Crackdown Déjà Vu? New and Ongoing Threats to Muslim Nonprofits

In recent years, Muslim individuals, businesses and nonprofits in the U.S. have reported facing discriminatory practices at some of the nation’s largest banks and financial institutions.

In its 2022 American Muslim Poll, the Institute for Social Policy and Understanding (ISPU), sought to gain an empirically grounded sense of the “banking while Muslim” phenomenon. (ISPU is a non-partisan research and education organization that conducts research exclusively on American Muslims.) Our findings are clear: Muslims do face challenges at a higher rate than other religious groups. Over 25% of the Muslims surveyed responded that they faced issues while banking, including challenges with business accounts (64%) and nonprofit accounts (62%), opening up a personal account (40%), having a personal bank account suspended or closed (30%) and being denied having payments sent or received via a personal account using PayPal or Venmo (30%). Mohamad Ali’s May 21 op-ed in the Boston Globe, “Targeting Muslims while they bank,” highlighted their experiences using PayPal.

ISPU’s data proves that these are systematic incidents. Lawmakers, including Sen. Elizabeth Warren (D- Mass.) and Rep. Ilhan Omar (D-Minn.) have urged financial institutions to “modernize” policies that implicitly discriminate based on ethnic and religious background (Rowaida Abdelaziz, “Dozens Of Lawmakers Urge Banks To Stop Discriminating Against Muslims,“). And the Office of the Comptroller in New York City used our data to press for less discriminatory policies among banks the city certified to receive deposits from New York City agencies.

In the aftermath of a wave of student protests against the war on Gaza as part of a larger grassroots advocacy movement critical of U.S. policy in the Middle East, Muslim charitable, non-governmental and nonprofit organizations, as well as institutions, are facing increased scrutiny by policymakers. This has emerged in the form of media attention, statements by policymakers and proposed legislation, such as H.R. 6408, which would give the executive branch sweeping powers to dismantle organizations the administration says have provided “material support” to terrorist organizations (Mike Zamore and Kia Hamadanchy, “A disturbing national security bill could silence nonprofits and college protests”).

ISPU hosted a webinar on May 23 with three expert speakers, which tied its research on “Banking While Muslim” to this bill that would have massive implications on Muslim individuals and organizations.

Gerald Fitzgerald, PhD (Schar School of Policy and Government, George Mason University) discussed findings from his report, “Mapping Anti-Muslim Discrimination and Information Manipulation and its Impact on Humanitarian Aid and Development,” which outlines how nonstate actors promote misinformation about Muslim charitable organizations. He identified some groups, such as the Middle East Forum, that intentionally generate misinformation about Islamic charitable organizations, specifically perpetuating the myth that they are tied to terrorism.

One way they do this is by manipulating sites, like Wikipedia, to produce a “negative slant” on targeted organizations. The other way is by sharing misinformation with respected journalists to produce an ongoing negative cycle. These groups share this false information “discreetly” with banks, which then go on to create difficulties for Muslim charitable organizations.

Fitzgerald also discussed how other groups, like the Endowment for Middle East Truth, legitimize this misinformation and try to push it into the political realm, via lobbying Congress to pass legislation that targets these organizations. The report mentions the Islamic Relief and Baitulmaal, among other organizations, that have historically and continue to provide aid to Palestine. (Note: Islamic Relief USA and LaunchGood supported ISPU’s Banking While Muslim research.)

Robert McCaw (department director, CAIR government affairs) spoke about the dangers of HR 6408, also known as S. 4136 in the Senate. He stated, “During its House debate and prior to its passage, but not in the Senate, lawmakers were specifically targeting and discussing campus groups like Students for Justice in Palestine and Jewish student groups.” He stated that the bill would have a detrimental impact on Muslim, Arab and other organizations that advocate for Palestine.

Specifically, it would give the Secretary of the Treasury broad discretionary powers to strip organizations of their tax-exempt status, thereby chilling free speech. McCaw noted that Muslim organizations and mosques are vulnerable to becoming government targets by being marked as “terrorist supporting” because of this bill. Additionally, he noted the massive financial impact on organizations that have lost their tax-exempt status, for this designation would engender ongoing legal battles.

Kia Hamadanchy (senior policy counsel, ACLU) raised due process concerns that come with giving the Treasury Secretary such vast authority to determine what evidence they will use in this regard. Furthermore, organizations won’t know what evidence has been presented before their tax-exempt status is terminated. Hamadanchy also confirmed this would chill free speech because nonprofits would avoid this designation of “terrorist supporting” or “terrorist sympathizers.” He stated that this bill would provide the “IRS investigative authority to harass nonprofits,” and could be used by an authoritarian government against their political opponents.

He also gave a hypothetical example of how this policy could affect non-Muslim organizations. Hamadanchy said that because some Congress members are equating student protesters with Hamas, this bill would enable the Treasury Secretary to strip any university’s nonprofit status if it is seen as allowing protests on its campus, because it will be marked as supporting “terrorists.” While he noted that this may not hold up in court, universities may choose to curtail free speech to avoid this designation and its ensuing hassles.

What can be done to protect Muslims’ civil rights and free speech, particularly those advocating for Palestine? Fitzgerald advised that they pay attention to sites like Wikipedia to prevent the spreading of misinformation. Anyone can correct and edit this misinformation. McCaw called for vigilance about the laws and policies that the House and Senate are proposing to pass, including HR 6408/S. 4136. Muslim Americans, he said, are more civically engaged than ever before and more institutions are advocating for their civil rights.

Hamadanchy noted that the bill passed the House because it “flew under the radar” and that the community needs to pay closer attention to such legislation. He also stated that many of the House members voted to pass it without doing more research into the actual bill and its impact. Bringing attention to this bill is imperative to ensure it doesn’t pass the Senate.

CAIR started a campaign so citizens can contact their Senators and demand that they reject S. 4136. Additionally, 134 organizations, including civil liberties and human rights ones, signed and sent a letter to the U.S. Senate Committee on Finance and the Senate about the bill’s dangers. Even if the Senate version does not pass, the investment of lawmakers in this effort is troubling and could later be redirected to make this policy a reality through other means.

This piece also appeared in the July/August 2024 edition of Islamic Horizons.