On July 14, Grantmakers Without Borders and OMB Watch released a paper, Collateral Damage: How the War on Terror Hurts Charities, Foundations, and the People They Serve, and hosted a panel discussing the topic. Six experts all agreed that shortsighted, undemocratic policies are stifling free speech, constraining the critical activities of the charitable and philanthropic sectors, and ultimately impeding the fight against terrorism. OMB Watch and Grantmakers Without Borders were lauded by many speakers and attendees for drawing attention to this issue. At the briefing, Kay Guinane, Director of Nonprofit Speech Rights at OMB Watch, recognized nonprofits and charities as "a key to helping democracy." She noted that Grantmakers Without Borders and OMB Watch collaborated to write the paper because very little public attention has been paid to how charities and foundations are affected by counterterrorism laws. The public mostly only hears about how individuals are affected, such as when people are wrongly tagged on no flight lists or detainees at Guantanamo are not afforded due process, Guinane said.

Guinane said that short-term solutions are now having harmful, long-term consequences. As a result of the "war on terror," the work of humanitarian aid, development, and conflict resolution programs is hindered at best, politicized at worst. She noted, "This counteracts the positive role charities and foundations can play in fighting the root causes of terrorism. Freedom of speech and association are undermined by policies that equate dissent with terrorism. Congress has not utilized its oversight powers to review counterterrorism programs and weigh the pros and cons of alternative approaches."

The six speakers included:

• David Cole, Professor of Law, Georgetown University Law Center
• Rob Buchanan, Director of International Programs, Council on Foundations
• Todd Shelton, Senior Director of Public Policy and External Affairs, InterAction
• Jim Harper, Director of Information Policy, Cato Institute
• Nimmi Gowrinathan, Director of South Asia Programs, Operation USA
• Lisa Graves, Deputy Director, Center for National Security Studies

Cole compared the current situation to the McCarthy era, stating that both are "driven by a fear of the unknown." He described the constitutional issues surrounding the government's expanding interpretation of what is considered prohibited "material support" of, or "otherwise associat[ing] with," designated terrorist organizations or individuals. For example, in the criminal prosecution of the Holy Land Foundation, the prosecution argued that by providing $12.4 million for the charitable activities of non-designated zakat committees in the West Bank and Gaza Strip, Holy Land gave indirectly to Hamas, a designated organization. Prosecutors argued that although the zakat committees were not designated organizations, the defendants "should have known" they were "otherwise associated" with Hamas.

Harper pointed out how illogical this anti-terrorism strategy is for charities. Due to bureaucracy, it is next to impossible to get off any terrorist watch list. He said the margin of security benefit is heavily outweighed by financial costs and loss of personal freedoms.

Buchanan spoke to the concerns facing the grantmaking community. He pointed out that the charitable mission of grantmakers counters terrorism, and foundations already effectively demonstrate due diligence. Buchanan also noted the frustrations the nonprofit community faces when dealing with the Department of Treasury. Treasury continues to assert that charities are a problem without providing any details, and it continues to stand by flawed guidance, such as its Anti-Terrorism Financing Guidelines, which have been called unworkable by many in the charitable sector.

Shelton described concerns surrounding the U.S. Agency for International Development (USAID) plan to move forward with the implementation of a new Partner Vetting System (PVS). Under the proposed PVS, every organization that applies for USAID funding would have to collect and submit highly personal information to the U.S. government. The objective is to ensure that neither USAID funds nor USAID-funded activities provide support to individuals associated with terrorism. However, Shelton pointed out practical problems with watchlists used for such vetting, as well as the danger such information sharing could create for aid workers, if they are perceived as agents of U.S. security and intelligence agencies. InterAction is a leader in the opposition to the PVS program.

Gowrinathan discussed on-the-ground impacts that organizations operating overseas face regarding these new counterterrorism policies. She said her organization tries to stay under the radar, out of the concern that publicizing the programs in conflict areas would place them at risk of being shut down. An environment of fear has impacted donor confidence, and her organization has experienced delays in funding due to ethnicity of donors. She also noted the danger associated with ambiguity in the PATRIOT Act, which has been reproduced by some other governments.

Graves noted problems with the definition of prohibited "material support" of terrorism and the fact that the only exceptions are for medicine and religious material. She said the same "association with" language Cole discussed puts peace organizations at risk to be placed on terrorist lists. She further discussed the chilling impact of surveillance of organizations that dissent and how spying on peace groups is a waste of money.

The panel and the paper raised the need for congressional oversight and action. Speakers argued that government unfairly characterizes nonprofits as conduits for terrorist funding and a breeding ground for aggressive dissent. Instead, government should recognize the nonprofit sector as a valuable ally in the war on terror and build policies that enable rather than hinder its work.