Both hostland and homeland factors are said to create opportunities and constraints for diasporic activism. Yet very little work has addressed the interconnectedness of terrorist threats in the homeland, counter-terrorism measures in the hostland and their impact on grass-roots political transnationalism between both. Furthermore, diaspora have been analyzed as either aiding insurgencies in the hostland (Collier and Hoeffler, 2004; Checkel, 2013) or as securitized communities under counter-terrorism policies (Bourbeau, 2017; Cochrane, 2015; Lazaridis and Wadia, 2015). Less analyzed is their role in supporting the state during existential crises, and how concurrently, counter-terrorism measures in the hostland and homeland may undermine these efforts. This study argues that Shia grass-roots organizations in the UK are increasingly becoming a transnational welfare provider for victims of Islamic State in Iraqi society, delivering vital state services and buttressing Iraq’s weak state. Yet their securitization is creating multiple obstacles, both in the UK and Iraq. This paper demonstrates how terrorism in the homeland is shaping Shia political transnationalism towards civil society. Simultaneously it reveals the transnational impact of counter-terrorism measures both in the homeland and hostland, which are impeding support to livelihoods of families who have themselves been victims of terrorist acts of violence in Iraq.