The foundation bills itself as the nation's largest Muslim charity. Its Web site describes needy people it fed and clothed and quotes the Quran: "Oh, if anyone saved a life it would be as if he saved the life of the whole people."
But Treasury Secretary Paul O'Neill said Tuesday that "this organization exists to raise money in the United States to promote terror."
Some Muslims said they were dismayed by the accusations but were willing to let the government make its case.
"If they've been politically supporting groups with this money, it's not what it was intended for. If they want to spend it for Hamas they need to change their name and collect it for that purpose," said Riyadh Alsaid, the outreach department coordinator for the Dallas Central Mosque. "I'm sure people here are in shock."
Others said they were suspicious of the motives and timing of Tuesday's raids.
Dr. Jamal Badawi is an Islamic scholar and the head of the Canada-based Islamic Information Foundation. He spends much of his time visiting Muslim communities across North America. The Holy Land Foundation has had a good reputation, and Tuesday's shutdown is not likely to rock that reputation among many people, he said.
"The government has an agenda," he said. "It's not only me who is saying that."
A coalition of national Muslim groups released a joint statement Tuesday afternoon condemning the crackdown as an attack by government officials who failed to provide evidence for their charges.
President Bush accused the foundation of helping Hamas in three areas:
"Money raised by the Holy Land Foundation is used by Hamas to support schools and indoctrinate children to grow up into suicide bombers," Bush said. "Money raised by the Holy Land Foundation is also used by Hamas to recruit suicide bombers and to support their families."
But those accusations are too vague to support Tuesday's actions, said Ibrahim Hooper, spokesman for the Washington, D.C.-based Council on American-Islamic Relations. The president's statement lacked evidence linking the Holy Land Foundation to specific acts of terrorism, he said.
"These are political statements," he said. "These are not criminal allegations."
Some Muslims seemed most troubled by the federal accusation that foundation money went to support families of suicide bombers. It's hard to make the case that hungry children should not be fed - no matter what their father did, said Mohammed Suleman, president of the board of trustees of the Dallas Central Mosque.
The United States is dumping food out of airplanes over Afghanistan, he said. "Are we being very sure that the guy who gets the food over there is not a Taliban or al-Qaida member?"
Holy Land Foundation officials said they were helping Palestinians and others whose lives are miserable because of war - and the need is real, Suleman said.
"There are people caught in the crossfire, and there should be someone to help them," he said. "That was what I think Holy Land was doing, helping people caught in the crossfire."