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Putting Your Gifts and Grants to Work Overseas

May 2003

In the years following September 11, international grantmaking has become more necessary than ever—and ever more difficult.

Interest in international grantmaking is on the rise. According to the 2002 "Giving USA" survey of philanthropic activity published by the American Association of Fundraising Counsel (www.aafrc.org), donations to U.S. nonprofit organizations involved in international affairs rose by almost 10 percent last year to $4.6 billion, while total charitable giving essentially remained flat.

A host of hot spots overseas are drawing attention and donations today, most notably reconstruction in Afghanistan, continued conflict in the Middle East, and other high profile targets for charitable relief and development support. In addition to providing much needed relief, donors to international causes may be acting on another realization: that in a globalized world of interconnectivity, the borders separating international and domestic stability, peace and prosperity are blurring. In today's world, it is not uncommon for the problems of others to unexpectedly become our own. September 11 is a dramatic example of this, though there are others, including the recent SARS epidemic, which has reached as far from China as Toronto, Canada.

Yet as the needs and reasons for international giving and grantmaking have grown, the ease of doing so has not. International financial flows of all kinds have received increased scrutiny in the aftermath of September 11. In addition to the standard challenges of accountability, oversight, due diligence, and accessibility of information on good causes and organizations, newly instituted regulations and guidelines issued by the U.S. government have further complicated international giving.

How to do it yourself and where to find help

Thankfully, there are many options available for those wishing to effectively and securely direct gifts and grants overseas. The alternatives can loosely be sorted into three categories: (1) giving directly, (2) giving to a U.S. nonprofit or faith-based organization working overseas, and (3) using a U.S. intermediary that can "regrant" to local organizations overseas. How you sort through these options depends on how involved you want to be, and how much time and expense you wish to devote to your overseas giving.

Giving directly is the first option, and it may be the most prevalent—millions of dollars in informal remittances are transferred to countries such as Mexico, Vietnam, and the Philippines every year. Many of these gifts are not charitable and support private individuals and families, but many donors also make their charitable gifts this way. However, there is no tax benefit and many complain about a lack of accountability and even the diversion or disappearance of funds.

Direct grantmaking is also an option for those using a private foundation, donor advised fund, or other vehicle for managing their charitable giving. Unfortunately, direct grantmaking is the practice most directly affected by the new regulations and guidelines issued by the U.S. Department of the Treasury. The standards for due diligence, oversight, and reporting on international grants and grantees are rising, complicating a process that has never been as clear as it should be. Excellent resources for grantmakers include: U.S. International Grantmakers, an initiative of the Council on Foundations (COF), which provides "how to" information and documents; and a guide to the legal requirements written by Betsy Adler, partner with Silk, Adler and Colvin (www.silklaw.com), which is available on COF's Web site.

The second way of funding international programs is a very familiar one: you can choose to work with a U.S. nonprofit whose mission includes international programs. These organizations number in the thousands, some of which are household names such as Amnesty International. GuideStar is a good place to start researching these groups. You can enter keywords related to your desired field of interest and geographic region and receive a list of organizations whose interests match yours.

There are a number of advantages to working with U.S.-based international groups. They are organized under U.S. law, and as such they may accept tax deductible donations, and are also accountable to state and federal authorities. It is easy to obtain public information on their history and programs—their annual Form 990 IRS filings are available on GuideStar, and you generally have better access and lines of communication to their staff and directors.

The final option is a hybrid of the first two—working with U.S. intermediary organizations that make regrants and give you access to local, indigenous leaders and organizations overseas. Often these intermediaries are organized by field or geography or both, and include the Global Fund for Women, Global Greengrants, the Charities Aid Foundation, Global Giving, and Give2Asia. Please note that regranting is not limited to these organizations, and all U.S. 501(c)(3) charitable organizations may use grants to effectively fulfill their mission. A good resource for learning about intermediaries, as well as the field in general, is the Global Philanthropy Forum.

Partnering with a grantmaking intermediary to achieve your goals overseas also has its benefits, and in some ways you get the best of both worlds—the tax deductibility, accountability, and resources of a U.S. organization, and the ability to support grants to foreign grantees. By virtue of their international networks and experience, intermediaries provide enhanced accountability, can save you time and money, and give you immediate access to experts who can offer advice if desired. Potential downsides are a loss of direct, hands-on experience, and additional administrative fees, though these charges defray the costs associated with good grantmaking overseas and supporting the intermediary's overall operations and services.

Another 10 percent or better!

Donors and grantmakers to international causes face an exciting set of options. You may choose to go it alone, or you may choose to work through a variety of U.S. partners. Regardless of how you sort through the opportunities, and how much you are able to contribute, you can play a major role in improving people's lives and social conditions on any continent.

International causes still have a long way to go, representing only 1.9 percent of all charitable giving according to the "Giving USA" publication. The total pie of American giving needs to grow, as does the international slice, which will hopefully continue its expansion in 2003 and beyond. And while practical and legal hurdles exist, the philanthropic industry has kept pace. There are many diverse ways of giving internationally, and as the challenges of globalization are shared, through philanthropy the solutions can be too.

Mike Rea, © 2003

Mike Rea is managing director at Give2Asia. He can be reached at mrea@give2asia.org.

About Give2Asia (www.give2asia.org)
Give2Asia, a U.S. nonprofit organization, was established by The Asia Foundation to facilitate charitable giving to Asia. Give2Asia provides services which overcome the common challenges associated with giving overseas, making U.S.-Asia philanthropy convenient, accountable, tax deductible, and most importantly, effective. With a flexible menu of custom giving options, Give2Asia provides individuals, families, corporations, donor advised funds, and foundations with the tools for fulfilling their charitable goals in Asia. Give2Asia is also a registered charity in Canada.