International Grantmaking Regulations https://cof.org/ en Frequently Asked Legal Questions about Global Grantmaking https://cof.org/content/frequently-asked-legal-questions-about-global-grantmaking <span class="field field--name-title field--type-string field--label-hidden">Frequently Asked Legal Questions about Global Grantmaking</span> <span class="field field--name-uid field--type-entity-reference field--label-hidden"><span lang="" about="/users/council-webteam" typeof="schema:Person" property="schema:name" datatype="">council-webteam</span></span> <span class="field field--name-created field--type-created field--label-hidden">Sun, 11/16/2014 - 09:40</span> <div class="article-body-wrapper"><div class="container"> <div class="layout row layout-builder__layout"> <div class="col-12"> <div class="extra-field-blocknodeprovus-articlecontent-moderation-control block block-layout-builder block-extra-field-blocknodeprovus-articlecontent-moderation-control"> <div class="content"> </div> </div> <div class="field-blocknodeprovus-articletitle block block-layout-builder block-field-blocknodeprovus-articletitle"> <div class="content"> <h1 class="field field--name-title field--type-string field--label-hidden">Frequently Asked Legal Questions about Global Grantmaking</h1> </div> </div> <div class="field-blocknodeprovus-articlebody block block-layout-builder block-field-blocknodeprovus-articlebody"> <div class="content"> <div class="clearfix text-formatted field field--name-body field--type-text-with-summary field--label-hidden field__item"><ul> <li><a href="#private">What are the legal requirements for private foundations wishing to make cross-border grants? </a> <ul> <li><a href="#IVa">What is equivalency determination?</a></li> <li><a href="#IVb">What is expenditure responsibility?</a></li> <li><a href="#IVc">How do I decide whether to use equivalency determination or expenditure responsibility?</a></li> </ul> </li> <li><a href="#public">What are the legal requirements for public charities wishing to make cross-border grants?</a></li> <li><a href="#anti">What anti-terrorism actions and policies of the U.S. Government relate to global grantmaking? </a> <ul> <li><a href="#Va">What does Executive Order 13224 do?</a></li> <li><a href="#Vb">How does the U.S.A. Patriot Act relate to grantmaking?</a></li> <li><a href="#Vc">What are the Treasury Department’s <em>Voluntary</em> Guidelines for Anti-Terrorist Financing?</a></li> <li><a href="#Vd">How should grantmakers respond to these anti-terrorism actions?</a></li> </ul> </li> </ul> <hr /> <h2><a name="private" id="private"></a>What are the legal requirements for private foundations wishing to make cross-border grants?</h2> <p>Private foundations wishing to make a cross-border grant must ensure that:</p> <ol> <li>The grant is clearly for a charitable purpose, and</li> <li>The grant counts as a qualifying distribution for the purpose of meeting the foundation’s annual distribution requirement.</li> </ol> <p>The easiest way for a private foundation to satisfy both of these requirements is to choose a grantee that is recognized by the IRS as a public charity.</p> <p>If a private foundation chooses to make a grant to a non-U.S. organization that is not recognized by the IRS as a public charity, the foundation must follow one of the two options provided in the tax code:</p> <ol> <li>Determine that the non-U.S. grantee is the “equivalent” of a U.S. public charity (“equivalency determination”), or;</li> <li>Exercise “expenditure responsibility.”</li> </ol> <h3><a id="IVa" name="IVa"></a>What is Equivalency Determination?</h3> <p>Equivalency determination is a process designed to assess whether a potential non-U.S. grantee organization is the equivalent of a U.S. public charity. It involves collecting certain information from the grantee about its origins, activities, and finances through an affidavit (see link below for sample affidavit). On the basis of the information provided in the affidavit, the private foundation then makes a good-faith determination concerning U.S. public charity equivalency and documents that decision. The determination may be made by the private foundation on its own or relying on the written opinion of counsel or the potential grantee’s counsel. The process need not be complicated; many private foundations routinely conduct equivalency reviews of prospective grantees.</p> <p>The following documents, translated into English, are necessary to make an equivalency determination:</p> <ul> <li>Founding documents of the organization.</li> <li>A description of the purposes of the organization as well as its past and present activities.</li> <li>Dissolution provisions, either contained in the founding documents or applicable law (see link below to country notes).</li> <li>Restrictions on private benefit, non-charitable activities, lobbying, and participation in political campaigns, either contained in the founding documents or applicable law (see link below to country notes)</li> <li>Detailed financial records (excluding religious institutions or medical or educational organizations).</li> </ul> <p><strong>Advantages of Equivalency Determination</strong></p> <p>This method does not require grantee reports at the end of each accounting period, a separate account dedicated to charitable purposes, or detailed reporting on Form 990-PF.</p> <p><strong>Disadvantages Equivalency Determination</strong></p> <p>This method requires substantial documentation in English plus financial reporting from previous years.</p> <h3><a id="IVb" name="IVb"></a>What is Expenditure Responsibility?</h3> <p>Expenditure responsibility is a method of making direct cross-border grants to a non-U.S. organization whereby the private foundation assumes full responsibility for ensuring that its grant is used for a charitable purpose. The process need not be unduly burdensome for either the grantmaker or grantee. Private foundations may apply expenditure responsibility grants to their payout requirement if they take the following steps:</p> <ol> <li>Undertake a pre-grant inquiry with reasonable determination that the intended grantee is capable of fulfilling the charitable purposes of the grant.</li> <li>Conclude a grant agreement that includes spending and reporting responsibilities and commits the grantee to spend the money only for the specified charitable purposes.</li> <li>Require grantee to maintain grant funds in a separate account for charitable purposes.</li> <li>Require one or more reports from the grantee detailing how the funds have been spent.</li> <li>Report the grant on the foundation’s form 990-PF.</li> </ol> <p><strong>Reporting for expenditure responsibility grants:</strong></p> <p>The U.S. Department of the Treasury requires that recipients of expenditure responsibility grants provide reports on how the funds were used. Existing IRS guidance does not provide clear answers on the following aspects of the reporting requirement: grants for capital equipment, grants for endowment, and reasonable efforts to secure reports from grantees. In the absence of guidance from the IRS, the Council on Foundations has made available its recommendations to international grantmakers in a letter to the U.S. Department of the Treasury: Guidance on Expenditure Responsibility: <a href="/sites/default/files/documents/files/COF_letter_Treasurydept.pdf" target="_blank">Council on Foundations Letter to Treasury</a> (in PDF).</p> <p><strong>Advantages of Expenditure Responsibility</strong></p> <p>Because equivalency determination can occasionally be a lengthy and ultimately unsuccessful process (i.e., the prospective grantee turns out <strong>not</strong> to be the equivalent of a U.S. public charity), grantmakers often choose to exercise expenditure responsibility instead.</p> <p><strong>Disadvantages of Expenditure Responsibility</strong></p> <p>Grant reports are required from the grantee until all funds have been expended, which may require monitoring the grant over a period of several years.</p> <h3><a id="IVc" name="IVc"></a>How do I decide whether to use Equivalency Determination or Expenditure Responsibility?</h3> <p>In 2001, the IRS made clear in a letter to the Council on Foundations that a private foundation wishing to make a grant to a foreign organization could choose between expenditure responsibility and equivalency determination, and that there was no obligation to rule out equivalency before turning to expenditure responsibility.</p> <h3>Table 1: When There Is No Choice</h3> <table border="1" cellpadding="5" cellspacing="0"> <tbody> <tr bgcolor="#E7F0F8"> <td valign="top" width="295"><strong>Situation </strong></td> <td valign="top" width="295"><strong>Required Action </strong></td> </tr> <tr> <td valign="top" width="295"> <p>Grantee is a non-charitable enterprise that will use the grant for charitable purposes</p> </td> <td valign="top" width="295"> <p>Expenditure responsibility is the only way to make this grant</p> </td> </tr> <tr> <td valign="top" width="295"> <p>Grantee cannot supply the information required for an equivalency affidavit</p> </td> <td valign="top" width="295"> <p>Grantor must use expenditure responsibility because it does not have enough information for an equivalency determination</p> </td> </tr> <tr> <td valign="top" width="295"> <p>Grantor evaluates the affidavit and concludes that despite everyone’s best efforts, the grantee is not the equivalent of a public charity</p> </td> <td valign="top" width="295"> <p>Expenditure responsibility is the only way to make the grant</p> </td> </tr> </tbody> </table> <h3>Table 2: When the Grantor Can Choose</h3> <table border="1" cellpadding="5" cellspacing="0"> <tbody> <tr bgcolor="#E7F0F8"> <td valign="top" width="295"><strong>Circumstances that favor Equivalency</strong></td> <td valign="top" width="295"><strong>Circumstances that favor Expenditure Responsibility</strong></td> </tr> <tr> <td valign="top" width="295"> <p>Grantor expects long-term relationship</p> </td> <td valign="top" width="295"> <p>Grantor plans a one-time grant</p> </td> </tr> <tr> <td valign="top" width="295"> <p>Grantee can supply governing documents and no financial data is needed (i.e., grantee is a school, hospital, or church)</p> </td> <td valign="top" width="295"> <p>Grantee may have considerable difficulty in supplying historical financial data or obtaining a certified copy of its governing documents</p> </td> </tr> <tr> <td valign="top" width="295"> <p>Grantor wants flexible reporting procedures</p> </td> <td valign="top" width="295"> <p>Grantor wants strict reporting provisions</p> </td> </tr> <tr> <td valign="top" width="295"> <p>Grantor wants to make a general support grant</p> </td> <td valign="top" width="295"> </td> </tr> <tr> <td valign="top" width="295"> <p>Grantee plans to re-grant funds received to accomplish its exempt purposes</p> </td> <td valign="top" width="295"> </td> </tr> </tbody> </table> <h2><a name="public" id="public"></a>What are the legal requirements for public charities wishing to make cross-border grants?</h2> <p>International grantmaking requirements for public charities are significantly less onerous than those for private foundations, yet public charities still have a fiduciary duty to ensure that grant funds are used exclusively for charitable purposes. Although they are not required to do so, most public charities follow the grantmaking rules for private foundations.</p> <p>The Pension Protection Act of 2006, signed into law by President Bush on August 17, 2006, introduced new rules for international grants made from donor-advised funds. International grantmaking from donor-advised assets now requires equivalency determination or expenditure responsibility. While the Council is seeking guidance as to what expenditure responsibility means for public charities, the regulations for <a href="#private">private foundations</a> provide some guidance.</p> <p>The suggested approach by the Council on Foundations for public charities that do <strong>not</strong> use donor-advised funds for their international grantmaking is as follows:</p> <ul> <li>Obtain English copies of organizational documents and a description of the activities and programs of the grantee.</li> <li>Enter into a specific written agreement, documenting the grantee’s commitments and the use of funds for charitable purposes.</li> <li>Obtain a yearly accounting of the funds for each year until the funds are expended.</li> </ul> <h2><a name="anti" id="anti"></a>What anti-terrorism actions and policies of the U.S. Government relate to international grantmaking?</h2> <p>The U.S. government took a number of steps to ensure that charitable funds were not diverted to terrorists and their organizations in the United States and around the world following the terrorist attacks of September 11, 2001. These included Executive Order 13224 and the USA Patriot Act, both issued shortly after 9/11, as well as the Treasury Department’s “Anti-Terrorist Financing Guidelines: Voluntary Best Practices for U.S.-Based Charities,” originally issued in November 2002 and most recently re-issued on September 29, 2006. This section provides a brief description of U.S. government anti-terrorism initiatives:</p> <ul> <li>Executive Order 13224</li> <li>U.S.A. Patriot Act</li> <li>U.S. Department of the Treasury Anti-Terrorist Financing Guidelines: Voluntary Best Practices for U.S.