In the past, few DAF providers offered their donors an option to recommend grants to NGOs outside the United States. The cost of due diligence to determine if non-U.S. organizations were eligible for grants discouraged DAF providers and their donors. As a result, most donors were limited to 501(c)(3) organizations when giving from their DAF accounts.
DAFs are increasingly hearing from their donor account holders that they want to make grants directly to NGOs outside the United States. And more DAFs are now working with NGOsource as their solution to drastically reduce the cost and complexity of international grantmaking.
Advantages of NGOsource for DAFs
By becoming a member of NGOsource, DAFs gain access to our unique equivalency determination (ED) repository, so they can offer their U.S. donor account holders a cost-effective way to make direct international grants and gain the tax advantages of giving to a U.S public charity.
DAFs that join NGOsource’s ED repository minimize the cost and time required to vet NGOs as equivalent to U.S. public charities. When an NGO is already in our 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 to their donors, and for smaller grants than were possible before. As a result, more U.S.-based donors are now using DAFs to give internationally, while getting the tax benefits of giving to a 501(c)(3) public charity.
What Is NGOsource?
NGOsource launched in March 2013 as a joint project of TechSoup Global and the Council on Foundations. NGOsource helps U.S. foundations and donor advised funds to provide funding to non‑U.S. NGOs through a process called "equivalency determination" or "ED."
ED is a process U.S.-based DAFs can use to meet their tax compliance requirements when they make grants to non-U.S. NGOs recommended by their account holders. When NGOsource performs an ED, we carefully review information about a non-U.S. NGO and 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, account holders can recommend grants to the NGO from their donor-advised accounts with fewer restrictions.
Why Are So Many Leading DAFs Offering Direct International Giving Using NGOsource?
- Centralized ED Repository: NGOsource keeps all of the ED certificates it issues in a central repository. 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.
- Serving the Entire Philanthropic Sector: NGOsource was designed and launched with the support and active engagement of prominent leaders in philanthropy and international grantmaking.
- Lower Cost: It has traditionally cost U.S. grantmakers $5,000 to $10,000 to conduct an ED review. 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 foundations' 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 within one business day. We perform renewals far more quickly than starting the process again from the beginning.
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 him directly at +1 415-633-9328.
►Interested in reading more? See all of NGOsource Team's blog posts.