Donors to humanitarian action frequently include provisions in their grants requiring recipients to comply with the CT measures and sanctions adopted by the donor. These restrictions and requirements raise additional challenges.
Institutional donors to humanitarian action frequently include restrictions and requirements in their funding agreements that aim to ensure that recipients of the funding comply with the CT measures and sanctions adopted by or binding on the donor. This is a way for the donor to comply with its own obligations. A particular focus of the restrictions is ensuring that funded activities do not benefit persons or entities designated under CT measures or country-specific sanctions. Requirements in funding agreements are an additional and ‘indirect’ way in which the CT measures adopted by a particular state may become applicable to a humanitarian actor.
The requirements are by no means uniform. They vary from donor to donor, context to context and, frequently, also according to the recipient of the funding, depending on their status – for example, whether they are UN agencies, other international organizations or NGOs – and also because donors may impose more restrictive obligations on organizations they are less familiar with, or because a particular recipient has successfully negotiated less restrictive measures. The nature of the funded activities is also a consideration, with programmes that entail the provision of cash being more tightly regulated.
States are not under a legal obligation to fund humanitarian programmes, but to the extent that they do, they must not include provisions that are incompatible with IHL, or that prevent the recipient organization from operating in accordance with humanitarian principles or medical ethics.
States are not under a legal obligation to fund humanitarian programmes, but to the extent that they do, they must not include provisions that are incompatible with IHL.
In addition to being recipients of funding, certain humanitarian actors are themselves donors or enter into subcontracts. This aspect has received less attention, but can raise additional challenges. For example, paradoxically some UN agencies have pushed back against problematic requirements from state donors, only to then include such measures – including exclusion of final beneficiaries – in the agreements they conclude with implementing partners.
This chapter addresses three contemporary challenges raised by requirements in funding agreements. It concludes with some recommendations that are relevant to all donors to humanitarian action: states, intergovernmental organizations and humanitarian actors that in turn fund or subcontract other humanitarian organizations.
4.1 Asking the impossible?
Frequently, funding agreements require the recipient to comply with the sanctions and CT measures adopted by the donor state. If the recipient organization is of a different nationality to the donor – i.e., if it is not registered in the donor state – this requirement renders the sanctions and CT measures applicable to the recipient ‘indirectly’ as a contractual obligation.
However, this can be an imperfect fit. Funded activities may include transactions that would be permissible pursuant to specific licences issued by the departments implementing the relevant sanctions. For example, US sanctions require specific Office of Foreign Assets Control (OFAC) authorization for operations that could make funds or other assets available – directly or indirectly – to designated groups. However, if the parties to the funding agreement are not ‘US persons’ – i.e. registered in the US – the sanctions are not directly applicable to them and so as a matter of sanctions regulations they cannot apply for such licences. On the other hand, if they operate without the licences, they may be violating grant requirements.
This problem does not arise from the sanctions or CT measures per se, but because of misaligned requirements in grants agreements and licensing regulations.
In some cases, the donor agencies have been willing to resolve this issue by themselves applying for relevant licences for the programmes they fund on behalf of the recipients. But this does not appear to be standard practice. An alternative approach would be to amend the implementing sanctions regulations to allow recipients of funding from the state that has imposed the measures to apply for specific licences necessary for the funded programme.
4.2 Screening of final beneficiaries of humanitarian programmes
One of the most common requirements in funding agreements is taking measures to avoid funds or other assets provided under the grant being made available directly or indirectly to designated persons or entities.
4.2.1 The nature of the obligation
Donors formulate the precise nature of this duty in different ways. Some donors impose what has been described as an ‘obligation of result’: recipients must ensure that assistance does not reach designated persons or entities. This is a high standard – probably unrealistically high – and many humanitarian actors are uncomfortable accepting it. A preferable approach is that adopted by donors which frame this as an ‘obligation of means’, requiring recipients to take ‘reasonable measures’ or ‘use their best endeavours’ in this regard.
Some funding agreements specify the measures that must be taken to comply with this requirement. At other times it is left to recipients to choose the modalities for doing so. Most frequently, this is done by ‘screening’ a range of actors involved in the funded programmes to ensure they are not included in lists of individuals or entities designated under relevant sanctions or CT measures.
4.2.2 ‘Screening’ and ‘vetting’
Although the terms are frequently used interchangeably, screening must be distinguished from vetting. Screening is carried out by humanitarian actors themselves. They check that entities and persons are not designated under UN, EU or other sanctions, or under CT measures. Various commercial programmes exist for doing this.
Vetting requires humanitarian actors to provide the identity information of relevant persons and entities to the donor, which will carry out the checks itself. Only a small minority of donors require vetting, and even those only in relation to grants for certain contexts. Applications for certain US government funding for operations in certain contexts require partner vetting – i.e. the provision of personal information relating to certain ‘key individuals’ in the organization applying for funds, including principal officers of its governing board, directors, officers and other staff members with significant responsibilities for the management of the funded programme. In some contexts, this has also included the vetting of final beneficiaries who receive more than a prescribed amount of assistance in cash or in kind or who participate in training activities.