-Based Charities</li> </ul> <h3><a id="Va" name="Va"></a>What does Executive Order 13224 do?</h3> <p>Executive Order 13224 was signed by President George W. Bush on September 24, 2001, to cut off resources to terrorists and terrorist organizations through asset blocking. The Executive Order prohibits transactions with those entities deemed by the Executive Branch to be associated with terrorism and freezes all assets controlled by or in the possession of these entities and those who support them. The EO prohibits the provision of any financial or material support to any entity specifically listed in an Annex or determined by the Secretaries of State or Treasury, as well as any <strong>associated entities</strong>. Several U.S. government agencies have created lists of known or suspected terrorists, as has the United Nations and the European Union. The most comprehensive of the U.S. lists is the Treasury Department's <a href="http://www.treasury.gov/resource-center/sanctions/SDN-List/Pages/default.aspx" target="_blank">Specially Designated Nationals</a> (SDN) list. Both the Treasury Department and Executive Order lists are physically included in the <a href="http://www.treasury.gov/ofac/downloads/t11sdn.pdf" target="_blank">Executive Order</a>. The open-endedness of the prohibitions contained in the EO is worrisome for grantmakers. No distinction is made in the EO between domestic and international terrorism.</p> <h3><a id="Vb" name="Vb"></a>How does the U.S.A. Patriot Act relate to grantmaking?</h3> <p>The U.S.A. Patriot Act was enacted in October 2001 and reauthorized in 2005. Among its many provisions, the Act increased existing criminal penalties for knowingly or intentionally providing material support or resources for terrorism. For grantmakers, these criminal statutes open the possibility that they could be found -- despite their best intentions -- to have knowingly or intentionally provided material support or resources for terrorism. Another concern for grantmakers is potential civil liability should their grants end up in the wrong hands. Nonprofit grantmaking organizations are not immune to potential legal liability because of the inherent charitable or humanitarian nature of their missions.<a href="#_ftn1" id="_ftnref1" name="_ftnref1">[1]</a></p> <h3><a id="Vc" name="Vc"></a>What are the Treasury Department’s Voluntary Anti-Terrorist Financing Guidelines?</h3> <p>On September 29, 2006, the U.S. Department of the Treasury issued an updated version of the “Anti-Terrorist Financing Guidelines: Voluntary Best Practices for U.S.-Based Charities.” The “Guidelines” were originally issued in November 2002 and revised in December 2005 to assist charitable organizations in complying with Executive Order 13224 and the USA Patriot Act following 9/11. The new Guidelines may be accessed here: <a href="http://www.treasury.gov/resource-center/terrorist-illicit-finance/Documents/guidelines_charities.pdf" target="_blank">Revised Anti-Terrorist Financing Guidelines: Voluntary Best Practices for U.S.-Based Charities</a></p> <p>On the same day, the Treasury Department released a document responding to public comments it received during the comment period following the release of the second version of the Guidelines in December 2005. This document may be accessed: <a href="http://www.treasury.gov/resource-center/terrorist-illicit-finance/Documents/response.pdf" target="_blank">Response to Comments Submitted on the U.S. Department of the Treasury Anti-Terrorist Financing Guidelines: Voluntary Best Practices for U.S.-Based Charities</a> (PDF).</p> <p>These comments include a submission by the Treasury Guidelines Working Group, a broadly representative group of more than 40 U.S. charities, foundations, religious organizations, corporations, umbrella associations, watchdog groups, and advisors, created in the spring of 2004 and coordinated by the Council on Foundations. In February 2006, the Treasury Guidelines Working Group submitted comments in response to the invitation for public comments on the revised “Anti-Terrorist Financing Guidelines: Voluntary Best Practices for U.S.-Based Charities” issued on December 5, 2005. <a href="/sites/default/files/documents/files/TreasuryGuidelinesWorkingGroup-Comments_to_Treasury12-5-05%20%281%29.pdf">Download</a> the comments (PDF).</p> <p>The working group developed the <a href="http://www.cof.org/content/principles-international-charity-0">Principles of International Charity</a> (PDF) that identifies eight principles to guide the anti-terrorism efforts of charities. The Principles of International Charity were submitted to the Treasury Department as an alternative to the Guidelines in March 2005.</p> <ul> <li>Read the revised <a href="http://www.treasury.gov/resource-center/terrorist-illicit-finance/Documents/guidelines_charities.pdf" target="_blank">Anti-Terrorist Financing Guidelines: Voluntary Best Practices For U.S.-Based Charities</a></li> <li>Download the <a href="/sites/default/files/documents/files/TreasuryGuidelinesWorkingGroup-Comments_to_Treasury12-5-05%20%281%29.pdf">Treasury Guidelines Working Group Comments</a> (PDF) submitted to the Treasury Department in February 2006</li> <li>Download the <a href="http://www.cof.org/content/principles-international-charity-0">Principles of International Charity</a> (PDF)</li> <li>Download <a href="/sites/default/files/documents/files/Treasury_Comments_06.03.pdf">Council on Foundation Comments on Original U.S. Department of Treasury Anti-Terrorist Financing Guidelines</a> (PDF) submitted in June 2003.</li> </ul> <h3><a id="Vd" name="Vd"></a>How should grantmakers respond to these various anti-terrorism measures?</h3> <p>Despite the attention paid in the media to a handful of charities alleged to have helped finance and aid terrorist activities, the Executive Order and the U.S.A. Patriot Act are not targeted directly at grantmaking organizations. As a result, they do not spell out specific procedures that grantmakers should undertake in order to comply with the law.</p> <p>In the absence of such guidance, grantmakers will have to rely a good deal on common sense. Some useful ideas to consider include:</p> <ul> <li>Know as much as you can about your grantees and their associates.</li> <li>Know what you can about donors who play a role in identifying grantees.</li> <li>Involve your donors and grantees in the compliance process.</li> <li>Educate board and staff about internal anti-terrorism measures.</li> <li>Consider developing an anti-terrorism policy statement.</li> <li>Discuss concerns with legal counsel.</li> <li>Document steps taken to comply with the Executive Order and the Patriot Act.</li> <li>Keep informed about anti-terrorism developments.</li> <li>Consult <strong><a href="/content/international-grantmaking-guide-funders-making-grants-outside-united-states">International Grantmaking: A Guide for Funders Making Grants Outside the United States</a>.</strong></li> </ul> <table align="center" border="0" cellpadding="6" width="94%"> <tbody> <tr> <td bgcolor="#E7F0F8">International grantmakers are responding to the federal anti-terrorism policies in many ways. The Council’s global philanthropy experts conducted an informal survey of a representative sample of approximately 35 of the Council’s international grantmaking members to determine what, if any, changes they had made or were planning to make in their procedures because of the government’s anti-terrorism actions. Read the results of this survey in: "<a href="http://www.cof.org/content/grantmaking-age-terrorism-compliance-strategies" target="_blank">Federal Anti–Terrorism Measures: How Foundations and Corporate Grantmakers are Responding</a>."</td> </tr> </tbody> </table> <p> </p> </div> </div> </div> </div> </div> </div></div><div ><div class="container"> <div class="layout row layout-builder__layout"> <div class="col-12"> <div class="fixed-block-contentarticle-staff-block block-provus-heading block block-fixed-block-content block-fixed-block-contentarticle-staff-block"> <div class="center"> <H2 class="title"> <div class="field field--name-field-provus-title field--type-string field--label-hidden field__item">Questions?</div> </H2> <div class="subheading"> <div class="field field--name-field-provus-sub-title field--type-string field--label-hidden field__item">Connect with Council Staff</div> </div> </div> </div> <div class="addtoany-block block block-addtoany block-addtoany-block"> <div class="content"> <span class="a2a_kit a2a_kit_size_32 addtoany_list" data-a2a-url="https://cof.org/taxonomy/term/701/feed" data-a2a-title="Council on Foundations"><span class="a2a-wrapper"><label>Share</label><a href="#" class="a2a_button_facebook"><img src="/themes/custom/cof/images/icons/social-icon-fb.png" border="0" alt="Share on Facebook" width="8" height="15" /></a><a href="#" class="a2a_button_twitter"><img src="/themes/custom/cof/images/icons/social-icon-twitter.png" border="0" alt="Share on Twitter" width="15" height="12" /></a><a href="#" class="a2a_button_linkedin"><img src="/themes/custom/cof/images/icons/social-icon-linkedin.png" border="0" alt="Share on LinkedIn" width="14" height="14" /></a><a class="a2a_dd" href="https://www.addtoany.com/share"><img src="/themes/custom/cof/images/icons/social-icon-sharethis.png" border="0" alt="Share on all" width="14" height="14" /></a></span></span> </div> </div> <div class="field-blocknodeprovus-articlefield-term-by-topic block block-layout-builder block-field-blocknodeprovus-articlefield-term-by-topic"> <div class="content"> <div class="field field--name-field-term-by-topic field--type-entity-reference field--label-hidden field__items"> <div class="field__item">Equivalency Determination</div> <div class="field__item">International Grantmaking Regulations</div> </div> </div> </div> </div> </div> </div></div><div ><div class="container"> <div class="layout row layout-builder__layout"> <div class="col-12"> <div class="fixed-block-contentrelated-events block-provus-heading block block-fixed-block-content block-fixed-block-contentrelated-events"> <div class="left"> <H2 class="title"> <div class="field field--name-field-provus-title field--type-string field--label-hidden field__item">Related Events</div> </H2> <div class="subheading"> </div> </div> </div> <div class="fixed-block-contentrelated-resources block-provus-heading block block-fixed-block-content block-fixed-block-contentrelated-resources"> <div class="left"> <H2 class="title"> <div class="field field--name-field-provus-title field--type-string field--label-hidden field__item">Related Resources</div> </H2> <div class="subheading"> </div> </div> </div> </div> </div> </div></div> Sun, 16 Nov 2014 14:40:42 +0000 council-webteam 1106 at https://cof.org Basic Options for Global Grantmaking by U.S. Foundations https://cof.org/content/basic-options-global-grantmaking-us-foundations <span class="field field--name-title field--type-string field--label-hidden">Basic Options for Global Grantmaking by U.S. Foundations</span> <span class="field field--name-uid field--type-entity-reference field--label-hidden"><span lang="" about="/users/council-webteam" typeof="schema:Person" property="schema:name" datatype="">council-webteam</span></span> <span class="field field--name-created field--type-created field--label-hidden">Wed, 11/13/2013 - 17:51</span> <div class="article-body-wrapper"><div class="container"> <div class="layout row layout-builder__layout"> <div class="col-12"> <div class="extra-field-blocknodeprovus-articlecontent-moderation-control block block-layout-builder block-extra-field-blocknodeprovus-articlecontent-moderation-control"> <div class="content"> </div> </div> <div class="field-blocknodeprovus-articletitle block block-layout-builder block-field-blocknodeprovus-articletitle"> <div class="content"> <h1 class="field field--name-title field--type-string field--label-hidden">Basic Options for Global Grantmaking by U.S. Foundations</h1> </div> </div> <div class="field-blocknodeprovus-articlebody block block-layout-builder block-field-blocknodeprovus-articlebody"> <div class="content"> <div class="clearfix text-formatted field field--name-body field--type-text-with-summary field--label-hidden field__item"><p>The Council on Foundations' definition of “international grantmaking” includes grants made by U.S. foundations and corporations to overseas recipients as well as grants made to U.S.-based organizations operating international programs. This also includes grants made toward activities wholly within the Unites States that have significant international purpose and impact.</p> <p>U.S. foundations and corporations interested in international grantmaking have several options:</p> <h2 class="title">U.S. 501(c)(3) Organizations</h2> <p>The simplest option is to make a grant directly to another U.S. 501(c)(3) charitable organization to support its international programs or activities.</p> <ul> <li><a href="http://www.usig.org/legal/Types-of-gm-orgs.asp" target="_blank">What is a U.S. 501(c)(3) organization?</a></li> </ul> <h2 class="title">“Friends of” Organizations</h2> <p>Another easy option is to make a grant to a U.S.-based 501(c)(3) “friends of” organization that has been set up to raise funds for a specific charitable program or activity outside the U.S., often a university, museum, or hospital.