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Funding Foreign Activities
Funding Foreign Activities
Seven legal areas that trip up churches—and how to navigate them.

The concept sounds well-meaning and innocent enough: Form a charity in the United States that finds sponsors to support poor children living abroad. It's not a unique idea, since many charitable groups, including churches, advocate this type of work to improve living conditions and educational opportunities for the most vulnerable in the world.

But with a nonreligious Oregon charity formed in 1994 to match donors with needy Iranian children, something went wrong. The founder said the work legitimately helped kids, but the U.S. government said the nonprofit sent $11 million to Iran and tried to hide it, with at least a portion of those funds funneled to a suspected terrorist. Both the charity and its founder faced prosecution.

The founder insisted his organization never aided a terrorist. During a March 2012 sentencing hearing, a U.S. District Court judge said it wasn't clear whether or not funds went toward terrorism, but he still assessed fines and penalties for the organization and founder. Why? Primarily because the charity knowingly sent cash to Iran, a country under U.S. embargo since 1995.

The organization received a $50,000 fine and two years of probation. The founder was sentenced to five years of probation, including one year of home detention, and fined $50,000. He also lost his job as an engineer.

While this case didn't involve a religious group, it serves as a powerful example of the complex rules and regulations that churches and nonprofits face for any foreign activity, whether collecting contributions for foreign efforts, sending teams abroad, sending money and resources to missionaries and organizations in other countries, or compensating a foreign pastor who speaks at the church. These activities are highly regulated by the Department of Treasury, by the Internal Revenue Service, and by the U.S. State Department.

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