When I Was ED for a Family Foundation
Before joining the NGOsource team in 2013, I worked for five years as executive director of a Boston-based family foundation with a lean staff doing international grants. I received an eye-opening education on the challenges facing U.S.-based grantmakers who want to support overseas NGOs.
Tough Choices Faced by Smaller Foundations
In particular, smaller foundations who want to make international grants in amounts of $25,000 or less face difficulties. In most cases, they don’t have specialized staff with expertise in meeting the complex IRS requirements for direct international grants. As a result, they need to rely on outside advisors providing compliance solutions that are generally inefficient and expensive, especially for smaller grants. Options include paying $5,000 to $10,000 to an outside law firm to do an equivalency determination (ED), paying 8% to 15% of the grant amount to an intermediary organization to process the transaction, or taking on the administrative burden of an expenditure responsibility grant.
In my role managing a family foundation, I often found myself having to decline opportunities to provide grants of $10,000 or less to overseas NGOs doing valuable work. The cost of the compliance options was so great that the grant just didn’t make economic sense. It was so discouraging to have to turn away opportunities to help people doing high-impact work even though the family wanted to support them.
NGOsource Lower Cost Options
What excites me most about NGOsource and its ED repository is its potential to make direct international giving accessible to smaller grantmakers providing funding in smaller amounts. NGOsource brings the cost of an ED certificate down to as little as $250 for organizations already in its repository. It's now cost effective for grantmakers with small staffs to do direct international grants as small as $2,500 or $5,000.
In the same way, it's now cost effective for individual donors to recommend smaller international grants through their accounts at donor advised funds that are NGOsource members, such as Schwab Charitable and National Philanthropic Trust.
Vision: Expand the Ability to Give Internationally
By opening up direct international giving to smaller grantmakers and individual donors making grants as small as $2,500, NGOsource has the potential to transform global philanthropy. Donors will no longer have to turn away opportunities to make $10,000 international grants just because the cost of compliance is too high. Overseas NGOs will now be able to access new sources of philanthropic capital in the United States.
The opportunity for so many more philanthropists to have such access is what excites me about being part of the NGOsource team. Our vision for the future is that no donation will ever be turned away, that all will make it into the hands of local NGOs on the ground doing good in the world.
Ken Tsunoda is general manager of NGOsource. Reach out to him anytime at ktsunoda [at] techsoupglobal [dot] org.
►Interested in reading more? See all of Ken’s blog posts.