</p> <ul> <li><a href="http://www.usig.org/legal/friends_of_organizations.asp?contentID=750">How a Private Foundation Can Use "Friends Of" Organizations</a></li> </ul> <h2 class="title">Donor-Advised Funds</h2> <p>Still another relatively straightforward option is to establish a donor-advised fund with a U.S.-based 501(c)(3) public charity that can, for a fee, provide a range of legal and monitoring services to donors wishing to support organizations located outside the United States. One increasingly popular option for making international grants is to set up a donor-advised fund with a willing U.S. community foundation, some of which are linking local ethnic communities that they serve with the communities' countries of origin.</p> <p>A donor-advised fund is not a separate public charity. It is instead owned, controlled, and administered by a public charity, subject to an agreement under which the donor (or an adviser designated by the donor) has the right to make recommendations with respect to the distributions and/or investments. Community foundations and some intermediary organizations offer donor-advised funds as a giving option for their donors.</p> <h2 class="title">Direct Cross-Border Grants</h2> <p>Making cross-border grants directly to organizations located in other countries is an option that requires some additional steps due to special IRS rules for private foundations, but the process need not be difficult. Many private foundations choose this option because it enables them to have a one-to-one relationship with their overseas grantee partners.</p> <p>Legal resources on the Council’s website explain the two approaches embodied in the IRS rules —equivalency determination and expenditure responsibility—that private foundations may choose if they wish to make direct grants to non-U.S. grantees. Public charities often follow these rules as well, although they are not required to do so.</p> </div> </div> </div> </div> </div> </div></div><div ><div class="container"> <div class="layout row layout-builder__layout"> <div class="col-12"> <div class="fixed-block-contentarticle-staff-block block-provus-heading block block-fixed-block-content block-fixed-block-contentarticle-staff-block"> <div class="center"> <H2 class="title"> <div class="field field--name-field-provus-title field--type-string field--label-hidden field__item">Questions?</div> </H2> <div class="subheading"> <div class="field field--name-field-provus-sub-title field--type-string field--label-hidden field__item">Connect with Council Staff</div> </div> </div> </div> <div class="addtoany-block block block-addtoany block-addtoany-block"> <div class="content"> <span class="a2a_kit a2a_kit_size_32 addtoany_list" data-a2a-url="https://cof.org/taxonomy/term/701/feed" data-a2a-title="Council on Foundations"><span class="a2a-wrapper"><label>Share</label><a href="#" class="a2a_button_facebook"><img src="/themes/custom/cof/images/icons/social-icon-fb.png" border="0" alt="Share on Facebook" width="8" height="15" /></a><a href="#" class="a2a_button_twitter"><img src="/themes/custom/cof/images/icons/social-icon-twitter.png" border="0" alt="Share on Twitter" width="15" height="12" /></a><a href="#" class="a2a_button_linkedin"><img src="/themes/custom/cof/images/icons/social-icon-linkedin.png" border="0" alt="Share on LinkedIn" width="14" height="14" /></a><a class="a2a_dd" href="https://www.addtoany.com/share"><img src="/themes/custom/cof/images/icons/social-icon-sharethis.png" border="0" alt="Share on all" width="14" height="14" /></a></span></span> </div> </div> <div class="field-blocknodeprovus-articlefield-term-by-topic block block-layout-builder block-field-blocknodeprovus-articlefield-term-by-topic"> <div class="content"> <div class="field field--name-field-term-by-topic field--type-entity-reference field--label-hidden field__items"> <div class="field__item">International Grantmaking Regulations</div> </div> </div> </div> </div> </div> </div></div><div ><div class="container"> <div class="layout row layout-builder__layout"> <div class="col-12"> <div class="fixed-block-contentrelated-events block-provus-heading block block-fixed-block-content block-fixed-block-contentrelated-events"> <div class="left"> <H2 class="title"> <div class="field field--name-field-provus-title field--type-string field--label-hidden field__item">Related Events</div> </H2> <div class="subheading"> </div> </div> </div> <div class="fixed-block-contentrelated-resources block-provus-heading block block-fixed-block-content block-fixed-block-contentrelated-resources"> <div class="left"> <H2 class="title"> <div class="field field--name-field-provus-title field--type-string field--label-hidden field__item">Related Resources</div> </H2> <div class="subheading"> </div> </div> </div> </div> </div> </div></div> Wed, 13 Nov 2013 22:51:54 +0000 council-webteam 1074 at https://cof.org Equivalency Determination or Expenditure Responsibility https://cof.org/content/equivalency-determination-or-expenditure-responsibility <span class="field field--name-title field--type-string field--label-hidden">Equivalency Determination or Expenditure Responsibility</span> <span class="field field--name-uid field--type-entity-reference field--label-hidden"><span lang="" about="/users/council-webteam" typeof="schema:Person" property="schema:name" datatype="">council-webteam</span></span> <span class="field field--name-created field--type-created field--label-hidden">Sat, 11/09/2013 - 20:57</span> <div class="article-body-wrapper"><div class="container"> <div class="layout row layout-builder__layout"> <div class="col-12"> <div class="extra-field-blocknodeprovus-articlecontent-moderation-control block block-layout-builder block-extra-field-blocknodeprovus-articlecontent-moderation-control"> <div class="content"> </div> </div> <div class="field-blocknodeprovus-articletitle block block-layout-builder block-field-blocknodeprovus-articletitle"> <div class="content"> <h1 class="field field--name-title field--type-string field--label-hidden">Equivalency Determination or Expenditure Responsibility</h1> </div> </div> <div class="field-blocknodeprovus-articlebody block block-layout-builder block-field-blocknodeprovus-articlebody"> <div class="content"> <div class="clearfix text-formatted field field--name-body field--type-text-with-summary field--label-hidden field__item"><p>Private foundations wishing to make a cross-border grant must ensure that:</p> <ul> <li>The grant is clearly for a charitable purpose, and</li> <li>The grant counts as a qualifying distribution for the purpose of meeting the foundation’s annual distribution requirement.</li> </ul> <p>The easiest way for a private foundation to satisfy both of these requirements is to choose a grantee that is recognized by the IRS as a public charity.</p> <p>If a private foundation chooses to make a grant to a non-U.S. organization that is not recognized by the IRS as a public charity, the foundation must follow one of the two options provided in the tax code:</p> <ul> <li>Determine that the non-U.S. grantee is the “equivalent” of a U.S. public charity (“equivalency determination”).</li> <li>Exercise expenditure responsibility.</li> </ul> <p><strong>Equivalency Determination</strong></p> <p>Equivalency determination documents that the grantee organization is the equivalent of a U.S. public charity. To fulfill the requirements of equivalency determination, the private foundation must make a good faith determination on the basis of an affidavit from the potential grantee or an opinion of legal counsel (either the private foundation’s or the potential grantee’s) that the grantee is the equivalent to a U.S. public charity. The following documents should be obtained and translated into English:</p> <ul> <li>founding documents of the organization</li> <li>detailed description of the purposes of the organization and its past and proposed activities</li> <li>dissolution provisions, either contained in the applicable law or in the founding documents</li> <li>legal or founding document restrictions on private benefit, noncharitable activities, lobbying, and participation in political campaigns</li> <li>detailed financial records (excluding religious institutions or medical educational organizations)</li> </ul> <p><strong>Advantages</strong>: This method does not require grantee reports at the end of each accounting period, a separate account dedicated to charitable purposes, or detailed reporting on Form 990-PF.</p> <p><strong>Disadvantages</strong>: This method requires gathering numerous documents translated into English, preparing affidavits, and compiling detailed financial reporting from previous years (required to show that the foreign organization is not the equivalent of a U.S. private foundation) to make a “good faith determination” that the non-U.S. grantee is the equivalent of a U.S. public charity.</p> <p><strong>Expenditure Responsibility</strong></p> <p>Private foundations may apply grants to their payout requirement if they take the following steps to ensure the grant funds are used for charitable purposes:</p> <ul> <li>Undertake a pre-grant inquiry with reasonable determination that the intended grantee is capable of fulfilling the charitable purposes of the grant.</li> <li>Conclude a grant agreement that includes spending and reporting responsibilities and commits the grantee to spend the money only for the specified charitable purposes.</li> <li>Require the grantee to maintain grant funds in a separate account for charitable purposes.</li> <li>Require one or more reports from the grantee detailing how the funds have been spent.</li> <li>Report the grant on the foundation’s form 990-PF.</li> </ul> <p><strong>Advantages</strong>: Because equivalency determination can be a lengthy and sometimes difficult process, requiring the collection of a substantial amount of information up front, grantmakers often choose to exercise expenditure responsibility.</p> <p><strong>Disadvantages</strong>: Grants reports are required from the grantee until all the funds have been expended, which may require monitoring the grant over a period of several years.</p> <p><strong>Deciding Whether to Use Equivalency Determination or Expenditure Responsibility</strong></p> <p>According to a letter from the IRS to the Council on Foundations, a private foundation wishing to make a grant to a foreign organization can choose between expenditure responsibility and equivalency determination, and there is no obligation to rule out equivalency before turning to expenditure responsibility.</p> <p><strong>When the Grantor Doesn’t Have a Choice</strong></p> <table border="1" cellpadding="0" cellspacing="0"> <tbody> <tr> <td> <p><strong>Situation</strong></p> </td> <td> <p><strong>Required Action</strong></p> </td> </tr> <tr> <td> <p>Grantee is a noncharitable enterprise that will use the grant for charitable purposes</p> </td> <td> <p>Expenditure responsibility is the only way to make this grant</p> </td> </tr> <tr> <td> <p>Grantee cannot supply the information required for an equivalency affidavit</p> </td> <td> <p>Grantor must use expenditure responsibility because it does not have enough information for an equivalency determination</p> </td> </tr> <tr> <td> <p>Grantor evaluates the affidavit and concludes that despite everyone’s best efforts, the grantee is not the equivalent of a public charity</p> </td> <td> <p>Expenditure responsibility is the only way to make the grant</p> </td> </tr> </tbody> </table> <p><strong>When the Grantor Can Choose </strong></p> <table border="1" cellpadding="0" cellspacing="0"> <tbody> <tr> <td> <p><strong>Circumstances that favor Equivalency</strong></p> </td> <td> <p><strong>Circumstances that favor Expenditure Responsibility</strong></p> </td> </tr> <tr> <td> <p>Grantor expects a long-term relationship</p> </td> <td> <p>Grantor plans a one-time grant</p> </td> </tr> <tr> <td> <p>Grantee can supply governing documents and no financial data is needed (that is, the grantee is a school, hospital, or church)</p> </td> <td> <p>Grantee may have considerable difficulty in supplying historical financial data or obtaining a certified copy of its governing documents</p> </td> </tr> <tr> <td> <p>Grantor wants flexible reporting procedures</p> </td> <td> <p>Grantor wants strict reporting provisions</p> </td> </tr> <tr> <td> <p>Grantor wants to make a general support grant</p> </td> <td> <p> </p> </td> </tr> <tr> <td> <p>Grantee plans to re-grant funds received to accomplish its exempt purposes</p> </td> <td> <p> </p> </td> </tr> </tbody> </table> <p> </p> </div> </div> </div> </div> </div> </div></div><div ><div class="container"> <div class="layout row layout-builder__layout"> <div class="col-12"> <div class="fixed-block-contentarticle-staff-block block-provus-heading block block-fixed-block-content block-fixed-block-contentarticle-staff-block"> <div class="center"> <H2 class="title"> <div class="field field--name-field-provus-title field--type-string field--label-hidden field__item">Questions?