American Giving Doesn't Stop at a BorderSubmitted by American Endowment Foundation on April 3rd, 2017
By Eric Kinaitis
American donors are a generous bunch. A study last year measured that over $373 billion dollars was donated to charitable causes in 2015. The majority of that, $264 billion, came from individuals giving to the causes important to them.
American generosity is not limited to our geographic borders. Nearly $16 billion dollars was given to international efforts. At American Endowment Foundation (AEF) in 2016, donors gave nearly $7 million in grants to qualified US charities that have field-based initiatives in foreign countries.
The term “qualified US charities” is an important term to keep in mind. For example, if people chose to donate toward providing disaster relief for a country affected by a natural calamity (earthquake, hurricane, etc.), they are likely providing their dollars to a US-based charity who is engaging in specific relief efforts in that country. Donating charitable dollars directly to an organization based in that foreign country can be problematic.
Because the rules and regulations for evaluating whether a foreign-based charity is the “equivalent” to a U.S. public charity are complicated and difficult to satisfy, an donor’s options for international grant making might normally be limited.
However, solutions do exist. Through partnerships with other organizations, such as CAF America and GlobalGiving, donors at AEF who desire to make direct donations to a foreign charity have a path available to them.
In general, that path looks something like this:
- A Grants Administrator will review the grant authorization form from a donor. If they determine that the attempted grant is to a foreign organization, they will attempt to determine if a US-based charity is available to facilitate the grant to the international charity that the donor is recommending.
- If there is a US intermediary, AEF will make the grant to this intermediary for the purpose of funding the intended project.
- If there is no US intermediary found then AEF will enlist the services of vetting firms such as GlobalGiving or CAF America. Such firms have databases of previously vetted foreign organizations. If the intended charity appears in such a database, then AEF will coordinate with the vetting organization to implement the grant.*
- If the intended foreign charity is not in the database, then the vetting organization must engage in what is known as an “equivalency determination.” This is a process (which can take several weeks) whereby an evaluation occurs of the foreign charity to determine if it is the equivalent of a US public charity.*
- If the foreign charity is determined to be an equivalent of a US public charity, then AEF could process the charitable grant.
- If it is determined that the foreign charity is not an equivalent of a US public charity, then the grant could not be made to that specific foreign organization.
For a donor(or their trusted financial advisor who may be assisting them), here are some tips that they can take to help make sure that the foreign charity that they desire to make a grant to will be processed quickly and hopefully approved:
- Include accurate and complete contact information on the grant recommendation form – including a specific contact person at the foreign charity.
- If possible – inform your foreign charity/intended project that you will be recommending the grant and that they should be expecting communication regarding the vetting process and the equivalency determination.
- Due to the fees involved in the vetting process, we advise recommending a grant well over AEF’s $250 minimum grant.
At American Endowment Foundation, helping donors achieve their charitable wishes, regardless if it involves charitable gifts at home or overseas, is of utmost importance. Don’t hesitate to contact or call us at 1-888-660-4508 with any questions about how to use an AEF Donor Advised Fund to build and advance a charitable legacy.
*Specific fees will be charged to a donor’s donor advised fund as part of the vetting process.