Vetting raises additional concerns to screening, including in terms of data protection and privacy in relation to the personal information provided to the donor. Vetting can also undermine perceptions of the independence of humanitarian actors providing such information from the state donors requiring it. If the donor is a party to an armed conflict, the provision of information can also affect the perceived neutrality of humanitarian actors.
4.2.3 Problems with screening of final beneficiaries
Screening is not problematic per se. It is a tool for identifying whether someone is on a list of designated persons. Screening of a range of persons and entities involved in the delivery of humanitarian programmes, including staff, sub-grantees, and contractors is an acceptable way of ensuring that funds or other assets are not provided to designated persons or entities in the course of operations.
Screening can become problematic if it leads to the exclusion of someone from humanitarian assistance that they have been determined as requiring. Once someone has been determined as requiring humanitarian assistance on the basis of eligibility criteria developed by a humanitarian actor – which are frequently shared with the donor – depriving that person of this assistance would go further than the underlying sanctions require, and would also be incompatible with IHL and humanitarian principles.
The purpose of screening requirements is to ensure compliance with sanctions and CT measures. But these very sanctions include exemptions allowing designated persons to access basic services, such as medical care, food and accommodation. This is a clear indication that sanctions should not deprive designated persons of essential services and goods.
The same holds true also when these basic goods and services are provided in the form of humanitarian relief. A 2020 European Commission Guidance Note on EU sanctions expressly restated the well-established and consistent position that EU sanctions do not prohibit the provision of humanitarian assistance to those who have been determined to be in need thereof:
Moreover, sanctions and most CT measures prohibit making funds or assets available to designated persons. They do not cover training. Requirements to screen and thus potentially exclude participants in training programmes also go beyond the underlying sanctions.
Under IHL everyone who is wounded and sick – civilians and fighters – is entitled to the medical care required by their condition, with no discrimination other than on medical grounds. Everyone deprived of their liberty – civilians and fighters – is entitled to food, water and clothing. Even when not deprived of their liberty, civilians are entitled to objects indispensable to their survival, including food, water, medical items, clothing and bedding. If the belligerent with control of civilians is unable or unwilling to provide these basic goods and services, they may be provided by humanitarian relief operations.
For all these entitlements, once a person has been determined as being in need of the particular type of assistance, the humanitarian principle of impartiality requires it to be provided with no discrimination other than on the basis of greatest need. Depriving people of the assistance to which they are entitled, because they are designated under sanctions or CT measures, would violate IHL and humanitarian principles.
The position is different for fighters who are not hors de combat. They do not have the same entitlement as civilians to other objects indispensable to their survival, such as food. But people can be designated for a broad range of reasons, most of which would not affect their status as civilians under IHL. There is thus no equivalence between being a fighter, and thus not entitled to benefit from certain types of humanitarian relief, and being designated. In this case, too, screening risks depriving people of the humanitarian relief to which they are entitled under IHL.
More operationally, the eligibility criteria developed by humanitarian actors and their implementation in practice go a long way towards ensuring that humanitarian assistance – other than medical assistance – is not provided to fighters.
4.2.4 The state of play
While humanitarian organizations have been willing to screen staff, sub-grantees, contractors and vendors, they have drawn a ‘red line’ at screening final beneficiaries. On the whole, this red line has been accepted by donors to humanitarian action, including the EU, the US and other key donors, but it is being challenged by a number of developments.
While humanitarian organizations have been willing to screen staff, sub-grantees, contractors and vendors, they have drawn a ‘red line’ at screening final beneficiaries.
Although the US has stated that it does not require screening of final beneficiaries of the programmes it funds, in practice its approach is not quite so clear-cut. For example, the CT certification that applicants for USAID funding must sign does not apply to the provision of USAID funds or assistance ‘to the ultimate beneficiaries of USAID-funded humanitarian or development assistance […] unless the applicant knew or had reason to believe that one or more of these beneficiaries was subject to U.S. or U.N. terrorism-related sanctions’. (Emphasis added.)
In contexts subject to enhanced partner vetting, recipients of USAID funding must vet – i.e. provide USAID with the personal information of – individual participants in training programmes funded with the grant, and recipients of cash payments of more than a specified amount.
More problematically, in recent years funding agreements concluded with certain humanitarian actors in contexts where groups designated as terrorist by the US are operative, including Boko Haram in Nigeria and ISIL in Syria and Iraq, have required recipients of funding to seek prior authorization from USAID before providing assistance to individuals whom the recipient ‘affirmatively knows’ to have been ‘formerly affiliated’ with these groups ‘as combatants or non-combatants’.
This requirement raises numerous concerns. USAID has not provided definitions or guidance of what amounts to having been ‘formerly affiliated’ with a designated group. But this is likely to be a larger group of people than those who are designated, so people who are not even designated could potentially be excluded from humanitarian programmes.