</div> </H2> <div class="subheading"> <div class="field field--name-field-provus-sub-title field--type-string field--label-hidden field__item">Connect with Council Staff</div> </div> </div> </div> <div class="addtoany-block block block-addtoany block-addtoany-block"> <div class="content"> <span class="a2a_kit a2a_kit_size_32 addtoany_list" data-a2a-url="https://cof.org/taxonomy/term/701/feed" data-a2a-title="Council on Foundations"><span class="a2a-wrapper"><label>Share</label><a href="#" class="a2a_button_facebook"><img src="/themes/custom/cof/images/icons/social-icon-fb.png" border="0" alt="Share on Facebook" width="8" height="15" /></a><a href="#" class="a2a_button_twitter"><img src="/themes/custom/cof/images/icons/social-icon-twitter.png" border="0" alt="Share on Twitter" width="15" height="12" /></a><a href="#" class="a2a_button_linkedin"><img src="/themes/custom/cof/images/icons/social-icon-linkedin.png" border="0" alt="Share on LinkedIn" width="14" height="14" /></a><a class="a2a_dd" href="https://www.addtoany.com/share"><img src="/themes/custom/cof/images/icons/social-icon-sharethis.png" border="0" alt="Share on all" width="14" height="14" /></a></span></span> </div> </div> <div class="field-blocknodeprovus-articlefield-term-by-topic block block-layout-builder block-field-blocknodeprovus-articlefield-term-by-topic"> <div class="content"> <div class="field field--name-field-term-by-topic field--type-entity-reference field--label-hidden field__items"> <div class="field__item">Equivalency Determination</div> <div class="field__item">Expenditure Responsibility</div> <div class="field__item">International Grantmaking Regulations</div> </div> </div> </div> </div> </div> </div></div><div ><div class="container"> <div class="layout row layout-builder__layout"> <div class="col-12"> <div class="fixed-block-contentrelated-events block-provus-heading block block-fixed-block-content block-fixed-block-contentrelated-events"> <div class="left"> <H2 class="title"> <div class="field field--name-field-provus-title field--type-string field--label-hidden field__item">Related Events</div> </H2> <div class="subheading"> </div> </div> </div> <div class="fixed-block-contentrelated-resources block-provus-heading block block-fixed-block-content block-fixed-block-contentrelated-resources"> <div class="left"> <H2 class="title"> <div class="field field--name-field-provus-title field--type-string field--label-hidden field__item">Related Resources</div> </H2> <div class="subheading"> </div> </div> </div> </div> </div> </div></div> Sun, 10 Nov 2013 01:57:12 +0000 council-webteam 985 at https://cof.org International Grantmaking: A Guide for Funders Making Grants Outside the United States https://cof.org/content/international-grantmaking-guide-funders-making-grants-outside-united-states <span class="field field--name-title field--type-string field--label-hidden">International Grantmaking: A Guide for Funders Making Grants Outside the United States</span> <span class="field field--name-uid field--type-entity-reference field--label-hidden"><span lang="" about="/users/benmcdearmoncoforg" typeof="schema:Person" property="schema:name" datatype="" content="ben.mcdearmon@cof.org">ben.mcdearmon@…</span></span> <span class="field field--name-created field--type-created field--label-hidden">Mon, 02/04/2019 - 17:05</span> <div class="article-body-wrapper"><div class="container"> <div class="layout row layout-builder__layout"> <div class="col-12"> <div class="extra-field-blocknodeprovus-articlecontent-moderation-control block block-layout-builder block-extra-field-blocknodeprovus-articlecontent-moderation-control"> <div class="content"> </div> </div> <div class="field-blocknodeprovus-articletitle block block-layout-builder block-field-blocknodeprovus-articletitle"> <div class="content"> <h1 class="field field--name-title field--type-string field--label-hidden">International Grantmaking: A Guide for Funders Making Grants Outside the United States</h1> </div> </div> <div class="field-blocknodeprovus-articlebody block block-layout-builder block-field-blocknodeprovus-articlebody"> <div class="content"> <div class="clearfix text-formatted field field--name-body field--type-text-with-summary field--label-hidden field__item"><h2 align="center" class="title"><a href="/page/mastering-foundation-law-council-foundations-compendium-legal-resources">A Chapter in Mastering Foundation Law:<br /> The Council on Foundations Compendium of Legal Resources</a></h2> <p><img alt="International Grantmaking Chapter cover" src="/sites/default/files/documents/files/MFL-international-grantmaking-cover-thumb.jpg" style="width:300px;height:auto;float:right;margin-left:1rem;margin-bottom:1rem;border-radius:1rem;border: 1px solid #DFE2E6;max-width:100%;" title="International Grantmaking Chapter cover" />Making grants to institutions outside of the United States is challenging and rewarding. We hope this revised publication will be a useful resource that encourages grantmakers of all types to expand their grantmaking beyond our borders.</p> <p>The target audience for this chapter includes private foundations, community foundations, and direct corporate-giving programs. Although this chapter occasionally references the individual donor and the laws that affect that donor, we do not make an effort to provide a comprehensive analysis of the rules for individual giving.</p> <p>The overriding objective of this chapter is to dissect and explain the various legal and technical requirements necessary to comply with the U.S. law and regulations concerning grants to non-U.S. organizations. Although these rules tend to inhibit foundations and business corporations from involvement in non-U.S. grantmaking, more and more funders each year are moving into the international arena with success. We hope that this chapter will increase your comfort level for grantmaking to non-U.S. institutions.  </p> <p>This chapter is divided into seven parts:</p> <h3>Part One: The Legal Framework for U.S. Charities and International Activity</h3> <p>The Internal Revenue Code (IRC or Code), the Treasury Regulations (Regulations), and subsequent guidance provides the framework for engagement in international grantmaking by defining charitable activity, outlining rules to obtain a charitable deduction or make grants to non-U.S. organizations, and classifying grantmakers and potential grantees.  We begin with a review of the basics here.</p> <h3>Part Two: IRS-Recognized Charities with Non-U.S. Activities</h3> <p>Given the added administrative details necessary for making grants to organizations not recognized by the IRS, it is understandably tempting to look for an easier method. The most straightforward way to fund charitable activities outside the United States is to make grants to IRS-recognized charities organized in the United States that have active programs outside this country. Our discussion of non-U.S. grantmaking starts with this approach.</p> <h3>Part Three: Corporate Philanthropy and International Giving</h3> <p>Corporate law allows U.S. for-profit corporations to give anything they want to anyone in any place so long as the gift is consistent with a legitimate purpose of that corporation. Corporate law generally prohibits actions considered <em>ultra vires</em>, or beyond legitimate corporate purposes. However, if the corporation wants to make a charitable gift and obtain a charitable tax deduction, there are significant limitations beyond the question of whether or not the gift serves a corporate purpose.</p> <h3>Part Four: International Grantmaking by Public Charities</h3> <p>Some sectors of American philanthropy—churches, for example—have a long tradition of supporting activities in other countries. More and more public charities, including community foundations, are exploring the possibility of expanding their programs and services across international borders. This section provides guidance to public charities that make grants to non-U.S. organizations.</p> <h3>Part Five: International Grantmaking by Private Foundations</h3> <p>This section is designed primarily for private foundations. The information, however, is also valuable to corporations and public charities. Any private foundation formed by a U.S. corporation (a company foundation) must abide by these rules for any grants to non-U.S. organizations; and while public charities are not bound to these rules, they provide useful guidance and relative safety if they are followed closely.</p> <h3>Part Six: Non-Tax Regulation of International Grantmaking</h3> <p>The majority of this chapter focuses on the tax rules imposed on grants sent outside the United States. This Part Six, however, will examine other areas of the law that may affect international grantmaking.</p> <h3>Part Seven: Additional Resources</h3> <hr /> <h2>Accessing this Chapter</h2> <p>As a benefit of Council membership, members can download this chapter for free. Nonmembers of the Council can purchase this chapter of the Legal Compendium in our store for $199.</p> <p><a class="btn btn-arrow btn-default" href="https://account.cof.org/NC__Product?id=a1B2M00000EXPBK" target="_blank">Members Download for Free</a></p> <p><a class="btn btn-arrow btn-default" href="https://account.cof.org/NC__Product?id=a1B2M00000EXPBK" target="_blank">Nonmembers Purchase from Store</a></p> </div> </div> </div> </div> </div> </div></div><div ><div class="container"> <div class="layout row layout-builder__layout"> <div class="col-12"> <div class="fixed-block-contentarticle-staff-block block-provus-heading block block-fixed-block-content block-fixed-block-contentarticle-staff-block"> <div class="center"> <H2 class="title"> <div class="field field--name-field-provus-title field--type-string field--label-hidden field__item">Questions?</div> </H2> <div class="subheading"> <div class="field field--name-field-provus-sub-title field--type-string field--label-hidden field__item">Connect with Council Staff</div> </div> </div> </div> <div class="addtoany-block block block-addtoany block-addtoany-block"> <div class="content"> <span class="a2a_kit a2a_kit_size_32 addtoany_list" data-a2a-url="https://cof.org/taxonomy/term/701/feed" data-a2a-title="Council on Foundations"><span class="a2a-wrapper"><label>Share</label><a href="#" class="a2a_button_facebook"><img src="/themes/custom/cof/images/icons/social-icon-fb.png" border="0" alt="Share on Facebook" width="8" height="15" /></a><a href="#" class="a2a_button_twitter"><img src="/themes/custom/cof/images/icons/social-icon-twitter.png" border="0" alt="Share on Twitter" width="15" height="12" /></a><a href="#" class="a2a_button_linkedin"><img src="/themes/custom/cof/images/icons/social-icon-linkedin.png" border="0" alt="Share on LinkedIn" width="14" height="14" /></a><a class="a2a_dd" href="https://www.addtoany.com/share"><img src="/themes/custom/cof/images/icons/social-icon-sharethis.png" border="0" alt="Share on all" width="14" height="14" /></a></span></span> </div> </div> <div class="field-blocknodeprovus-articlefield-term-by-topic block block-layout-builder block-field-blocknodeprovus-articlefield-term-by-topic"> <div class="content"> <div class="field field--name-field-term-by-topic field--type-entity-reference field--label-hidden field__items"> <div class="field__item">International Giving</div> <div class="field__item">International Grantmaking Regulations</div> </div> </div> </div> </div> </div> </div></div><div ><div class="container"> <div class="layout row layout-builder__layout"> <div class="col-12"> <div class="fixed-block-contentrelated-events block-provus-heading block block-fixed-block-content block-fixed-block-contentrelated-events"> <div class="left"> <H2 class="title"> <div class="field field--name-field-provus-title field--type-string field--label-hidden field__item">Related Events</div> </H2> <div class="subheading"> </div> </div> </div> <div class="fixed-block-contentrelated-resources block-provus-heading block block-fixed-block-content block-fixed-block-contentrelated-resources"> <div class="left"> <H2 class="title"> <div class="field field--name-field-provus-title field--type-string field--label-hidden field__item">Related Resources</div> </H2> <div class="subheading"> </div> </div> </div> </div> </div> </div></div> Mon, 04 Feb 2019 22:05:26 +0000 ben.mcdearmon@cof.org 14281 at https://cof.org Updates on Global Giving and Non-Tax US Regulations that Impact Funders https://cof.org/content/updates-global-giving-and-non-tax-us-regulations-impact-funders <span class="field field--name-title field--type-string field--label-hidden">Updates on Global Giving and Non-Tax US Regulations that Impact Funders</span> <span class="field field--name-uid field--type-entity-reference field--label-hidden"><span lang="" about="/users/kelseygerbercoforg" typeof="schema:Person" property="schema:name" datatype="" content="kelsey.gerber@cof.org">kelsey.gerber@…</span></span> <span class="field field--name-created field--type-created field--label-hidden">Wed, 01/23/2019 - 15:56</span> <div class="article-body-wrapper"><div class="container"> <div class="layout row layout-builder__layout"> <div class="col-12"> <div class="extra-field-blocknodeprovus-articlecontent-moderation-control block block-layout-builder block-extra-field-blocknodeprovus-articlecontent-moderation-control"> <div class="content"> </div> </div> <div class="field-blocknodeprovus-articletitle block block-layout-builder block-field-blocknodeprovus-articletitle"> <div class="content"> <h1 class="field field--name-title field--type-string field--label-hidden">Updates on Global Giving and Non-Tax US Regulations that Impact Funders</h1> </div> </div> <div class="field-blocknodeprovus-articlefield-news-subhead block block-layout-builder block-field-blocknodeprovus-articlefield-news-subhead"> <div class="content"> <h2 class="field field--name-field-news-subhead field--type-string field--label-hidden article-subheading">Webinar Recording</h2> </div> </div> <div class="field-blocknodeprovus-articlebody block block-layout-builder block-field-blocknodeprovus-articlebody"> <div class="content"> <div class="clearfix text-formatted field field--name-body field--type-text-with-summary field--label-hidden field__item"><div class="embed-responsive embed-responsive-16by9"> <p><iframe allow="accelerometer; autoplay; encrypted-media; gyroscope; picture-in-picture" allowfullscreen="" frameborder="0" height="315" src="https://www.youtube.com/embed/F3EInGxtIxE?start=75" width="560"></iframe></p> </div> <p> </p> <p>If you have any questions, pleae email <a href="mailto:legal@cof.org">legal@cof.org</a>.