Nonprofits receiving funding or controlled/supervised by foreign parties may be subject to the Foreign Agents Registration Act (FARA). FARA imposes disclosure requirements and other legal obligations on any individual or entity that is or becomes an “agent of a foreign principal.”
FARA defines “foreign principal” broadly to include any, government, political party, association, corporation, or other organization that was either established under a foreign country’s laws or maintains its principal place of business in a foreign country; and any individual outside of the United States.
An “agent” is an individual or entity that acts within the United States at the direction of either a foreign principal or a person whose activities are supervised or directed by a foreign principal. If your nonprofit falls under FARA’s scope, you will need to register with the U.S. Department of Justice (“DoJ”) and will be required to follow specific disclosure and other rules.
FOREIGN ACTIVITIES REQUIRING REGISTRATION
Not all actions require registration under FARA. The following activities are those specified in FARA to require registration:
- Engaging in political activities. Political activities are those intended in any way to influence a U.S. agency or official or any section of the public within the U.S. relating to U.S. domestic or foreign policy. Lobbying, public relations activities, and even tourism promotion are considered to be political activities under FARA.
- Providing certain public relations or politically related services. These services include public relations counseling, publicity agent services, information-service work, and political consulting.
- Soliciting, collecting, dispersing, or dispensing money or other things of value.
- Representing interests before any U.S. agency or official.
If your nonprofit conducts any of these activities, even incidentally, you are required to register under FARA.
FARA REGISTRATION EXEMPTIONS
FARA does permit some exceptions to its registration requirement. An individual or entity who fits the definition of an “agent of a foreign principal” may not be required to register under FARA if one of the following exemptions apply:
- Persons engaging in private, non-political activities that further a bona fide trade or commerce.
- Persons registered under the Lobbying Disclosure Act. If your nonprofit is already registered under the Lobbying Disclosure Act, your organization will not need to register under FARA as well.
- Persons engaged only in activities that further the fine arts or a bona fide religious, scholastic, academic, or scientific purpose.
- Attorneys representing clients before a court of law or U.S. agency.
- Foreign diplomatic, consular, or government officials who are accredited or formally recognized by the U.S. State Department.
- Persons engaging in activities not serving predominantly a foreign interest. An individual or entity need not register under FARA if their work: (i) furthers a bona fide commercial, industrial, or financial operation; (ii) is not directed by a foreign government or political party; and (iii) does not directly promote the public or political interests of a foreign government or political party.
- Persons formally granted an exemption by the President or U.S. Attorney General.
Many nonprofits fall into at least one of the above categories and thus do not need to register under FARA.
However, suppose your nonprofit does not meet the requirements for exemption. In that case, it will need to register with the DoJ within ten days after initially agreeing to, or performing, a registerable activity.
After registering, your nonprofit will have ongoing disclosure and legal obligations. These include filing status reports biannually, maintaining certain material records, and refusing specific compensation arrangements.
Related Read: Foreign Aid and OFAC Sanctions
CONCLUSION
Historically, the DoJ has been relaxed in enforcing and penalizing nonprofits subject to FARA. However, in recent years, due mostly to the media’s claims of Russian interference in the 2016 presidential election, the DoJ has ramped up enforcement under FARA.
The DoJ has also notably increased its scrutiny of nonprofit activities and registration. There are civil and criminal penalties for nonprofits out of compliance with FARA. Accordingly, nonprofits who receive funding or operate under the direction, request, or control of foreign individuals or entities must register under FARA.
Kyler Mejia is a third year law-student with Arizona State University law school and legal extern with Caritas Law Group, P.C.. Caritas Law Group, P.C. advises nonprofit and socially responsible businesses on corporate, tax, and fundraising regulations nationwide as well as donors with regard to major gifts. To schedule a consultation, call 602-456-0071 or email us through our contact form.