Direct Global Grantmaking Basics

Outflow Overview

U.S. laws and regulations governing international grantmaking can largely be divided based on the authority or agency responsible for enforcement. For most aspects of compliance, Treasury and the Internal Revenue Service (IRS) are the most important federal agencies.

Treasury Department, IRS, and OFAC

• Treasury oversees two of the main bodies responsible for rules impacting U.S.-based funders granting abroad: the IRS and the Office of Foreign Assets Control (OFAC).
• The IRS is responsible for enforcing Treasury’s rules that impact both how U.S. funders can make grants abroad without triggering an excise tax and regarding Form 990 and Form 990-PF reporting requirements.
  • There are two mechanisms for U.S.-based foundations to make grants abroad: Equivalency Determination and Expenditure Responsibility.
• OFAC administers U.S. sanctions programs – funders granting abroad need to comply with these sanctions.

State Department

The U.S. State Department is relevant to global grantmakers as it works closely with Treasury on sanctions programs as well as designating Foreign Terrorist Organizations.

Learn more about sanctions and counterterrorism

Outflow Resources

• Basic Options for Global Grantmaking by U.S. Foundations
• FAQ: Global Grantmaking (Members-only resource)
• International Grantmaking: A Guide for Funders Making Grants Outside the United States (Free for Council members, otherwise $199)
• NGOsource | LegalEASE blog

Inflow Overview

Global grantmakers often must comply with complex foreign laws and systems that differ from how the U.S. regulates charitable organizations.

While some countries have similar tax treatment and registration requirements of nonprofits as the United States, others do not have formal structures that equate to domestic definitions or characteristics of public charities. In addition, global funders must navigate different languages, cultures, currency exchange rates, politics, and norms that can exacerbate difficulties.

For global grantmakers, nearly every country in the world permits its nonprofits to receive funds from U.S. philanthropy. However, increasingly governments across the world are putting restrictions on domestic charitable organizations or establishing barriers to receiving foreign funding. This trend, which has worsened over the last two decades, is often referred to as the closing space for civil society and poses real challenges to global grantmakers.

Inflow Resources

• Country Notes – a free guide to 35+ countries’ nonprofit laws to assist funders with conducting equivalency determinations
• ICNL | Country Resources
• NGOsource | ED Resource Center
• Philea | European Fiscal and Legal Landscape for Philanthropy