Legislators on the House Ways & Means Committee unanimously voted to advance a bill designed to shine a spotlight on grants made by U.S. nonprofits to foreign entities. Supporters hope to expose funds funneled to terrorists and other malicious organizations. However, concerns are growing that those spreading the Gospel in dangerous regions abroad could be at risk if the legislation is adopted in its current form.
The Foreign Grant Reporting Act, introduced in early May by Rep. Lloyd Smucker (R-Pa.), aims to close a possible “loophole” in current tax law that requires nonprofits to make more detailed disclosures on Form 990 about grants to domestic groups than to partners abroad. Smucker’s bill would require new information from 990-filers about such foreign grantees including their names and addresses, aggregate amounts of funding they received, and whether they are considered charities.
While presenting his bill to the powerful tax-writing committee on May 15, Smucker said his bill is concerned with “transparency and parity.” He particularly highlighted concerns about money potentially flowing from U.S. nonprofits to Hamas as an example for why the bill is necessary.
“Since these tax-exempt entities aren’t required to disclose information about grants they provide to foreign entities, we have little transparency into if these grants may end up supporting terrorism or other malicious actions, intentionally or indirectly,” Smucker said.
This bill was the first among several marked up in a committee session that featured contentious partisan debates related to foreign influence and election integrity. However, after receiving words of support from both the panel’s chairman and ranking Democrat, Smucker’s bill sailed forward via a 38-0 vote.
Still, some observers are concerned the current text of the bill could have unintended consequences for individuals and organizations serving Christ in places of severe—even life-threatening—persecution.
“Christian ministries supporting evangelism in countries with governments closed to the Gospel could find themselves in a bind under the current requirements of this bill,” Ted Batson, Partner and Tax Counsel at CapinCrouse, told ECFA. “Thwarting support for terrorists and other similarly problematic organizations is certainly laudable, but the risks of serious harm to ministries and their workers in dangerous regions abroad are very real if they are exposed.”
The Foreign Grant Reporting Act is now on its way to the full House for consideration. However, Rep. Smucker did express an openness to adjustments after Rep. Brad Schneider (D-Ill.) warned against potential vagueness in what the bill would mandate for new reporting on Form 990 regarding “indirect” support of foreign entities. When considering amendments, Members of Congress should also be sure to take precautions for Christian workers in harm’s way abroad before the bill advances further.
As deliberations on this bill and others continue, ECFA encourages churches and ministries seeking best practices on working confidently and above reproach with partners abroad to re-visit ECFA resources such as our webinar on “Key Considerations When Operating Internationally” and our e-book on “6 Essentials of International Financial Activity for Ministries.”