This pre-authorization requirement means recipients must identify – by whatever means they choose – and thus potentially exclude from humanitarian action an even broader category of people than those who are actually designated. This exacerbates the problems underlying the screening of final beneficiaries.
Admittedly, the requirement neither requires recipients of funding to provide USAID with the personal data of the persons in question, nor does it automatically preclude assistance from being provided. It is for USAID to decide what the consequences of any notification are. Nonetheless a very real risk exists that this requirement may exclude people from life-saving assistance, including measures to treat and reduce the spread of the COVID-19 virus. Not providing medical assistance – even just pending authorization – would violate IHL and be contrary to medical ethics.
There have also been problematic developments at EU level. Since 2018 new grant agreements concluded by parts of the European Commission other than the department known as ECHO (European Civil Protection and Humanitarian Aid Operations) have started requiring the screening of final beneficiaries of funded programmes.
The source of the funding within an organization does not affect the position outlined above, and in fact expressly recognized by the European Commission itself. What is determinative is the context in which the funded activities are being conducted. Is it one where IHL applies, or to which humanitarian principles are otherwise relevant? The same holds true for the nature of the funded activities. Both must be determined on the basis of the facts on the ground and not the institutional identity of the donor.
There has been significant pushback to the inclusion of this requirement, most particularly in relation to activities that are being conducted in conflict settings, such as Syria. Some NGOs terminated a grant that included it, returning the funds. Others successfully argued that the requirement should only apply to the parts of the grant that related to cash-based activities, as only these were covered by the EU sanctions: they returned that element of the grant, and carried out the other activities without screening final beneficiaries. Adopting these principled positions is essential to maintaining the red line. It is nonetheless regrettable that it was necessary to return the funds, as this left people without the assistance they had been determined to need.
4.3 False Claims Act litigation in the US
The False Claims Act (FCA) is a US federal statute that allows third parties to bring whistle-blower proceedings ‘on behalf’ of the US Government for alleged fraudulent use of government funds. In recent years FCA proceedings have been brought against humanitarian and peacebuilding actors on the basis of certification that applicants for USAID funding must sign. The version of the certification signed by the defendants required an applicant to certify that:
The three cases that have been made public to date were strategic litigation brought by the same plaintiff, the Zionist Advocacy Center. The plaintiff claimed that the recipients of USAID funding had violated the certification and, thus, defrauded the US Government. None of these cases reached the merits stage before a court: the first settled, and the courts accepted the US Department of Justice’s motion to dismiss in the other two.
The problem is not the FCA per se, but the USAID certification that formed the basis of the claims. It is problematic because of the breadth of the prohibited support; the lack of clarity as to who should not be receiving the support; the period it covers; and the source of the funds with which support must not be provided.
In the wake of the litigation, the certification was amended, and some of the more problematic aspects were modified. In particular, the ‘look back’ period was shortened from 10 to three years; and the vague and overly broad reference to the persons to whom funds should not be made available was replaced by a reference to people or groups designated under US CT sanctions and UN sanctions.
What remains extremely broad is the source of funds from which the material support must not be provided. This is not expressly addressed in the certification clause, but the one case that was settled suggested that the certification applies to support provided with the funds received from any donor, not just from the US government. This means that a humanitarian organization that, in the three years prior to signing the USAID certification, carried out an activity funded by a different donor that did not include similarly broad restrictions, or that had a different list of designated entities from those of the US, could, by virtue of these entirely permissible activities, nonetheless be violating the USAID certification and exposing itself to the risk of FCA claims.
This line of litigation significantly changes the dynamics relating to restrictions in funding agreements. Any leeway that recipients of funding may have been (implicitly) granted by USAID in the past has been removed. If FCA claims are brought, the US Government is obliged to investigate them. The pecuniary risks of litigation are very significant: US courts are entitled to award punitive damages of three times the amount received from the respondent organization from the relevant US government agency. One-third of these costs are awarded to the whistle-blower. While the cases brought so far had a clear political dimension, and there are no further cases with that particular plaintiff, the risk exists that similar claims may be brought in the future.
- Funding agreements for humanitarian action should not impose restrictions that go beyond those in the CT measures or country-specific sanctions with which they aim to promote compliance.
- Such agreements should impose ‘obligations of means’, requiring recipients to take all feasible measures to avoid making funds and assets available to designated groups. They should not include requirements that could lead to the exclusion of final beneficiaries or that could otherwise impair a principled humanitarian response.
- The Good Humanitarian Donorship initiative is an informal donor forum and network that facilitates collective advancement of good donorship principles and practices. CT measures have been on its agenda since 2018. This workstream should continue, and lead to the elaboration of good practices.
- Humanitarian organizations should develop common red lines and ‘bargaining’ positions, and adhere to them. They should also share good practices that meet donors’ concerns but do not impede principled action.