</p> <p>Topics included regulations like the Foreign Agent Registration Act (FARA), Foreign Corrupt Practices Act (FCPA), US Treasury’s voluntary anti-terrorism guidelines and more.</p> </div> </div> </div> </div> </div> </div></div><div ><div class="container"> <div class="layout row layout-builder__layout"> <div class="col-12"> <div class="fixed-block-contentarticle-staff-block block-provus-heading block block-fixed-block-content block-fixed-block-contentarticle-staff-block"> <div class="center"> <H2 class="title"> <div class="field field--name-field-provus-title field--type-string field--label-hidden field__item">Questions?</div> </H2> <div class="subheading"> <div class="field field--name-field-provus-sub-title field--type-string field--label-hidden field__item">Connect with Council Staff</div> </div> </div> </div> <div class="addtoany-block block block-addtoany block-addtoany-block"> <div class="content"> <span class="a2a_kit a2a_kit_size_32 addtoany_list" data-a2a-url="https://cof.org/taxonomy/term/701/feed" data-a2a-title="Council on Foundations"><span class="a2a-wrapper"><label>Share</label><a href="#" class="a2a_button_facebook"><img src="/themes/custom/cof/images/icons/social-icon-fb.png" border="0" alt="Share on Facebook" width="8" height="15" /></a><a href="#" class="a2a_button_twitter"><img src="/themes/custom/cof/images/icons/social-icon-twitter.png" border="0" alt="Share on Twitter" width="15" height="12" /></a><a href="#" class="a2a_button_linkedin"><img src="/themes/custom/cof/images/icons/social-icon-linkedin.png" border="0" alt="Share on LinkedIn" width="14" height="14" /></a><a class="a2a_dd" href="https://www.addtoany.com/share"><img src="/themes/custom/cof/images/icons/social-icon-sharethis.png" border="0" alt="Share on all" width="14" height="14" /></a></span></span> </div> </div> <div class="field-blocknodeprovus-articlefield-term-by-topic block block-layout-builder block-field-blocknodeprovus-articlefield-term-by-topic"> <div class="content"> <div class="field field--name-field-term-by-topic field--type-entity-reference field--label-hidden field__items"> <div class="field__item">International Giving</div> <div class="field__item">International Grantmaking Regulations</div> </div> </div> </div> </div> </div> </div></div><div ><div class="container"> <div class="layout row layout-builder__layout"> <div class="col-12"> <div class="fixed-block-contentrelated-events block-provus-heading block block-fixed-block-content block-fixed-block-contentrelated-events"> <div class="left"> <H2 class="title"> <div class="field field--name-field-provus-title field--type-string field--label-hidden field__item">Related Events</div> </H2> <div class="subheading"> </div> </div> </div> <div class="fixed-block-contentrelated-resources block-provus-heading block block-fixed-block-content block-fixed-block-contentrelated-resources"> <div class="left"> <H2 class="title"> <div class="field field--name-field-provus-title field--type-string field--label-hidden field__item">Related Resources</div> </H2> <div class="subheading"> </div> </div> </div> </div> </div> </div></div> Wed, 23 Jan 2019 20:56:09 +0000 kelsey.gerber@cof.org 14246 at https://cof.org Call Recording: New Chinese Laws Regulating Domestic Charities and International NGOs: What do you need to know? https://cof.org/content/call-recording-new-chinese-laws-regulating-domestic-charities-and-international-ngos-what <span class="field field--name-title field--type-string field--label-hidden">Call Recording: New Chinese Laws Regulating Domestic Charities and International NGOs: What do you need to know?</span> <span class="field field--name-uid field--type-entity-reference field--label-hidden"><span lang="" about="/users/stormegraycoforg" typeof="schema:Person" property="schema:name" datatype="">storme.gray@cof.org</span></span> <span class="field field--name-created field--type-created field--label-hidden">Thu, 05/12/2016 - 10:10</span> <div class="article-body-wrapper"><div class="container"> <div class="layout row layout-builder__layout"> <div class="col-12"> <div class="extra-field-blocknodeprovus-articlecontent-moderation-control block block-layout-builder block-extra-field-blocknodeprovus-articlecontent-moderation-control"> <div class="content"> </div> </div> <div class="field-blocknodeprovus-articletitle block block-layout-builder block-field-blocknodeprovus-articletitle"> <div class="content"> <h1 class="field field--name-title field--type-string field--label-hidden">Call Recording: New Chinese Laws Regulating Domestic Charities and International NGOs: What do you need to know?</h1> </div> </div> <div class="field-blocknodeprovus-articlebody block block-layout-builder block-field-blocknodeprovus-articlebody"> <div class="content"> <div class="clearfix text-formatted field field--name-body field--type-text-with-summary field--label-hidden field__item"><div class="col-sm-10"><a class="btn btn-default btn-block btn-arrow" href="http://web.cof.org/docs/Track1-ID273633412.mp3">Download the Recording</a></div> <p>In 2015, the Council and ICNL <a href="/content/call-summary-chinas-draft-law-management-ngos-and-foundations">convened foundations</a> to discuss how a draft Foreign NGO law in China might impact their work. The Council also <a href="/content/council-submits-comments-chinese-overseas-ngo-management-legislation">submitted formal comments</a> about concerns with this law to the Chinese government.</p> <p>In mid-March 2016, China approved the long-awaited domestic charity law, following more than ten years of work with governments, nonprofits, and donors to strengthen regulation of nonprofits in China. In late April 2016, the Chinese government also approved a new Overseas NGO law.</p> <p>This conference call was an opportunity for funders working in China to hear updates on both the domestic charity and overseas NGO laws in China and ask questions about how it may impact their work. Professor Sidel of ICNL, who has worked with foundations, NGOs, and other groups in China for more than three decades, describes both laws. Additionally, the U.S.-based Asia Foundation, which has worked in China for decades, shared how the law may impact their grantmaking, programs, and their grantees.</p> <p>Read more about the new laws in <a href="http://www.alliancemagazine.org/blog/china-the-overseas-ngo-management-law-returns-with-a-new-strategy/">Alliance Magazine</a> and <a href="http://foreignpolicy.com/2016/04/29/it-just-got-harder-to-make-a-difference-in-china-harsh-new-ngo-law-clamps-down-on-foreign-organizations/">Foreign Policy</a>. Translations of the Foreign NGO law are available from <a href="http://chinadevelopmentbrief.cn/articles/the-peoples-republic-of-chinas-law-on-the-management-of-the-activities-of-overseas-ngos-within-mainland-china/">China Development Brief</a> and <a href="http://chinalawtranslate.com/2016-foreign-ngo-law/?lang=en">China Law Translate</a>.</p> <h3 align="center"> </h3> <h3 align="center">Speakers</h3> <div align="center" class="row"> <div class="col-sm-3"> <p><img alt="" src="/sites/default/files/mark-sidel_0.jpg" style="width: 150px; height: 150px;" /></p> </div> <div class="col-sm-9" style="vertical-align:center"> <p style="text-align: left; vertical-align:center;"><b>Mark Sidel</b></p> <p style="text-align: left; vertical-align:center;">Doyle-Bascom Professor of Law and Public Affairs, University of Wisconsin-Madison<br /> Consultant (Asia), International Center for Not-for-Profit Law (ICNL) </p> </div> </div> <div align="center" class="row"> <div class="col-sm-3"> <p><img alt="" src="/sites/default/files/suzanne-siskel.JPG" style="width: 150px; height: 150px;" /></p> </div> <div class="col-sm-9" style="vertical-align:center"> <p style="text-align: left;"><b>Suzanne Siskel</b></p> <p style="text-align: left;">Executive Vice President and Chief Operating Officer for The Asia Foundation </p> </div> </div> </div> </div> </div> </div> </div> </div></div><div ><div class="container"> <div class="layout row layout-builder__layout"> <div class="col-12"> <div class="fixed-block-contentarticle-staff-block block-provus-heading block block-fixed-block-content block-fixed-block-contentarticle-staff-block"> <div class="center"> <H2 class="title"> <div class="field field--name-field-provus-title field--type-string field--label-hidden field__item">Questions?</div> </H2> <div class="subheading"> <div class="field field--name-field-provus-sub-title field--type-string field--label-hidden field__item">Connect with Council Staff</div> </div> </div> </div> <div class="addtoany-block block block-addtoany block-addtoany-block"> <div class="content"> <span class="a2a_kit a2a_kit_size_32 addtoany_list" data-a2a-url="https://cof.org/taxonomy/term/701/feed" data-a2a-title="Council on Foundations"><span class="a2a-wrapper"><label>Share</label><a href="#" class="a2a_button_facebook"><img src="/themes/custom/cof/images/icons/social-icon-fb.png" border="0" alt="Share on Facebook" width="8" height="15" /></a><a href="#" class="a2a_button_twitter"><img src="/themes/custom/cof/images/icons/social-icon-twitter.png" border="0" alt="Share on Twitter" width="15" height="12" /></a><a href="#" class="a2a_button_linkedin"><img src="/themes/custom/cof/images/icons/social-icon-linkedin.png" border="0" alt="Share on LinkedIn" width="14" height="14" /></a><a class="a2a_dd" href="https://www.addtoany.com/share"><img src="/themes/custom/cof/images/icons/social-icon-sharethis.png" border="0" alt="Share on all" width="14" height="14" /></a></span></span> </div> </div> <div class="field-blocknodeprovus-articlefield-term-by-topic block block-layout-builder block-field-blocknodeprovus-articlefield-term-by-topic"> <div class="content"> <div class="field field--name-field-term-by-topic field--type-entity-reference field--label-hidden field__items"> <div class="field__item">International Grantmaking Regulations</div> </div> </div> </div> </div> </div> </div></div><div ><div class="container"> <div class="layout row layout-builder__layout"> <div class="col-12"> <div class="fixed-block-contentrelated-events block-provus-heading block block-fixed-block-content block-fixed-block-contentrelated-events"> <div class="left"> <H2 class="title"> <div class="field field--name-field-provus-title field--type-string field--label-hidden field__item">Related Events</div> </H2> <div class="subheading"> </div> </div> </div> <div class="fixed-block-contentrelated-resources block-provus-heading block block-fixed-block-content block-fixed-block-contentrelated-resources"> <div class="left"> <H2 class="title"> <div class="field field--name-field-provus-title field--type-string field--label-hidden field__item">Related Resources</div> </H2> <div class="subheading"> </div> </div> </div> </div> </div> </div></div> Thu, 12 May 2016 14:10:11 +0000 storme.gray@cof.org 8191 at https://cof.org Call Summary: Challenges and Opportunites for Grantmaking in Mexico https://cof.org/content/call-summary-challenges-and-opportunites-grantmaking-mexico <span class="field field--name-title field--type-string field--label-hidden">Call Summary: Challenges and Opportunites for Grantmaking in Mexico</span> <span class="field field--name-uid field--type-entity-reference field--label-hidden"><span lang="" about="/users/natalierosscoforg" typeof="schema:Person" property="schema:name" datatype="">natalie.ross@cof.org</span></span> <span class="field field--name-created field--type-created field--label-hidden">Wed, 07/08/2015 - 12:50</span> <div class="article-body-wrapper"><div class="container"> <div class="layout row layout-builder__layout"> <div class="col-12"> <div class="extra-field-blocknodeprovus-articlecontent-moderation-control block block-layout-builder block-extra-field-blocknodeprovus-articlecontent-moderation-control"> <div class="content"> </div> </div> <div class="field-blocknodeprovus-articletitle block block-layout-builder block-field-blocknodeprovus-articletitle"> <div class="content"> <h1 class="field field--name-title field--type-string field--label-hidden">Call Summary: Challenges and Opportunites for Grantmaking in Mexico</h1> </div> </div> <div class="field-blocknodeprovus-articlebody block block-layout-builder block-field-blocknodeprovus-articlebody"> <div class="content"> <div class="clearfix text-formatted field field--name-body field--type-text-with-summary field--label-hidden field__item"><p>As part of the Council’s <a href="/content/global-philanthropy">global philanthropy program</a>, this members-only <a href="/content/challenges-and-opportunities-grantmaking-mexico">conference call</a> on July 1, 2015 provided an overview on policy developments in Mexico that are impacting the flow of U.S. philanthropy into the country. On the call, expert speakers delved into the implications for funders of a new anti-money laundering law, changes to the Mexican tax code, and the consequences of the U.S.