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-
mine the ability of relief and development organizations to
effectively implement U.S. foreign assistance programs by
restricting access to important groups and discouraging
the cooperation of key local partners. Some put U.S. civil-
ians in harm’s way  by requiring them to undertake tasks
normally the responsibility of security and intelligence ser-
vice operatives.
Partner Vetting System
On July 17, 2007, USAID published a notice in the Federal
Register describing the agency’s intent to create a new Part-
ner Vetting System (PVS). The notice proposed vetting indi-
viduals and officers from non-governmental organizations
(NGOs) that apply for USAID contracts, grants and coopera-
tive agreements to ensure that neither USAID nor USAID-
funded activities were inadvertently benefitting terrorists.
The PVS will affect every nonprofit organization that applies
for USAID funding, and thousands of NGO employees and
board members – a list of people that includes religious
leaders and members of Congress – will be forced to turn
over private personal information. Furthermore, in propos-
ing the new PVS, the agency has ignored the fact that U.S.
NGOs already have procedures in place to certify that funds
are not diverted to terrorists or terrorist organizations. The
proposed system, which was effectively put forth with no
consultation with the NGO community, dangerously blurs
the lines between USAID and the various security agencies
of the U.S. government. If the employees of U.S. NGOs work-
ing abroad are suspected of working in concert with U.S. in-
telligence agencies, the threat of terrorist acts against them
can only increase. Nonprofit relief and development organi-
zations are often the only non-security, non-military face of
the American people in some of the most dangerous places
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.
In March 2005 the group also produced Principles of Inter-
national Charity which it proposed that the Department of
Treasury issue in lieu of its Guidelines. The Department of
Treasury declined to do so, but has twice revised the initial
Guidelines in response to criticism, most recently in Septem-
ber 2006. The Working Group and its members remain con-
cerned that the Guidelines are discouraging charitable giv-
ing and are being used inappropriately by federal officials.
In December 2006 the Working Group wrote to Secretary
Paulson re-iterating its request that the Guidelines be with-
drawn in favor of its Principles of International Charity.
Anti-Prostitution Pledge Requirement
The Global AIDS Act of 2003 required that organizations
receiving funds under the Act have or adopt a policy explic-
itly opposing prostitution. Until May 2005 USAID and HHS
did not enforce the policy requirement against U.S.-based
NGOs. But in May and June 2005 the two agencies issued
directives imposing the policy requirement on their U.S.
NGO implementing partners without providing any guid-
ance on what activities would no longer be permissible.
Because prostitutes can spread HIV/AIDS, many NGOs have
programs to encourage their cooperation in measures to
control the disease. In January 2006 InterAction entered the
federal courts with an amicus brief supporting the position
that the directives were an unconstitutional abridgement
of the free speech rights of American citizens. The Federal
District Court in New York agreed but the administration ap-
pealed its decision to the Second Circuit Court. Before that
Court could issue a ruling the administration adopted a tac-
tic that sent the case back to the District Court. There the
directives were again ruled unconstitutional, resulting in
another administration appeal to the Second Circuit Court,
where the matter now rests (November 2008).
POLICY
BRIEF
InterAction USAID Management Reform
Working Group
Organization URL
1400 16th Street, NW
Suite 210
Washington, DC 20036
202-667-8227
reform@interaction.org
www.interaction.org
November 2008
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
Lutheran World Relief www.lwr.org
Management Sciences for Health www.msh.org
MAP International www.map.org
Mercy Corps www.mercycorps.org
National Association of Social Workers www.naswdc.org
Opportunity International www.opportunity.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