A vital part of any U.S. foundation’s global grantmaking process includes a set of steps to ensure the foundation’s compliance with non-tax laws. In the international grantmaking context, this often means:
- Ensuring your foundation is not supporting a sanctioned country, organization, or individual
- Preventing your organization’s grant funds from being used for terrorism or other criminal activity such as bribery, corruption, or money laundering
- Working with your organization’s grantee to follow any applicable local laws
For most foundations, compliance starts with following either expenditure responsibility or equivalency determination.
As part of the due diligence process followed by expenditure responsibility or equivalency determination, it's important to ensure your grant does not directly or indirectly support an individual, entity, or country that is currently sanctioned by the U.S. government.
The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) is the body primarily responsible for enacting and enforcing sanctions. It administers country-level sanctions programs, otherwise known as embargos or comprehensive sanctions. It also maintains targeted sanctions, which by their nature target specific entities or individuals. Generally, these organizations or individuals appear on OFAC’s Specially Designated Nationals (SDN) list for illicit activities such as money laundering, drug trafficking, or terrorism.
Countries under comprehensive sanctions, and entities or individuals on the SDN list, are generally blocked — meaning U.S. persons or organizations cannot work with them in any capacity. There are exceptions, such as when OFAC releases a “General License” that may permit certain types of activities such as humanitarian aid. OFAC updates their Recent Actions page with all General Licenses.
Funders working abroad should also monitor changes to the State Department’s various lists regarding terrorist organizations and state sponsors of terrorism to ensure their funds are not being used to provide material support to terrorist groups.
Important Lists to Check
- State Department: Foreign Terrorist Organizations
- State Department: State Sponsors of Terrorism
- Treasury Department (OFAC): Specially Designated Nationals (SDN)
Additional Resources
- To Check or Not to Check: Complying With OFAC Regulations (Members-only resource)
- The Debate Over Anti-Terrorism Certification (Members-only resource)