-Mexico trade agreement. Foundation leaders also explained how they navigate the changed regulatory environment and highlighted a range of new resources on grantmaking in Mexico.</p> <p class="field-content link-more"><a href="/content/call-recording-challenges-and-opportunites-grantmaking-mexico">Members, Download the Recording of the Call</a></p> <h2>Call Summary</h2> <p>Michael Layton from the<strong> </strong><strong><a href="http://www.filantropia.itam.mx/index.html">Instituto Tecnológico Autónomo de México (ITAM) </a></strong>spoke to the state of civil society in Mexico, the legal and regulatory history and atmosphere for grantmaking in Mexico, and what grantmaking organizations are doing to adapt to recent challenges. Layton explained that Mexican civil society faces a number of challenges: it is underdeveloped, lacks infrastructure and visibility, and there is public distrust of the sector. These two factors have two consequences: informality in giving among Mexicans (80% of Mexicans would prefer to give<strong> directly</strong> to individuals, as opposed to 16% who would prefer to give to organizations) and government inexperience and limited knowledge with the philanthropic sector.</p> <p>Fortunately, Mexico continues to democratize and a growing middle class has increased local expectations of accountability, which has led several accrediting agencies to issue “grades” to organizations. Thanks in part to the efforts of U.S. foundations such as Charles Stewart Mott and Inter-American Foundation, Layton expressed optimism that a growing number of community foundations are appearing in Mexico. Additionally, corporate philanthropy is increasing and a growing population of wealthy Mexican philanthropists are contributing to a positive institutionalization of philanthropy.</p> <p>Marc Owens from Loeb &amp; Loeb discussed the reform of the <a href="http://www.bakermckenzie.com/RRMexico2010TaxReform/">Mexican Income Tax Law</a> in 2010. Owens flagged concerns about the relationship between the tax law and a <a href="http://www.irs.gov/pub/irs-trty/mexico.pdf">U.S.-Mexico Tax Treaty</a> that allows U.S. grantmakers to fund Mexican Article 70-B charities as if they were 501(c)(3) organizations. The 2010 law shifted articles within the tax code and has created confusion over which Mexican charities may still be treated as equivalent to U.S. 501(c)(3) organizations for grantmaking purposes. He explained that the full implications of this law are still unclear and that many organizations are still struggling to comply.</p> <p>Owens also discussed a <a href="http://www.dof.gob.mx/nota_detalle.php?codigo=5273403&amp;fecha=17/10/2012">2013 anti-money laundering law</a> designed to stem the amount of money laundered in Mexico. This law helped improve the score given to Mexico by the <a href="http://www.fatf-gafi.org/">Financial Action Task Force (FATF),</a> an intergovernmental organization tasked with reducing money laundering and terrorist funding worldwide. To align with FATF recommendations, Mexico included in the law strict oversight requirements for all “suspect” or “vulnerable” financial transactions. Recipients of “vulnerable” transactions, which include grants made to NGOs, must now regularly provide extensive documentation to the federal government, which includes some personal pieces of information that funders may not want to submit to a foreign government. The burden lies on the grantee to collect this information for the Ministry of Finance, which is challenging because non-compliance could result in fines that can easily cripple small nonprofits. It is also important that funders understand what is needed in order to help their grantees comply with the new law. Earlier this year, the<strong> </strong>Council on Foundations<strong> </strong>reached out to the U.S. Treasury Department to offer to convene Treasury and Mexican Ministry of Finance officials to discuss solutions for these problems grantmakers face in Mexico <a href="/sites/default/files/documents/files/FINAL%20international%20issues.pdf">(see pg. 5 &amp; 6 here)</a> and will continue to work with government officials to try and improve the situation. </p> <p>Windy Lopez-Afflito from the <a href="http://about.americanexpress.com/csr/">American Express Foundation</a> and Joshua Mintz and Sharon Bissell Sotelo from the <a href="http://www.macfound.org/tags/mexico/">MacArthur Foundation</a><b> </b>discussed the ways in which their organizations are navigating this complex regulatory landscape in Mexico.</p> <p>The MacArthur Foundation is working with their grantees to comply with the law by providing the new information required under the anti-money laundering legislation. The foundation has also worked with other grantmakers, including the Ford Foundation, Open Society Foundations, Fund for Global Human Rights, William and Flora Hewlett Foundation, and Sociedad Mexicana Pro Derechos de la Mujer (Semillas) over the last six months to produce a guide that can help grantmakers continue to do philanthropic work in Mexico, as well as support grantees to better understand what is required of them by the law (see ** links below with guide in both English and Spanish). Less than a third of the organizations in the region supported by MacArthur have requested the required institutional information necessary for compliance with the law, so there continues to be concerns about whether Mexican CSOs are aware of the law and able to comply. </p> <p>American Express has been funding overseas for more than 150 years, including in Mexico. In response to the new legislation, they are now using a grantmaking intermediary to facilitate their Mexican grantmaking and ensure they can continue to support a robust grantmaking program into Mexico. Windy explained the range of strategic decisions around selecting an intermediary, once AmEx decided that the new legislation meant they would no longer make grants directly into Mexico. They considered a range of questions including looking at past experience working in the region, intermediaries' understanding of and effectiveness in Latin America, level of efficiency, and reputation. Other funders interested in working with an intermediary can see a list below of possible intermediaries who can help funders continue to work in Mexico, if they are unwilling or unable to comply with the new regulatory requirements. </p> <h2>Additional Resources </h2> <ul> <li><a href="/sites/default/files/documents/files/ENGLISH%20Gu%C3%ADa%20de%20cumplimiento%20OSCs%20para%20la%20LFIPORPI%20-%20Marzo%202015%20-%20FINAL_INGLES.pdf">** </a><a href="/sites/default/files/documents/files/ENGLISH%20Gu%C3%ADa%20de%20cumplimiento%20OSCs%20para%20la%20LFIPORPI%20-%20Marzo%202015%20-%20FINAL_INGLES.pdf">Guide for CSOs for Compliance with Anti-Money Laundering Law in Mexico (English) </a></li> <li><a href="/sites/default/files/documents/files/ESP%20-%20Gu%C3%ADa%20de%20cumplimiento%20OSCs%20para%20la%20LFIPORPI%20-%20Marzo%202015%20-%20FINAL.pdf">** </a><a href="/sites/default/files/documents/files/ESP%20-%20Gu%C3%ADa%20de%20cumplimiento%20OSCs%20para%20la%20LFIPORPI%20-%20Marzo%202015%20-%20FINAL.pdf">Guía para las Organizaciones de la Sociedad Civil sobre el cumplimiento de sus obligaciones en materia de prevención de lavado de dinero (Spanish) </a></li> <li><a href="/content/mexico">COF's Mexico Country Note</a></li> <li><a href="https://s3.amazonaws.com/media.hudson.org/files/publications/2015.Index.of.Philanthropic.Freedom.Mexico.pdf">Philanthropic Freedom Report: Mexico</a><a href="http://s3.amazonaws.com/media.hudson.org/files/publications/2015.Index.of.Philanthropic.Freedom.Mexico.pdf"> - by the Hudson Institute </a></li> <li><a href="http://cpl.hks.harvard.edu/files/cpl/files/hauser_-_ubs_mexico.pdf">From Prosperity to Purpose: Perspectives on Philanthropy and Social Investment among Wealthy Individuals in Latin America – by the Hauser Institute and UBS</a></li> <li><a href="http://www.icnl.org/research/monitor/mexico.html">NGO Law Monitor: Mexico – by the International Center for Not-for-profit Law</a></li> <li><a href="http://www.cafamerica.org/giving-securely-in-mexico/">Giving Securely in Mexico – an article by the Charities Aid Foundation of America</a></li> </ul> <h2>Possible Intermediaries </h2> <p>For more information about possible intermediaries working in Mexico, please reach out to the following COF members and partners:</p> <ul> <li><a href="http://borderpartnership.org/">Border Philanthropy Project</a></li> <li><a href="http://www.cafamerica.org/">CAF America</a></li> <li><a href="http://www.globalgiving.org/">Global Giving</a></li> <li><a href="http://www.iaf.gov/">Inter-American Foundation</a></li> <li><a href="http://www.icfdn.org/index.php">International Community Foundation</a></li> <li><a href="http://www.ngosource.org/">NGO Source</a></li> <li><a href="http://resourcefnd.org/">Resource Foundation</a></li> <li><a href="http://www.siliconvalleycf.org/">Silicon Valley Community Foundation</a></li> <li><a href="http://www.usmexicofound.org/">US-Mexico Foundation</a></li> </ul> </div> </div> </div> </div> </div> </div></div><div ><div class="container"> <div class="layout row layout-builder__layout"> <div class="col-12"> <div class="fixed-block-contentarticle-staff-block block-provus-heading block block-fixed-block-content block-fixed-block-contentarticle-staff-block"> <div class="center"> <H2 class="title"> <div class="field field--name-field-provus-title field--type-string field--label-hidden field__item">Questions?</div> </H2> <div class="subheading"> <div class="field field--name-field-provus-sub-title field--type-string field--label-hidden field__item">Connect with Council Staff</div> </div> </div> </div> <div class="addtoany-block block block-addtoany block-addtoany-block"> <div class="content"> <span class="a2a_kit a2a_kit_size_32 addtoany_list" data-a2a-url="https://cof.org/taxonomy/term/701/feed" data-a2a-title="Council on Foundations"><span 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field--type-entity-reference field--label-hidden field__items"> <div class="field__item">International Grantmaking Regulations</div> </div> </div> </div> </div> </div> </div></div><div ><div class="container"> <div class="layout row layout-builder__layout"> <div class="col-12"> <div class="fixed-block-contentrelated-events block-provus-heading block block-fixed-block-content block-fixed-block-contentrelated-events"> <div class="left"> <H2 class="title"> <div class="field field--name-field-provus-title field--type-string field--label-hidden field__item">Related Events</div> </H2> <div class="subheading"> </div> </div> </div> <div class="fixed-block-contentrelated-resources block-provus-heading block block-fixed-block-content block-fixed-block-contentrelated-resources"> <div class="left"> <H2 class="title"> <div class="field field--name-field-provus-title field--type-string field--label-hidden field__item">Related Resources</div> </H2> <div class="subheading"> </div> </div> </div> </div> </div> </div></div> Wed, 08 Jul 2015 16:50:23 +0000 natalie.ross@cof.org 5421 at https://cof.org Webinar Recording: Cross-Border Philanthropy Regulations and Current Challenges https://cof.org/content/webinar-recording-cross-border-philanthropy-regulations-and-current-challenges <span class="field field--name-title field--type-string field--label-hidden">Webinar Recording: Cross-Border Philanthropy Regulations and Current Challenges</span> <span class="field field--name-uid field--type-entity-reference field--label-hidden"><span lang="" about="/users/council-webteam" typeof="schema:Person" property="schema:name" datatype="">council-webteam</span></span> <span class="field field--name-created field--type-created field--label-hidden">Thu, 03/12/2015 - 15:35</span> <div class="article-body-wrapper"><div class="container"> <div class="layout row layout-builder__layout"> <div class="col-12"> <div class="extra-field-blocknodeprovus-articlecontent-moderation-control block block-layout-builder 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href="http://www.cof.org/sites/default/files/documents/files/Cross-Border-Philanthropy-Webinar-SLIDES.pdf">slides from this webinar</a>.</p> </div> </div> </div> </div> </div> </div></div><div ><div class="container"> <div class="layout row layout-builder__layout"> <div class="col-12"> <div class="fixed-block-contentarticle-staff-block block-provus-heading block block-fixed-block-content block-fixed-block-contentarticle-staff-block"> <div class="center"> <H2 class="title"> <div class="field field--name-field-provus-title field--type-string field--label-hidden field__item">Questions?