[co-author: Pavla Ovtchinnikova]

A flurry of recent advisory opinions from the Department of Justice’s FARA unit raise new questions about how the Foreign Agents Registration Act (FARA) might apply to the nonprofit community. Adding to the uncertainty, these opinions arrive just as momentum is increasing for DOJ to adopt new regulations to clarify and update the pre-World War II law that has seen aggressive enforcement in the last decade.

FARA generally requires agents of foreign principals engaged in certain activities within the United States to influence domestic and foreign policy to register and publicly disclose the relationship and their activities to DOJ. In the last few years, enforcement has ramped up, with multiple indictments in the wake of investigations into foreign interference in the 2016 elections. As a result, organizations with international connections have called for greater guidance on the reach of what is a notoriously vague law. To this end, DOJ began releasing heavily redacted advisory opinions interpreting FARA and its regulations.

A common theme among opinions released in February 2022 is the scope of the so-called academic exemption, one of several exemptions to the law’s registration and reporting requirements. Under this exemption, an agent working on behalf of any kind of foreign principal need not register under FARA if the activity performed on behalf of the principal promotes bona fide religious, scholastic, academic, or scientific pursuits or the fine arts. Nonprofits, including universities and other educational organizations, religious groups, and other charitable organizations, have long relied on this exemption when engaging in activities that may cause them to be considered an “agent” of a foreign entity.

In one advisory opinion, DOJ emphasized that in order for the exemption to apply, activity performed on behalf of the principal must be strictly limited to promoting the exempted pursuits. The advisory opinion was requested by a U.S.-based employee of a foreign university whose contract was limited to monitoring legislation and generating relationships with covered officials to promote the scholastic values of the university. However, in a phone call with DOJ, the requester acknowledged that in the future, he expected that he would advocate to U.S. officials that federal grants be made available to the university. DOJ determined that this proposed activity would constitute “political activity” under FARA, as it would be undertaken with an intent to influence the U.S. government on the domestic or foreign policies of the United States. While this activity was not part of the employee’s contract or written job description, DOJ concluded that the requester did not qualify for the academic exemption to the extent he would be engaging in political activity and thus was required to register under FARA.

Another advisory opinion took a similarly narrow view of the exemption, looking critically at the ultimate goals of the U.S. activities of a foreign organization. In that opinion, the requester was a foreign nonprofit established to promote “friendship and goodwill” between a foreign country and the rest of the world through various exchange programs. The requestor asked whether the academic exemption from FARA could be applied in their circumstance. Looking beyond the materials submitted by the requester, DOJ scrutinized the organization’s website and an annual report published by the organization. There, they found evidence that the “generalized” goals of the organization included promoting goodwill regarding the foreign country, thus influencing the U.S. public with a goal of ultimately fostering beneficial U.S. foreign policies toward the country. As a result, DOJ concluded the organization was engaged in “political activities” designed to influence U.S. policy that fell outside the scope of the academic exemption, and the nonprofit was therefore required to register.

Both opinions highlight the limits of the academic exemption and the importance of considering FARA with regard not only to an organization’s formal contracts and agreements, but also to the organization’s public statements about its work, including press releases, reports, and social media posts, as each of these can be used by DOJ in evaluating the application of FARA. What is interesting about the regulation limiting the scope of the academic exemption to nonpolitical activities is that that limit is not actually found in the statute. In fact, the more logical reading of the statute would be that the exemption is designed for political activities that would otherwise require registration, unless they are in the furtherance of bona fide religious, scholastic, academic, or scientific pursuits or of the fine arts. Someone not engaged in political activities (or other registerable activity) would not be subject to FARA in the first place.

Another advisory opinion released by DOJ was requested by a 501(c)(3) nonprofit, whose aim is to prevent global conflict by offering diplomatic advice to foreign governments. Here, the organization had entered into a funding agreement with an agency of a foreign country to assist in building the capacity of a political faction. In their letter to DOJ, the charity characterized the funding agreement as being “no strings attached,” and pointed to an explicit provision in the agreement indicating that there was no agency relationship between the charity and the foreign agency. The Department of Justice disagreed. In finding that the charity was acting as an agent, DOJ characterized the funding agreement as a contractual relationship, where the agreement funds were predicated on the charity fulfilling the objectives outlined in the funding agreement. DOJ particularly pointed to the provision requiring the charity to submit “detailed narrative reports” of their progress in achieving the objectives outlined in the funding agreement. This finding stresses the importance of drafting flexible funding agreements that do not place the nonprofit organization under the direct control of a foreign entity.

As enforcement of FARA continues to rise, these advisory opinions underline the importance of nonprofit organizations considering FARA implications when interacting with foreign entities, including members, donors, and leadership. While an organization’s activities may be in furtherance of a charitable mission, that alone is not sufficient to exempt them from FARA, and organizations should take care to conduct critical evaluations of whether the goals of the work and the means to accomplish them might be interpreted as influencing U.S. policy.

Hopefully, there may be more clarification coming. DOJ received an array of comments on its notice of proposed rulemaking, including multiple comments from groups representing the nonprofit sector. Comments reflected a variety of perspectives, but overwhelmingly asked the agency to issue regulations clarifying how DOJ interprets the statute and specifically the academic exemption.