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(iii) Potential Civil Penalties.

The USA Patriot Act also provides for civil penalties against those who

materially support terrorism. 18 U.S.C. 2333. Plaintiffs in a civil action may be
entitled to damages, court costs and attorneys’ fees. 18 U.S.C. section 2333(a). A
criminal indictment or conviction is not a prerequisite to commencing a civil action.
18 U.S.C. section 2333(b); (c).

c. Voluntary Treasury Guidelines

On September 29, 2006, the Treasury Department issued an updated version
of the U.S. Department of the Treasury Anti-Terrorist Financing Guidelines:
Voluntary Best Practices for U.S.-Based Charities (the “Voluntary Treasury
Guidelines”), available at https://www.treasury.gov/resource-center/terrorist-illicit-
finance/Documents/guidelines_charities.pdf. The Voluntary Treasury Guidelines do
not have the force of law, and an exempt organization is not obligated to comply
with these guidelines. Furthermore, the Voluntary Treasury Guidelines do not
create a “safe harbor.” The Treasury Department suggests that an exempt
organization following these guidelines will reduce the chance that it will unwittingly
make problematic expenditures or that it will be found liable if it does make
problematic expenditures.

The Voluntary Treasury Guidelines address five topics. The first four address
(1) fundamental principles of good charitable practice, (2) governance
accountability and transparency, (3) financial accountability and transparency, and
(4) programmatic verification. The suggestions in these first four topics are typically
practiced by most well-run nonprofits.

The fifth topic of the revised Voluntary Treasury Guidelines speaks to anti-
terrorist financing best practices and has generated more controversy. In drafting
the revised guidelines, the Treasury Department responded to various criticisms
received regarding the initial draft of the Voluntary Treasury Guidelines. For
example, the Council on Foundations stated that the initial version of the Voluntary
Treasury Guidelines (1) were not tailored to the reality of international grantmaking
by U.S. charitable organizations, (2) did not take into account either the legal
requirements governing international grants or the extensive experience of U.S.
grant-makers in administering foreign grant funds, and (3) included provisions that
were unworkable in many respects, were wholly unrelated to achieving the
intended objectives, and had a compliance cost so high as to deter many charitable

WASHINGTON NONPROFIT HANDBOOK -131- 2018