Donor Advised Funds Can Expand Donors’ Philanthropy Internationally
Donor Advised Funds use NGOsource. NGOsource members are not just foundations. Donor advised funds (DAFs) like Schwab Charitable and National Philanthropic Trust also take advantage of our service.
NGOsource bridges the gap. In the past, few DAF providers offered their donors an option to recommend grants to NGOs based outside the United States. The cost of due diligence to determine if non-U.S. organizations were eligible for grants discouraged DAFs and their donors. As a result, most donors were limited to 501(c)(3) organizations when giving from their DAF accounts.
Easier to fulfill donors’ grant recommendations. Increasingly, DAFs are hearing from their donor account holders that they want to make grants directly to NGOs outside the United States. And more DAFs are now using NGOsource to drastically reduce the cost and complexity of international grantmaking.
Advantages of NGOsource for DAFs
Repository of EDs on non-U.S. NGOs. By becoming a member of NGOsource, DAFs gain access to our unique repository of equivalency determinations (ED) for non-U.S. NGOs. So they are able to offer their U.S. donor account holders a cost-effective way to make direct international grants that have the tax advantages of giving to a U.S. public charity.
Lower cost. Time saver. DAFs that join NGOsource minimize the cost and time required to vet NGOs as equivalent to U.S. public charities. When an NGO is already in our ED repository, members can get these EDs issued in one day for only $250. This cost-effective approach enables more DAFs to offer direct international grantmaking services for the first time, and for smaller grants than were possible before. As a result, more U.S.-based donors are now using DAFs to give internationally and get the tax benefits of giving to a 501(c)(3) public charity.
How NGOsource Works
NGOsource launched in March 2013 as a joint project of TechSoup and the Council on Foundations. NGOsource helps U.S. foundations and donor advised funds provide funding to non‑U.S. NGOs through equivalency determination (ED).
Equivalency determination is a process grantmakers use to meet their tax compliance requirements when they make grants to NGOs based outside the United States. When NGOsource performs an ED, we carefully review information about the non-U.S. NGO to determine if it meets the same standards as a U.S. public charity. If it does, NGOsource issues an ED certificate to the DAF for that NGO. Based on the ED certificate, donor account holders can recommend grants to the NGO from their donor-advised accounts with fewer restrictions.
No need to hire any lawyers, dive into a foreign country’s laws, or deal with governing documents. We do that for you, typically for less. You access all your ED requests and monitor ED reviews by logging in to our secure online portal or speaking to our customer service representatives.
Why Are DAFs Offering Direct International Giving Using NGOsource?
Centralized ED repository — NGOsource keeps all of the equivalency determination (ED) certificates it issues in a central repository, which we access again and again. So when a grantmaker requests an ED for an NGO that has already been certified, NGOsource can issue an ED certificate within one business day for a nominal fee of $250.
This gives all our grantmaker members the benefits of economy of scale — they gain the advantage of a large repository of EDs and our access to ED reviews we’ve already performed. Our centralized information collection minimizes the redundancy of grantmakers doing their own separate ED reviews, increases everyone’s efficiency through specialization, and reduces duplication of efforts across the philanthropic sector.
Standard process reduces risk and burden — We use our same standard ED process every time. This means the DAF doesn’t ever bear the burden of a lengthy, risk-laden determination. NGOs provide the same information using our process each time, rather than duplicative or incongruent data from one grantmaker to the next. So DAFs lower their risk.
Lower cost — U.S. grantmakers typically have spent $5,000 to $10,000 to conduct an ED. With NGOsource, ED costs are reduced to $250 for NGOs already in the repository, and between $1,490 and $1,760 for NGOs not yet certified by NGOsource. This drastic reduction in compliance costs makes more funding available for grantees, and makes it possible for many more U.S. foundations and DAFs to make international grants.
Fast — The initial ED process can be completed in four to six weeks. After the NGO has gone through the process once, we can reissue an active ED certificate to another grantmaker or DAF within one business day for $250.
Serving the entire philanthropic sector — NGOsource was designed and launched with the support and active engagement of prominent leaders in philanthropy and international grantmaking, including the Council on Foundations and TechSoup as well as a distinguished advisory council and funders and supporters. We centralize, standardize, and streamline the ED process to benefit international giving as a whole and the entire philanthropic community. Our system brings diverse efforts together, so the entire community benefits from this sharing model.
How Do We Get Started?
Ken Tsunoda, our general manager, can answer any questions you may have about NGOsource. Reach out to him anytime at ktsunoda [at] techsoupglobal [dot] org, or call us at +1 855-646-7723.