It is an age-old fear: nefarious foreign agents infiltrating American society to spread subversive ideas and undermine the country. The topic is drawing renewed attention among government officials in Washington and state capitals across the country.
Their chief concern is that hostile foreign nations are using nonprofits as a gateway to gain access to the American people, influencing public opinion and impacting elections. Experts say there is little evidence to support this theory, but that has not deterred them from proposing new laws and regulations that would increase compliance costs for nonprofits and threaten donor privacy.
Philanthropy Roundtable reviewed these concerns in its latest policy brief, “Balancing Act: How to Keep Foreign Influence Out of U.S. Politics and Protect Americans’ Freedom to Give.” The brief also includes a list of tools the federal government currently has at its disposal to address the perceived threat of hostile foreign nations infiltrating America’s nonprofits.
Here is a brief list:
501(c)(3)
Nonprofit organizations are regulated under 26 U.S. Code § 501. That law is enforced by the IRS through Internal Revenue Code Section 501(c)(3). Organizations are required to file a Form 990 annually, which contains information about its income, receipts, and disbursements. Organizations are not required to disclose their donors, but they are required to disclose who they provided grants to. This enables researchers and investigators to follow money from foundations to organizations, while still protecting individual donors’ privacy.
Section 117
Although nonprofits are not required to disclose their donors, there is an exception for foreign donations to institutions of higher education. They are required to report contracts and gifts from foreign entities over $250,000 under Section 117 of the Higher Education Act of 1965. That is enforced by the US Department of Education.
IEEPA
The International Emergency Economic Powers Act of 1977, or IEEPA, allows the president to impose sanctions in response to a national security threat. The sanctions can be broad, impacting an entire country, or targeted, impacting only a specific sector of a country’s economy. The Department of the Treasury’s Office of Foreign Assets Control is responsible for implementing sanctions. This is the primary tool used to prevent countries such as North Korea, Cuba and Iran from funding American nonprofits.
FARA
The Foreign Agents Registration Act of 1938, or FARA, requires anyone working on behalf of a foreign government or principal to influence politics or policy to register as a foreign agent with the U.S. Department of Justice. According to the Justice Department, “FARA is an important tool to identify foreign influence in the United States and address threats to national security.” FARA is enforced by the Justice Department’s National Security Division. Violating FARA can result in a $250,000 fine or up to five years in prison.
Lobbying Disclosure Act
Additionally, the Lobbying Disclosure Act requires lobbyists to report when they are representing foreign interests. Those reports provide a starting point for measuring the impact of foreign influence in the United States. The law is enforced by Congress.
Conclusion
Using these tools, the federal government has successfully blocked hostile foreign agents from infiltrating the American nonprofit community when it has chosen to do so. Political considerations determine the extent to which the government is willing to act, which is why certain hostile foreign nations are able to maintain a large presence in American society, while others have been effectively shut out. The public can access many of the government reports listed above, such as Section 117 and Form 990, to conduct their own personal investigations into suspected foreign influence. Many people do so, including experts who claim there is no transparency in the nonprofit community.
