.
Disbursements by check or wiretransfer
rather than in cash, unless such financial
arrangements are not reasonably available, in
which case funds should be disbursed in
smaller increments sufficient to meet imme
diate and shortterm needs. Disbursements
require oversight, including keeping detailed
internal records of cash disbursements.
Principles of International Charity 7
13In addition to the list provided under the Executive Order and the list of Specially Designated Nationals, lists have been issued by various U.S.
Government departments and also by the United Nations and other governments.

8Principles of International Charity
5.
Fiscal responsibility is fundamental to
international charitable work. There
fore, an organization’s commitment
to the charitable use of its assets
must be reflected at every level of
the organization.
Commentary
While the board of directors is charged with estab
lishing a culture committed to the charitable use of
assets, each individual associated with an organiza
tion is obligated to act accordingly. Thus, a board
should require that staff, contractors and volunteers
all understand the organization’s mission, what it
means, how that mission should be implemented,
what constitutes success, and how to protect the
organization’s good reputation. Some organizations
should conduct orientations and periodic training
for directors, staff, and volunteers on the relation
ship between the organization’s mission and relevant
laws, regulations and best practices in international
charity.Directors and staff at all levels should be
encouraged to identify risks involved in various
charitable activities.
Fiscal responsibility may differ for organizations that
provide resources alone—that is monetary grants
and grants of inkind assistance of a type readily
converted to cash—and for providers of services.
Services include inkind assistance not readily
reduced to cash, microcredit and other financial
services for poor people, and technical and educa
tional assistance. Services are inherently more
variable in the risk of diversion they present and
more variable also in the types of due diligence that
may be both practicable and likely to reduce risk of
diversion. While service providers may also provide
resources, the nature of the relationship between
the service provider and the recipient of those serv
ices demands a different sort of accountability foruse of charitable assets. For example, a U.S. private
f
oundation that provides resources in the form of
funding for medical supplies to a foreign healthcare
organization may engage in formal, armslength due
diligence. Such procedures may be impractical and
ineffective for a service provider. For example, a
charitable relief organization based in the U.S. that
engages in frontline medical assistance abroad
must adapt its due diligence procedures to the
immediacy of the charitable needs presented. A
service provider’s procedures—although they may
be less formalistic—may be just as rigorous as those
of a resource provider.
6.
When supplying charitable resources,
fiscal responsibility on the part of the
provider generally involves:
a.in advance of payment, determining
that the potential recipient of mon
etary or inkind contributions has
the ability to both accomplish the
charitable purpose of the grant and
protect the resources from diver
sion to noncharitable purposes;
b. reducing the terms of the grant to
a written agreement signed by both
the charitable resource provider and
the recipient;
c. engaging in ongoing monitoring of
the recipient and of activities under
the grant;
d. seeking correction of any misuse of
resources on the part of the recipi
ent.
14
14Evidence of misuse of charitable resources, even if corrected, should be factored into any decision to engage in further activity with that recipient.

Commentary
T
he procedures listed above are generally included
inthe exercise of fiscal responsibility on the part of
aprovider of charitable resources. A provider also
may take additional measures that will vary
depending upon the organization and the challenges
inherent in its charitable activities. The examples
below are intended to illustrate—but not limit—the
range of supplementary practices engaged in by
charitable resource providers. For instance:
A U.S. grantmaking organization funding
charitable activities in multiple countries
might supplement its pregrant investigation
by checking its grantees and their board
members against the terrorist lists and/or
requiring grantees to certify that they have
not and will not knowingly provide material
support or resources for acts of violence or
terrorism as defined in 18 U.S.C. section
2339A.
AU.S. national religious organization that
supports the charitable work of affiliated
foreign places of worship might, in addition
to its formal letter of agreement with a
responsible local religious authority, disburse
large grants in semiannual installments,
with successive payments contingent uponreceipt and satisfactory review of sixmonth
interim reports.
A small U.S. grantmaking organization with
n
ooverseas staff that has funded a few
organizations abroad for many years and has
developed close working relationships with
them over time might continue its current
practice based on formal grant agreements
specifying the charitable purposes for which
each new grant may be used, regular moni
toring reports from the grantee, and periodic
site visits and project assessments by the
grantmaker, a consultant or other reputable
organization on the grantmaker’s behalf.
A U.S.based relief and development organi
zation with overseas staff might rely upon
its knowledge of the community and its
continuing presence to have confidence that
its pregrant investigation and subsequent
oversight aresufficient to reduce the risk of
diversion of charitable funds. If such an
organization is establishing a relationship
with a new or untested grantee, the organi
zation might decide that additional inquiry
with respect to the bona fides of the board
members or the key employees of the
grantee, or requiring a statement with
respect to the appropriate nature of the
grantee’sactivities, may be appropriate.
A U.S. corporation having an employee
matching gift program might not be able to
individually evaluate the many organizations
that benefit from the matching of thousands
of small employee charitable gifts. Such a
corporation might delegate the due diligencerequired to appropriately exercise its fiscal
responsibility to a vendor and require that
the vendor supplement its usual practices to
verify that the grantee organizations do not
appear on any list of terrorists or terrorist
organizations identified by a private list
checking service provider.
15
Principles of International Charity9
15No amount of due diligence—including reliance on a vendor—provides a safe harbor from the possible application of sanctions should a charitable
organization inadvertently engage in a prohibited transaction.

