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POLICY November 2008

BRIEF

Regulatory Constraints
on NGO Space
Recommendations
Problem
It is imperative that the following three policies be eliminated:
Three Executive (1) USAID’s Partner Vetting System (PVS) to vet NGO personnel and leaders; (2) the
branch initiatives Department of Treasury’s Voluntary Guidelines intended to prevent charities funnel-
undermine
ing money to terrorists; and (3) the anti-prostitution policy requirement for organiza-
the ability of
nongovernmental tions receiving money from the President’s Emergency Plan for AIDS Relief (PEPFAR)
organizations through USAID and the Department of Health and Human Services (HHS).
(NGOs) to effectively
implement U.S.
foreign assistance 
Actions
programs. Two Partner Vetting System:
intended to help • Suspend implementation of the rule that created the PVS while using consultative
fight terrorism
process between USAID and the NGO community to design a workable alter-
put the lives of
NGO staff at risk native system that protects NGOs, the government and the public against the
by requiring the unintended diversion of U.S. funds to terrorist organizations without putting U.S.
organizations to NGO personnel at undue risk;
perform tasks Department of Treasury Voluntary Guidelines:
associated with • The Department of Treasury should drop its Anti-Terrorism Financing Guidelines:
intelligence
Voluntary Best Practices for U.S. Based Charities and endorse in their stead the
services. The third
needlessly puts Principles of International Charity developed by over 39 American NGOs, founda-
countless others tions, grant makers, legal firms, and public interest advocates. This will remove
at risk by denying NGOs from roles usually performed by security and intelligence personnel; and
them access to Anti-Prostitution Pledge Requirement:
programs that can • USAID and HHS should revise their guidelines as applied to domestic and for-
help them avoid
eign NGOs to comply with the August 2008 federal court ruling (which found it
contracting HIV/
AIDS. unconstitutional to compel U.S.-based groups to adopt the U.S. Government’s
requirement), and allow the most effective groups to partner with the U.S. in the
fight against HIV/AIDS. 

Results
1400 16th Street, NW
Suite 210 American NGOs would be able to more effectively implement U.S. foreign assistance
Washington, DC 20036
programs without having to sacrifice constitutional rights or put their staff in physi-
202-667-8227
reform@interaction.org cal jeopardy.

www.interaction.org
Background
These three executive branch initiatives under- In March 2005 the group also produced Principles of Inter-
mine the ability of relief and development organizations to national Charity which it proposed that the Department of
effectively implement U.S. foreign assistance programs by Treasury issue in lieu of its Guidelines. The Department of
restricting access to important groups and discouraging Treasury declined to do so, but has twice revised the initial
the cooperation of key local partners. Some put U.S. civil- Guidelines in response to criticism, most recently in Septem-
ians in harm’s way  by requiring them to undertake tasks ber 2006. The Working Group and its members remain con-
normally the responsibility of security and intelligence ser- cerned that the Guidelines are discouraging charitable giv-
vice operatives. ing and are being used inappropriately by federal officials.
In December 2006 the Working Group wrote to Secretary
Partner Vetting System Paulson re-iterating its request that the Guidelines be with-
On July 17, 2007, USAID published a notice in the Federal drawn in favor of its Principles of International Charity.
Register describing the agency’s intent to create a new Part-
ner Vetting System (PVS). The notice proposed vetting indi- Anti-Prostitution Pledge Requirement
viduals and officers from non-governmental organizations The Global AIDS Act of 2003 required that organizations
(NGOs) that apply for USAID contracts, grants and coopera- receiving funds under the Act have or adopt a policy explic-
tive agreements to ensure that neither USAID nor USAID- itly opposing prostitution. Until May 2005 USAID and HHS
funded activities were inadvertently benefitting terrorists. did not enforce the policy requirement against U.S.-based
The PVS will affect every nonprofit organization that applies NGOs. But in May and June 2005 the two agencies issued
for USAID funding, and thousands of NGO employees and directives imposing the policy requirement on their U.S.
board members – a list of people that includes religious NGO implementing partners without providing any guid-
leaders and members of Congress – will be forced to turn ance on what activities would no longer be permissible.
over private personal information. Furthermore, in propos- Because prostitutes can spread HIV/AIDS, many NGOs have
ing the new PVS, the agency has ignored the fact that U.S. programs to encourage their cooperation in measures to
NGOs already have procedures in place to certify that funds control the disease. In January 2006 InterAction entered the
are not diverted to terrorists or terrorist organizations. The federal courts with an amicus brief supporting the position
proposed system, which was effectively put forth with no that the directives were an unconstitutional abridgement
consultation with the NGO community, dangerously blurs of the free speech rights of American citizens. The Federal
the lines between USAID and the various security agencies District Court in New York agreed but the administration ap-
of the U.S. government. If the employees of U.S. NGOs work- pealed its decision to the Second Circuit Court. Before that
ing abroad are suspected of working in concert with U.S. in- Court could issue a ruling the administration adopted a tac-
telligence agencies, the threat of terrorist acts against them tic that sent the case back to the District Court. There the
can only increase. Nonprofit relief and development organi- directives were again ruled unconstitutional, resulting in
zations are often the only non-security, non-military face of another administration appeal to the Second Circuit Court,
the American people in some of the most dangerous places where the matter now rests (November 2008).
in the world. If NGOs are forced to restrict their operations
in these places – which they will if the PVS is implemented
– we will be ceding the streets of the world to the kinds of
violent extremists that this policy aims to target.