</div> </H2> <div class="subheading"> <div class="field field--name-field-provus-sub-title field--type-string field--label-hidden field__item">Connect with Council Staff</div> </div> </div> </div> <div class="addtoany-block block block-addtoany block-addtoany-block"> <div class="content"> <span class="a2a_kit a2a_kit_size_32 addtoany_list" data-a2a-url="https://cof.org/taxonomy/term/701/feed" 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class="subheading"> </div> </div> </div> </div> </div> </div></div> Thu, 12 Mar 2015 19:35:42 +0000 council-webteam 4536 at https://cof.org Sample Foreign Grant Expenditure Responsibility Letter https://cof.org/content/sample-foreign-grant-expenditure-responsibility-letter <span class="field field--name-title field--type-string field--label-hidden">Sample Foreign Grant Expenditure Responsibility Letter</span> <span class="field field--name-uid field--type-entity-reference field--label-hidden"><span lang="" about="/users/council-webteam" typeof="schema:Person" property="schema:name" datatype="">council-webteam</span></span> <span class="field field--name-created field--type-created field--label-hidden">Sun, 11/17/2013 - 16:45</span> <div class="article-body-wrapper"><div class="container"> <div class="layout row layout-builder__layout"> <div class="col-12"> <div class="extra-field-blocknodedocumentcontent-moderation-control block block-layout-builder block-extra-field-blocknodedocumentcontent-moderation-control"> <div class="content"> </div> </div> <div class="field-blocknodedocumenttitle block block-layout-builder block-field-blocknodedocumenttitle"> <div class="content"> <h1 class="field field--name-title field--type-string field--label-hidden">Sample Foreign Grant Expenditure Responsibility Letter</h1> </div> </div> <div class="field-blocknodedocumentbody block block-layout-builder block-field-blocknodedocumentbody"> <div class="content"> <div class="clearfix text-formatted field field--name-body field--type-text-with-summary field--label-hidden field__item"><p>Sample foreign grant expenditure responsibility letter.</p> <p>This sample document is being provided for informational purposes and is not to be shared without the permission of the Council on Foundations. Use of the sample document does not create an attorney-client relationship, and the information provided is not a substitute for expert legal, tax, or other professional advice tailored to your specific circumstances. The information may not be relied upon for the purposes of avoiding any penalties that may be imposed under the Internal Revenue Code.</p> </div> </div> </div> </div> </div> </div></div><div class="article-body-wrapper document-download"><div class="container"> <div class="layout row layout-builder__layout"> <div class="col-12"> <div class="fixed-block-contentdocument-files block-provus-basic-text block block-fixed-block-content block-fixed-block-contentdocument-files"> <h2 class="title"> <div class="field field--name-field-provus-title field--type-string field--label-hidden field__item">Download Document</div> </h2> </div> <div class="field-blocknodedocumentfield-files block block-layout-builder block-field-blocknodedocumentfield-files"> <div class="content"> <div class="field field--name-field-files field--type-file field--label-hidden field__items"> <div class="field__item"> <span class="file file--mime-application-pdf file--application-pdf"> <a href="/sites/default/files/documents/files/Foreign-Grant-Expenditure-Responsibility-Letter%5B1%5D.pdf" type="application/pdf" title="Foreign-Grant-Expenditure-Responsibility-Letter[1].pdf">Sample Foreign Grant Expenditure Responsibility Letter</a></span> </div> </div> </div> </div> </div> </div> </div></div><div ><div class="container"> <div class="layout row layout-builder__layout"> <div class="col-12"> <div class="fixed-block-contentarticle-staff-block block-provus-heading block block-fixed-block-content block-fixed-block-contentarticle-staff-block"> <div class="center"> <H2 class="title"> <div class="field field--name-field-provus-title field--type-string field--label-hidden field__item">Questions?</div> </H2> <div class="subheading"> <div class="field field--name-field-provus-sub-title field--type-string field--label-hidden field__item">Connect with Council Staff</div> </div> </div> </div> <div class="fixed-block-contentrelated-resources block-provus-heading block block-fixed-block-content block-fixed-block-contentrelated-resources"> <div class="left"> <H2 class="title"> <div class="field field--name-field-provus-title field--type-string field--label-hidden field__item">Related Resources</div> </H2> <div class="subheading"> </div> </div> </div> <div class="fixed-block-contentrelated-events block-provus-heading block block-fixed-block-content block-fixed-block-contentrelated-events"> <div class="left"> <H2 class="title"> <div class="field field--name-field-provus-title field--type-string field--label-hidden field__item">Related Events</div> </H2> <div class="subheading"> </div> </div> </div> </div> </div> </div></div> Sun, 17 Nov 2013 21:45:37 +0000 council-webteam 1189 at https://cof.org How a Private Foundation Can Use "Friends of" Organizations https://cof.org/content/how-private-foundation-can-use-friends-organizations <span class="field field--name-title field--type-string field--label-hidden">How a Private Foundation Can Use &quot;Friends of&quot; Organizations</span> <span class="field field--name-uid field--type-entity-reference field--label-hidden"><span lang="" about="/users/council-webteam" typeof="schema:Person" property="schema:name" datatype="">council-webteam</span></span> <span class="field field--name-created field--type-created field--label-hidden">Wed, 11/13/2013 - 18:03</span> <div class="article-body-wrapper"><div class="container"> <div class="layout row layout-builder__layout"> <div class="col-12"> <div class="extra-field-blocknodeprovus-articlecontent-moderation-control block block-layout-builder block-extra-field-blocknodeprovus-articlecontent-moderation-control"> <div class="content"> </div> </div> <div class="field-blocknodeprovus-articletitle block block-layout-builder block-field-blocknodeprovus-articletitle"> <div class="content"> <h1 class="field field--name-title field--type-string field--label-hidden">How a Private Foundation Can Use &quot;Friends of&quot; Organizations</h1> </div> </div> <div class="field-blocknodeprovus-articlebody block block-layout-builder block-field-blocknodeprovus-articlebody"> <div class="content"> <div class="clearfix text-formatted field field--name-body field--type-text-with-summary field--label-hidden field__item"><p>U.S. private foundations are increasingly involved in international grantmaking. One way for a private foundation to give overseas is to make grants directly to foreign charities. Many U.S. private foundations, however, may want to consider giving overseas indirectly through a "Friends of" organization. In the aftermath of the terrorist attacks of September 11, 2001, and the heightened focus on the fact that overseas grantmaking, like all cross-border transactions, may potentially be diverted for terrorism and money laundering, giving through a "Friends of" organization is an increasingly attractive option.</p> <h3><strong>What is a "Friends of" organization? </strong></h3> <p>The term "Friends of" derives from the fact that the names of so many organizations that support foreign charities begin with these two words. They include organizations such as American Friends of the Louvre, Friends of Foundation de France, and Friends of China Heritage Fund, as well as hundreds of other organizations which do not have names beginning with these two words, such as Doctors Without Borders/Medecins Sans Frontieres. The "Friends of" organization is almost always a U.S. nonprofit corporation.<a href="#_ftn2" name="_ftnref2" id="_ftnref2">[2]</a> It can be classified as a public charity or as a private foundation. A private foundation donor will prefer to give to a "Friends of" organization classified as a public charity in order to avoid having to perform expenditure responsibility (which is required for grants to other private foundations and for grants directly to foreign organizations).<a href="#_ftn3" name="_ftnref3" id="_ftnref3">[3]</a></p> <p>A "Friends of" organization generally exists to provide federal tax deductibility for charitable contributions to support a foreign charity by breaking a "conduit" flow of funds to the foreign charity.<a href="#_ftn4" name="_ftnref4" id="_ftnref4">[4]</a> While a private foundation has no need of tax deductibility pursuant to Section 170, it may wish to work with a "Friends of" organization to make international grants with greater administrative ease and efficiency. Unlike a direct grant to a foreign charity, a grant to a "Friends of" organization that is classified as a public charity will not require an equivalency determination or the exercise of expenditure responsibility.<a href="#_ftn5" name="_ftnref5" id="_ftnref5">[5]</a> Also, as it works continuously with its foreign partner organization, the "Friends of" organization may have a greater ability than the private foundation donor to conduct due diligence on the grantee, oversee the grant, and obtain reports on fund use—and to do so at a lower cost.</p> <p>Private foundations must also avoid earmarking of grants <a href="#_ftn6" name="_ftnref6" id="_ftnref6">[6]</a> and are thus interested in the proper governance and operations of a "Friends of" organization. The Internal Revenue Service (the "IRS") has approved two structures, which provide models for two distinct types of "Friends of" organizations.<a href="#_ftn7" name="_ftnref7" id="_ftnref7">[7]</a> The first type of organization makes grants to a foreign charity, and the second actually controls the operations of the foreign charity. In either case, the structure will succeed or fail on the U.S. charity's exercise and documentation of "discretion and control."</p> <h3><strong>Discretion and Control</strong></h3> <p><strong><em>Directors</em></strong>. The IRS has noted the importance of the "Friends of" organization having directors who are U.S. citizens and who are not acting on behalf of the supported foreign charity.<a href="#_ftn8" name="_ftnref8" id="_ftnref8">[8]</a> Based on our experience in seeking and maintaining tax-exempt status for these groups, we believe that the IRS generally requires a majority of directors to be U.S. citizens who are not affiliated with the foreign charity.<a href="#_ftn9" name="_ftnref9" id="_ftnref9">[9]</a> Board composition may be one of the most difficult issues in setting up a "Friends of" organization unless the foreign charity understands U.S. law. Counsel must disclose in the application for tax exemption (i) the number of directors that are U.S. citizens or residents and their percentage of the entire Board of Directors, (ii) whether the directors are subject to voting or other restrictions, and (iii) whether the directors are also directors, officers, or employees of the foreign charity. It is also important to take into account any state conflict-of-interest rules and watchdog agencies' rules about disclosure and eligibility to vote on grants to an organization of which a director is a director, officer, or employee. These rules may necessitate having a certain number of directors who are not affiliated with the foreign charity.</p> <p><em><strong>Grants for Specific Projects.</strong></em> The models approved by the IRS require the "Friends of" organization to fund specific projects of the foreign charity. In contrast, disapproved models have the organization remitting net proceeds of fundraising campaigns or "receiv[ing] contributions and send[ing] them at convenient intervals to the foreign organization," which could be interpreted to prohibit general operating support grantmaking. The IRS has held that a charity had to know, in advance of making a grant, what the foreign charity would do with the funds.<a href="#_ftn10" name="_ftnref10" id="_ftnref10">[10]</a> The problem with general operating support grants is that the "Friends of" organization cedes expenditure control to the foreign charity. Therefore, we strongly recommend that grants be made either for the activities described in a grant application or for administrative expenses (salaries, rent, utilities, etc.) of the foreign charity.</p> <p><em><strong>Promises that Kill Discretion and Control.</strong></em> A private foundation has no affirmative obligation to investigate a "Friends of" organization's anti-conduit procedures. Nonetheless, a donor private foundation should not request, and the "Friends of" organization must not make, promises that the contribution will absolutely, positively be used overseas as the donor requires. The "Friends of" Board must have the option to say "No" if, for example, the "Friends of" organization becomes aware that the foreign charity is diverting funds or failing to account for funds. An alternative is that a donor could pledge a contribution to the "Friends of" organization contingent upon that organization's preapproval of a specific project. In this way, the contingency would not be satisfied and the funds not due unless the desired project is approved. While the pledge model comes in several varieties and may not be fail-safe, it can be a useful alternative for a donor who wants some level of assurance that a project will be selected for funding but wants to avoid earmarking.</p> <p><strong><em>Preapprove Projects Before Soliciting Funds.