Nonprofits Face ‘Foreign Agent’ Tag

Recent Congressional interest in limiting foreign interference in the U.S. political process risks ensnaring nonprofit organizations. A bill sponsored by Sen. Chuck Grassley (R-Iowa) and Rep. Mike Johnson (R-La.) to up enforcement of the seldom-used Foreign Agents Registration Act (FARA) is expected to receive a markup by the House Judiciary Committee on Wednesday.

Several other members of Congress have also pursued legislation to further enforce the broadly worded law with an eye at passage in the spring, according to Douglas Rutzen, president, and Nick Robinson, legal advisor, at The International Center for Not-for-Profit Law (ICNL) in Washington, D.C.

FARA dates back to 1938, an effort to combat Nazi propaganda, according to Rutzen. Its broad language in identifying what constituted a foreign agent and what sorts of activities one might be required to register in order to pursue made the law cumbersome and enforcement lapsed. ICNL’s main interaction with the law has been in other countries — Russia, Ukraine, and Venezuela among others — that have used FARA as justification for chilling cross-border philanthropy and civil services.

ICNL literature raising the potential consequences of increased enforcement without redefinition includes several examples illustrating how into the weeds some scenarios might get. If a South Korean think tank was to write about policies that the international community might adopt to address the North Korean nuclear threat and then proceeds to reach out to an American nonprofit to organize a public meeting to share findings, that interaction would arguably require the U.S. organization to register with FARA.

It, after all, would be acting at the request of a foreign principal. The notion of political agents and activity that many Americans think about — lobbying and the like — is far narrower than what the law states. Even activities such as public outreach can be seen as political activity, Rutzen said.

Robinson said that there some exemptions within the law for academic and religious groups among others. Registration for those that do not fall under the exemption list requires filing as a foreign agent with the Department of Justice (DoJ) and then providing regular updates concerning organizational activities. Noncompliance carries criminal penalties. Faced with some of the burdensome hurdles of registration, some organizations might choose to remove international work from their missions, Robinson said.

In addition to the extra bureaucratic work registration would hoist upon nonprofit leaders, registering as a foreign agent also stigmatizing the work many nonprofits do, according to Melissa Hooper, director of human rights and civil society for Human Rights First (HRF), a humanitarian organization based in New York City. The fact that the Norwegian government might support some of the resettlement work HRF does with a grant would all of a sudden place the organization on a foreign agent list that might have the effect of preventing partnerships with other organizations.

Hooper believes that amendments to FARA addressing some of the definition issues and providing more clarity and specificity could go a long way in making proposed enforcement laws less disruptive to the nonprofit sector. Simple tweaks to terms like “agent” and “political activity” to more general legal definitions could, by themselves, make large differences. For instance, is an entity that is simply donating money really asserting influence or is it deferring to the organization? Perhaps specific language addressing the nonprofit sector could be incorporated, she added.

HRF leadership has seen interest in FARA ratchet up during the past six months and as many as eight proposed pieces of legislation advocate for greater enforcement of the law. Hooper opined that so many proposed laws are in the system because many legislators want to provide their own comments and solutions to the reported Russian involvement in the 2016 election cycle. Some laws focus more on media, some are focused on other entities, but the general consensus has been to increase enforcement, Hooper said.

“There has been some interest in trying to narrow the definitions and make them more precise and legal,” she said of interactions HRF has had with a handful of Congressional offices. “However, one office told us that they wanted some sort of certification from the Department of Justice to say that the current definitions would not be helpful to [the DoJ].”

Grantmakers also get caught up in the debate, said Natalie Ross, vice president, external relations for the Council on Foundations  in Arlington, Va. FARA hasn’t really been an issue for cross-border grantmaking because it has seldom been enforced. Increasing enforcement creates two separate issues: (1) actual enforcement and whether there will be consistency in how grantmaking organizations are treated and (2) lack of clarity for grantmakers as to when it is necessary for them to register as foreign agents.

Council leadership potentially sees that push and pull within its own organizational structure. The majority of the 1,000 foundations in the council’s network are U.S.-based, but several are headquartered in other countries and pay dues to the council. In theory, the foreign foundations’ participation would trigger a requirement under the current language of FARA for the council to register as a foreign agent.

Ross said that there is a general lack of awareness of how nonprofits can get caught in FARA’s web. FARA’s language also creates challenges internationally. Russia, for instance, has used FARA language to require foreign foundations working in the health, arts, and other subsectors to register as foreign agents. Many of the foundations opted to leave Russia instead of registering. Attention needs to be paid, she said, on looking at the side effects of efforts to decrease foreign influence.

“How do you best do that? The argument is you narrow the 1930s language to target what you really want to target,” Ross said.

Rutzen and Robinson recognize that a conflict is potentially created in the balancing of political desires to address reports of foreign interference with the U.S. political system while needing to narrow the underlying law.

“There needs to be a political wind blowing to move FARA bills forward and to make a political statement about FARA and foreign engagement in U.S. political issues,” Rutzen said. “At the same time, I think, it’s easy to lose track of these important details and what we’re nervous about is the collateral damage, the potential risk that U.S. nonprofits could face.”

Rutzen said that communications with government officials have indicated a general appreciation for nonprofits’ concerns. As political winds move toward upping enforcement, opportunities remain for nonprofits to share their point of view, added Robinson.

“I think that they are sensitive and it might be helpful to hear from more nonprofits,” Robinson said of legislators. “Our hope is that enough people can articulate that to them, to go in and clarify some of the language in the act.”