Treasury Department Voluntary Guidelines
In November 2002, without any prior consultation with
the affected organizations, the Department of Treasury is-
sued Anti-Terrorism Financing Guidelines: Voluntary Best
Practices for U.S. Based Charities. A broad coalition of grant-
makers, NGOs, foundations, law firms, and public interest
groups formed the Treasury Guidelines Working Group of
Charitable Sector Organizations and Advisors and submitted
common and individual comments criticizing the Guidelines
as unnecessary, impractical, and likely to pose dangers to
American citizens working for these organizations abroad.
POLICY November 2008

BRIEF

InterAction USAID Management Reform
Working Group

Organization URL

Academy for Educational Development www.aed.org
Adventist Development and Relief Agency International www.adra.org
Africare www.africare.org
Air Serv International www.airserv.org
America’s Development Foundation HQ www.adfusa.org
American Friends Service Committee www.afsc.org
American Red Cross www.redcross.org
American Refugee Committee www.archq.org
Bread for the World www.bread.org
CARE www.care.org
Catholic Relief Services www.crs.org
Centre for Development & Population Activities (CEDPA) www.cedpa.org
CHF International www.chfinternational.org
Christian Children’s Fund www.christianchildrensfund.org
Concern Worldwide www.concernusa.org
Congressional Hunger Center www.hungercenter.org
Counterpart International www.counterpart.org
Enterprise Development International www.endpoverty.org
Florida Association for Volunteer Action in the Caribbean www.favaca.org/
and the Americas (FAVACA)
Food for the Hungry www.fh.org
Global Health Council www.globalhealth.org
Habitat for Humanity International www.habitat.org
Heifer International www.heifer.org
Helen Keller International www.hki.org
INMED Partnerships for Children www.inmed.org
InsideNGO www.InsideNGO.org
Institute for Sustainable Communities www.iscvt.org
Int’l Crisis Group www.crisisweb.org
International Medical Corps www.imcworldwide.org
International Relief & Development www.ird.org
International Rescue Committee www.theirc.org
Int’l Youth Foundation www.iyfnet.org
Jesuit Refugee Services USA www.jrsusa.org
1400 16th Street, NW
Lutheran World Relief www.lwr.org
Suite 210
Washington, DC 20036
Management Sciences for Health www.msh.org
202-667-8227
MAP International www.map.org
reform@interaction.org Mercy Corps www.mercycorps.org
National Association of Social Workers www.naswdc.org
Opportunity International www.opportunity.org
www.interaction.org Oxfam America www.oxfamamerica.org
InterAction USAID Management Reform
Working Group

Organization URL

Pact www.pactworld.org
PATH www.path.org
Pathfinder International www.pathfind.org
Physicians for Human Rights www.phrusa.org
Plan USA www.planusa.org
Refugees International www.refugeesinternational.org
Relief International www.ri.org
Save the Children www.savethechildren.org
United Methodist Committee on Relief www.umcor.org
Winrock International www.winrock.org
World Vision www.worldvision.org
World Wildlife Fund www.worldwildlife.org

InterAction Humanitarian Policy and Practice
Counterterrorism Working Group

Organization URL

AmeriCares www.americares.org
Adventist Development and Relief Agency International www.adra.org
America’s Development Foundation www.adfusa.org
American Friends Service Committee www.afsc.org
American Near East Refugee Aid www.anera.org
American Red Cross www.redcross.org
CARE www.care.org
Catholic Relief Services www.crs.org
CHF International www.chfinternational.org
Christian Children’s’ Fund www.christianchildrensfund.org
CIVIC www.civicworldwide.org
Concern Worldwide www.concernusa.org
Ethiopian Community Development Council www.ecdcinternational.org
Food for the Hungry www.fh.org
Habitat for Humanity International www.habitat.org
Heart to Heart www.hearttoheart.org
Heifer International www.heifer.org
InsideNGO www.InsideNGO.org
International Crisis Group www.crisisweb.org
International Medical Corps www.imcworldwide.org
International Relief & Development www.ird.org
International Rescue Committee www.theirc.org
International Youth Foundation www.iyfnet.org
Lutheran World Relief www.lwr.org
InterAction Humanitarian Policy and Practice
Counterterrorism Working Group (cont)

Organization URL

Management Sciences for Health www.msh.org
Mercy Corps www.mercycorps.org
Plan USA www.planusa.org
Save the Children www.savethechildren.org
Winrock International www.winrock.org
World Vision www.worldvision.org