Making grants to organizations outside of the United States is as challenging as it is rewarding. This is due to the numerous legal and technical requirements which inhibit foundations and businesses from involvement in non-U.S. grantmaking. The Council on Foundation’s recently published Beyond our Borders: A Guide to Making Grants Outside of the United States (4th ed.) aims to help philanthropic organizations understand and meet these requirements. It is also a useful guide for international grantseeking organizations, as it can inform their fundraising efforts. In this blog I’ll give a quick tour of the book, which is newly updated and thoroughly revised due to new restrictions aimed at combating terrorism post-9/11, and increased enforcement of international sanctions.
The handbook starts with an overview of the tax code, and then examines grantmaking to IRS-recognized charities with activities outside of the U.S., the most straightforward way to fund non-U.S. charitable programs. The guide then discusses the process of international grantmaking through direct corporate giving programs, public charities, and private foundations. I’ll summarize the book’s advice to private foundations as this may be most pertinent to the Foundation Center’s clientele.
Chapter 6, “Grants by Private Foundations” starts out by listing the best options for making grants to non-U.S. organizations, such as making a grant to a donor-advised fund that works with international charities, or making grants to a “friends of” organization.
The process for making grants to non-U.S. organizations not recognized by the IRS is clearly the most onerous. This section alone is over ten pages and lists the technical and legal requirements that often hinder the involvement of U.S.-based grantmakers. The two primary options for foundations are (1) making an equivalency determination of the potential grantee, or (2) exercising expenditure responsibility, which is easier (in most cases) than completing the equivalency determination. The chapter also looks at grants to governmental units, grants requiring special attention, and concludes with a matrix that outlines the types of non-U.S. organizations a private foundation can and cannot fund, and what granting options are the best for each type.
Multiple appendices contain helpful sample documents (i.e. grant agreements and an affidavit for equivalency determination) and explain in more detail key legal rulings affecting international grantmaking. One appendix includes a list of international organizations designated by executive order, all of which may be treated as public charities--meaning grants may be made to them without special procedures.
While Beyond Our Borders is essentially a legal handbook, it is required reading for those interested in the nuts and bolts of international grantmaking regulations and procedures. It can be found in all Foundation Center libraries under Call Number 330 EDI 2011.
Related publications include Jonathan R. Moore’s A Practical Guide to International Philanthropy (Cambridge, 2010) as well as the Foundation Center’s The Global Role of U.S. Foundations (2010) and our International Grantmaking series.
Foundation Center--New York