</em></strong> In the model approved by the IRS, the "Friends of" organization solicited funds "pursuant to grants previously reviewed and approved by the Board of Directors." This fact pattern has generally been read to create a preapproval requirement before solicitation begins in the United States . This requirement can be met by using the pledge option described above. An alternative is to ask the foreign charity to submit annually its "wish list" of projects for the following fiscal year. The board of directors of the "Friends of" organization can then review and "pre-approve" those projects that they believe will be of greatest interest to U.S. donors. The board can also authorize and conduct fundraising for these projects in cooperation with the foreign charity. Note that the "Friends of" organization should be the solicitor as it, and not the foreign charity, is likely registered to solicit in the 39 states that require registration before charitable solicitation occurs.</p> <p><em><strong>Recordkeeping.</strong></em> The "Friends of" organization should prepare form proposals, form resolutions, form grant contracts, and form reports if necessary to create the required records that discretion and control have been exercised by the U.S. board of directors in proper sequence. Creating a package of form documents also helps the foreign charity to understand better what is expected of it and to avoid misunderstandings or resentment about paperwork. The "Friends of" organization should also create a file for each grant that includes a copy of the board resolution authorizing solicitation, a copy of the resolution authorizing payment of the grant, the grant application and budget from the foreign charity, the grant-award contract, and the annual and/or wrap-up reports.<a href="#_ftn11" name="_ftnref11" id="_ftnref11">[11]</a></p> <h3><strong>Anti-Terrorist Financing Measures</strong></h3> <p>Executive, legislative and regulatory actions taken after September 11, 2001 have increased the need for U.S. private foundations to focus on appropriate due diligence procedures when making grants for use overseas. These actions include Executive Order 13224, which precludes all U.S. persons (including U.S. charities) from dealing with persons designated as associated with terrorism and freezes the property of designated persons within the possession or control of a U.S. person,<a href="#_ftn12" name="_ftnref12" id="_ftnref12">[12]</a> and the USA PATRIOT Act, which, among other things, authorizes the President to identify, investigate, disrupt and dismantle "nontraditional" structures, such as U.S. charities, used by terrorists and their supporters to raise, collect and distribute funds.</p> <p>In addition, in November 2002, the U.S. Treasury Department issued its "Anti-Terrorist Financing Guidelines: Voluntary Best Practices for U.S.-Based Charities" (the "Initial Guidelines") addressing how charities could reduce the likelihood that charitable funds would be diverted to terrorist purposes. In response to the Initial Guidelines, representatives of more than 25 organizations, including umbrella groups such as the Council on Foundations, drafted the <em>Principles of International Charity </em> as an alternative. The "Principles" document lists eight fundamental principles of accountability that guide international work.<a href="#_ftn13" name="_ftnref13" id="_ftnref13">[13]</a> A revised version of the Guidelines (the "Revised Guidelines") was issued on December 2, 2005.<a href="#_ftn14" name="_ftnref14" id="_ftnref14">[14]</a> The Revised Guidelines incorporate some of the concepts enunciated in the Principles. The last section of the Revised Guidelines, entitled "Anti-Terrorist Financing Best Practices," contains recommended steps for charities to take when making grants. When taking these steps, the Revised Guidelines state that "charities should apply a risk-based approach, particularly with respect to foreign recipients due to the increased risks associated with overseas charitable activity." The recommended steps include specific instructions for (1) gathering information about and vetting the foreign organization and the individuals and entities it serves, (2) gathering information about the organization's key employees, (3) reviewing the organization's operating activities, and (4) performing on-site audits.</p> <p>While the Revised Guidelines are voluntary and advocate a risk-based approach, indicating that not all steps are appropriate for every grant or every grantor, they illustrate the type of due diligence the government expects when a U.S. private foundation makes a grant for use overseas. In many cases, a U.S. private foundation may not have the ability or the resources to conduct this due diligence directly. In such a case, making the grant to a well-run "Friends of" organization may be an attractive alternative. The "Friends of" organization, which presumably has close ties to the foreign charity (both operationally and due to a reliance for funding), may be in a better position to conduct ongoing due diligence of the grantee and its use of granted funds. As stated in comments by the ABA Tax Section to the IRS regarding international grantmaking, "[a]lmost all American "Friends of" grantmakers would consider their grants and recipients easier to monitor because of their close ongoing relationships with their grantees and the grantees' reliance on the U.S. funder for critical support."<a href="#_ftn15" name="_ftnref15" id="_ftnref15">[15]</a></p> <h3><strong>Conclusion</strong></h3> <p>A grant to a well-run "Friends of" organization can be an efficient means by which a private foundation can fund an overseas project without having to conduct expenditure responsibility and without directly undertaking an extensive and expensive due diligence investigation of the foreign recipient.</p> <h3><strong>Footnotes</strong></h3> <p><a href="#_ftnref1" name="_ftn1" id="_ftn1">[1]</a> Copyright © 2005 Victoria B. Bjorklund and Jennifer I. Reynoso. This article updates our earlier article on the same topic published in the Fall of 1998.</p> <p><a href="#_ftnref2" name="_ftn2" id="_ftn2">[2]</a> A corporation seeking a corporate income tax deduction for a charitable contribution is also subject to a requirement that the contribution be used exclusively within the United States or its possessions. Section 170(c). (All section references are to the Internal Revenue Code of 1986, as amended). However, a corporate contribution to a charity organized as a corporation avoids this requirement. Rev. Rul. 69-80, 1969-1 C.B. 65. Thus, a "Friends of" organization must be organized as a corporation if it plans to solicit deductible contributions from corporate donors.</p> <p><a href="#_ftnref3" name="_ftn3" id="_ftn3">[3]</a> Section 4945(d)(4).</p> <p><a href="#_ftnref4" name="_ftn4" id="_ftn4">[4]</a> An individual or a corporation will not be eligible to claim a U.S. tax deduction for a direct charitable contribution to a charity organized under foreign law. Section 170(c)(2). Moreover, if a donor makes a gift to a U.S. charity and unconditionally earmarks the gift for a foreign charity, then the gift may be characterized by the IRS as being made to the foreign charity through the U.S. charity acting as a conduit, and no deduction will be allowed. A properly organized and operated "Friends of" organization avoids the conduit problem by having the U.S. board of directors exercise discretion and control over contributions made by U.S. taxpayers.</p> <p><a href="#_ftnref5" name="_ftn5" id="_ftn5">[5]</a> Section 4945(h); Treas. Reg. §53.4945-5(a)(5). For a helpful guide, see John A. Edie and Jane C. Nober, <em>Beyond Our Borders: Making Grants Overseas </em>, 3rd Ed. ( Washington , DC : Council on Foundations, 2003).</p> <p><a href="#_ftnref6" name="_ftn6" id="_ftn6">[6]</a> Treas. Reg. § 53.4945-5(a)(6). As is the case with an individual or a corporation, if a private foundation earmarks a grant, the IRS is free to disregard the intermediary organization and to treat the grant as made directly to the designated group.</p> <p><a href="#_ftnref7" name="_ftn7" id="_ftn7">[7]</a> Rev. Rul. 63-252, 1963-2 C.B. 101.</p> <p><a href="#_ftnref8" name="_ftn8" id="_ftn8">[8]</a> See Rev. Rul. 66-79, 1966-1 C.B. 48.</p> <p><a href="#_ftnref9" name="_ftn9" id="_ftn9">[9]</a> An interesting exception is found in Priv. Ltr. Rul. 9129040 (April 23, 1991), where the IRS granted approval to an organization with seven directors, three of whom had to be approved by the foreign charity, where two of the three had to approve all major decisions. We recommend against relying on this model, especially given the increased scrutiny on grants to foreign organizations since September 11, 2001.</p> <p><a href="#_ftnref10" name="_ftn10" id="_ftn10">[10]</a> GCM 35319 ( April 27, 1973 ). See also Victoria B. Bjorklund and Joanna Pressman, Chapter 10: Cross-Border Philanthropy in <em>Complete Guide to Nonprofit Organizations </em> ( Kingston NJ : Civic Research Institute, 2005) ("existing authority justifies support only for expenditures that have been previously identified and approved by the "American Friends of" organization. However, an "American Friends of" charity may indeed pay for general support in the form of qualifying administrative costs (such as salaries and rent) so long as the expenditures are charitable within the meaning of U.S. federal tax law.")</p> <p><a href="#_ftnref11" name="_ftn11" id="_ftn11">[11]</a> Model forms may be found in Appendix 10.4 to Chapter 10 of Complete Guide to Nonprofit Organizations.</p> <p><a href="#_ftnref12" name="_ftn12" id="_ftn12">[12]</a> In the past, orders similar to EO 13224 exempted donations of food, clothing and medicine intended to be used to relieve human suffering. However, EO 13224 prohibits even these donations.</p> <p><a href="#_ftnref13" name="_ftn13" id="_ftn13">[13]</a> <a href="/content/principles-international-charity-0">Principles of International Charity</a></p> <p><a href="#_ftnref14" name="_ftn14" id="_ftn14">[14]</a> The revised Guidelines may be found <a href="http://www.treasury.gov/offices/enforcement/key-issues/protecting/charities-intro.shtml" target="_blank">here</a> (in PDF)</p> <p><a href="#_ftnref15" name="_ftn15" id="_ftn15">[15]</a>Comments In Response To Internal Revenue Service Announcement 2003-29, 2003-20 I.R.B. 928 Regarding International Grant-Making and International Activities by Domestic 501(c)(3) Organizations, 41 Exempt Org. Tax Rev. 278 (2003).</p> </div> </div> </div> </div> </div> </div></div><div ><div class="container"> <div class="layout row layout-builder__layout"> <div class="col-12"> <div class="fixed-block-contentarticle-staff-block block-provus-heading block block-fixed-block-content block-fixed-block-contentarticle-staff-block"> <div class="center"> <H2 class="title"> <div class="field field--name-field-provus-title field--type-string field--label-hidden field__item">Questions?</div> </H2> <div class="subheading"> <div class="field field--name-field-provus-sub-title field--type-string field--label-hidden field__item">Connect with Council Staff</div> </div> </div> </div> <div class="addtoany-block block block-addtoany block-addtoany-block"> <div class="content"> <span class="a2a_kit a2a_kit_size_32 addtoany_list" data-a2a-url="https://cof.org/taxonomy/term/701/feed" data-a2a-title="Council on Foundations"><span class="a2a-wrapper"><label>Share</label><a href="#" class="a2a_button_facebook"><img src="/themes/custom/cof/images/icons/social-icon-fb.png" border="0" alt="Share on Facebook" width="8" height="15" /></a><a href="#" class="a2a_button_twitter"><img src="/themes/custom/cof/images/icons/social-icon-twitter.png" border="0" alt="Share on Twitter" width="15" height="12" /></a><a href="#" class="a2a_button_linkedin"><img src="/themes/custom/cof/images/icons/social-icon-linkedin.png" border="0" alt="Share on LinkedIn" width="14" height="14" /></a><a class="a2a_dd" href="https://www.addtoany.com/share"><img src="/themes/custom/cof/images/icons/social-icon-sharethis.png" border="0" alt="Share on all" width="14" height="14" /></a></span></span> </div> </div> <div class="field-blocknodeprovus-articlefield-term-by-topic block block-layout-builder block-field-blocknodeprovus-articlefield-term-by-topic"> <div class="content"> <div class="field field--name-field-term-by-topic field--type-entity-reference field--label-hidden field__items"> <div class="field__item">International Grantmaking Regulations</div> </div> </div> </div> </div> </div> </div></div><div ><div class="container"> <div class="layout row layout-builder__layout"> <div class="col-12"> <div class="fixed-block-contentrelated-events block-provus-heading block block-fixed-block-content block-fixed-block-contentrelated-events"> <div class="left"> <H2 class="title"> <div class="field field--name-field-provus-title field--type-string field--label-hidden field__item">Related Events</div> </H2> <div class="subheading"> </div> </div> </div> <div class="fixed-block-contentrelated-resources block-provus-heading block block-fixed-block-content block-fixed-block-contentrelated-resources"> <div class="left"> <H2 class="title"> <div class="field field--name-field-provus-title field--type-string field--label-hidden field__item">Related Resources</div> </H2> <div class="subheading"> </div> </div> </div> </div> </div> </div></div> Wed, 13 Nov 2013 23:03:40 +0000 council-webteam 1075 at https://cof.org