7.
When supplying charitable services,
fiscal responsibility on the part of a
provider involves taking appropriate
measures to reduce the risk that its
assets would be used for noncharitable
purposes. Given the range of services
in which organizations engage, the
specific measures necessarily vary
depending on the type of services
and the exigencies of the surrounding
circumstances. The key to fiscal
responsibility, however, is having
sufficient financial controls in place
to trace services and commodities
between deliveryby the provider and
use bythe recipient.
Commentary
The practical requirements of exercising fiscal
responsibility with respect to the provision of
services will not be the same if an organization is
distributing food or building shelter after a natural
disaster as when it is building and staffing a hospice
for victims of HIV/AIDS. Similarly, services providedin an area beset by political or economic crisis may
require different due diligence procedures than
services provided in a politically and economically
stable area. The Internal Revenue Service has recog
nized that flexibility is essential for charitable
organizations assisting individuals in crisis situations,
stating, for example, that those organizations dis
tributing shortterm emergency assistance are not
expected to maintain the more detailed records
usually associated with delivery of longerterm
assistance.
16 The examples below are intended to
illustrate—but not limit—the range of appropriate
practices engaged in by charitable service providers.
AU.S. humanitarian relief organization
d
istributing food and other relief supplies
following a natural disaster might put into
place an auditing system for reducing the
risk of diversion as supplies are transported
from port of entry to warehouse to village
storeroom, as well as a ration card system for
individuals or households, so that the aid
reaches its intended recipients, and often
security guards to protect the warehouses.
Acharitable organization involved in establish
ing sustainable early childhood development
centers or village primary schools in rural
areas of developing countries might provide
the funds or the materials to construct the
facility and implement a procurement and
receipting system for the acquisition and dis
tribution of the materials. If the organization
finances operating expenses, the charitable
organization would require that an account
of receipts and expenditures be maintained
and would periodically audit that account.
A charitable organization that is working
with the Ministry of Health in a developing
country to provide staff and supplies to
rural health clinics might have in place an
effectivereporting system to account for the
time of the staff, establish and require the
maintenance of inventory systems for the
materials supplied and conduct periodic
onsite inspections of the clinics. If it seems
appropriate, the organization might perform
additional due diligence beyond that gener
ally involved in hiring to staffthe clinics.
10 Principles of International Charity
16I.R.S. Publication 3833, DisasterRelief: Providing Assistance Through Charitable Organizations

AU.S. organization that raises funds to
s
upport microlending programs carried out
by an independent legal entity it has helped
to set up in a postconflict country might
require in its funding agreements with that
entity that individual loan officers be back
groundchecked and be trained to spot
possible opportunities for diversion among
the borrowers for whom the loan officer is
responsible. Where programmatically
appropriate, the organization might require
its local affiliate to use a “group guarantee”
lending methodology, to assure that each
borrower is well known by his or her co
borrowers. Where individual lending is
carried out, the local affiliate might require a
loan officer to visit each borrower at his or
her home or place of business beforethe first
loan, to see how loan proceeds will be used.
8.
Each charitable organization must
safeguard its relationship with the
communities it serves in order to
deliver effective programs. This relation
ship is founded on local understanding
and acceptance of the independence
of the charitable organization. If this
foundation is shaken, the organization’s
ability to be of assistance and the
safety of those delivering assistance
is at serious risk.
Commentary
A
n organization’s mission can require humanitarian
workers to provide services in highly dangerous
areas of the world. More than ever before, service
providers must pay attention to the safety of their
staff. This includes investigating the risks, providing
training to mitigate those risks, and—most
importantly—developing understanding and
acceptance by the community.
An organization’s ability to deliver charitable pro
grams effectively will be compromised if its relation
ship to the community is not part of the security
approach. The gravest risk to this relationship is
association with a political position, a partisan entity
or a particular U.S. or foreign government action.
While an organization may itself give the community
no reason to perceive its workers as anything but
independent, governments may engage in practices
that have the unintended effect of increasing the
risk to these workers. For example, the use of armed
forces out of uniform to deliver humanitarian
assistance or the inaccurate characterization of
humanitarian workers as partners or agents of the
government allows the misidentification of human
itarian workers—either purposefully or out of
confusion—as extensions of government action.
The foundation of the relationship between a
service provider and the community can also be
shaken if inquiries by the organization are perceived
as undertaken on behalf of a government or as
intelligence gathering. The consequences to
humanitarian workers when charitable assistance
is confused with military or intelligence operations
may be deadly to staff and may undermine the
effectiveness of the programs they deliver.
While maintaining a reputation in the community
for independence is essential, humanitarian organiza
tions may decide that additional security measures
are required. The threat may be too great, either
because of confusion or misidentification or because
of the grave danger posed by extremist organizations
unwilling to recognize the impartiality of these
workers.
Principles of International Charity 11

