Two-thirds of U.S.-based nonprofit organizations working abroad are facing problems accessing financial services, according to a comprehensive report released by the Charity and Security Network. (The Peace Appeal Foundation is a member of the network, and serves on its Executive Board.) The study illustrates a growing challenge to peacebuilding and humanitarian relief organizations working in conflict zones globally. Though focused on US-based organizations, the challenge to US organizations is part of a broader trend restricting the operations of civil society organizations globally.
The report, Financial Access for U.S. Nonprofits, is based on the first-ever empirical study of the global phenomenon known as “derisking,” as it relates to U.S.-based NPOs. Derisking refers to financial institutions terminating or restricting business relationships to avoid rather than manage risk. The report also reflects information from numerous focus group sessions and interviews with stakeholders over the last year. It outlines and analyzes the scope, frequency, and prevalence of various financial access problems, including delayed wire transfers, account refusals and closures, and unusual additional documentation requests. The report also provides recommendations to address these challenges. Author Sue E. Eckert of the Center for New American Security noted, “At a time of unprecedented need in regions of conflict, humanitarian crises, and natural disaster, American charities’ efforts to save lives and prevent the further erosion of democracy and human rights are being stymied unnecessarily. The data are clear: there is a serious and systemic problem that must be addressed.”
Among the major findings:
These challenges have made it difficult for nonprofits to access the financial services necessary to provide life-saving aid to people in global hot spots where the need is greatest. For example:
Because nonprofits contribute to peace and security around the world, “finding a solution to the problem should be a priority for the U.S. government,” said Kay Guinane, director of the Charity & Security Network.
Regulators are tasked with ensuring the safety and security of the banking system,” explained Scott Paul, senior humanitarian policy advisor at Oxfam America. “In doing so, they impose steep penalties for undercompliance but none for overcompliance.”
To read the report, go to charityandsecurity.org/FinAccessReport