Betsy Buchalter Adler
Attorney, Silk, Adler & Colvin
Laila AlMarayati, M.D.
Chairperson
Kinder USA
Salam AlMarayati
Executive DirectorMuslim Public Affairs Council
Barnett F. Baron
Executive Vice President
Asia Foundation
Peter V. Berns
Executive Director
Maryland Association of
Nonprofit Organizations
James K. Bishop
Acting President & CEO
InterAction
Victoria Bjorklund
Attorney, Simpson Thacher & Bartlett LLP
Doug Boehr
Chief Operating Officer
Geneva Global Inc.
Rob Buchanan
Director, International Programs
Council on Foundations
Cynthia Carr
General Counsel
Save the Children
Rick Cohen
Executive Director
National Committee for Responsive
Philanthropy
DeirdreDessingue
Associate General Counsel
U.S. Conference of Catholic Bishops
Mohamed Elsanousi
Director of Communications and
Community Outreach
Islamic Society of North America
Greg Fields
Managing Director
The Global Fund for Children
Mary Gailbreath
Manager, Grants Administration
Charles StewartMott Foundation
Janne G. Gallagher
Vice President and General Counsel
Council on FoundationsKay Guinane
Counsel, Nonprofit Advocacy Project
OMB Watch
Paul E. Hammerschmidt, CPA
Tax Director of Non Profit Services
BDO Seidman, LLP
John Harvey
Executive Director
Grantmakers Without Borders
Cornelia Higginson
Vice President, Philanthropic Programs
American Express
Elizabeth Holder
Legal Director
CreateHope
Lourdes Inga
Grants Administrator
Christensen Fund
Lisa Johnsen
Partner, Preston Gates & Ellis LLP
James Joseph
Partner, Arnold & Porter
Jack Kilroy
Attorney
Kinder USA
Robin Krause
Attorney,Patterson, Belknap, Webb
and Tyler
Abby Levine
Foundation Advocacy Counsel
Alliance for Justice
Sharon P. Light
Associate, Caplin & Drysdale
Timothy R. Lyman
President and Executive Director
Day, Berry & Howard Foundation
Josh Mintz
Vice President and General Counsel
The John D. and Catherine T.MacArthur
Foundation
Dalell Mohmed
Executive Director
Kinder USA
Kenneth T. Monteiro
Deputy Director, Office of Legal Services
Ford Foundation
Ana Maria Moran
Vice President, Resource Development
United Way InternationalDale Needles
Vice President for Finance and
Administration
The Global Fund for Women
Terry Odendahl
Professor, Georgetown University
Public Policy Institute and Board
Chair, National Committee for
Responsive Philanthropy
Marcus S. Owens
Attorney, Caplin & Drysdale
Edgardo Ramos
Attorney, Day, Berry & Howard LLP
Pat Read
Senior Vice President, Public Policy
and Government Affairs
Independent Sector
Steve Ristow
Chief Operating Officer
Global Impact
Celia Roady
Partner, Morgan Lewis & Bockius LLP
MaryAnn Stein
President
The Moriah Fund
Kalman Stein
President & CEO
Earth Share
Sayyid M. Syeed
Secretary General
Islamic Society of North America
Liz Towne
Director of Advocacy Programs
Alliance for Justice
Rob Trevino
Manager of Compliance and
NPO Relations
CreateHope
Mark Weinberg
Attorney, Weinberg & Jacobs LLP
Avis Worrell
Chief Financial Officer
World Links
Barbara P. Wright
Secretary and General Counsel
The David and Lucile Packard Foundation
The Treasury Guidelines Working Group
is coordinated by the Council on
Foundations.
12 Principles of International Charity
Treasury Guidelines Working Group Members
March 2005

The Treasury Guidelines Working Group
is coordinated by the Council on
Foundations.
Torequest additional copies,contact:
Rob Buchanan
Director,International Programs
Council on Foundations
1828 L Street, NW, Suite 300
Washington,DC 200365168
202/4670391
buchr@cof.org

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