FAQ

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Equivalency Determination

  • ED is expressly available (per U.S. tax law) for non-U.S. organizations that are equivalent to U.S. public charities. NGOsource will also issue legal opinions – similar to EDs – verifying that an organization is a “foreign government agency or instrumentality,” by applying a set of facts and circumstances promulgated by the IRS. For more information on this topic, see our article on government entities.

  • NGOsource is designed for U.S. funders that make grants or distribute funds to a non-U.S. organization that has not received a ruling or determination letter that it is a U.S. public charity. These funders include, but are not necessarily limited to, private foundations, corporate foundations and donation programs, independent foundations, community foundations, donor-advised funds, family foundations, re-granting organizations, philanthropic service providers, "friends of" organizations, U.S. government agencies, public charities and individual donors. Funders use EDs as a means of lessening and/or eliminating restrictions on a non-U.S. organization’s use of funds. 

  • To comply with U.S. tax laws, regulations, and requirements, including avoiding tax penalties, certain U.S. funders (including private foundations) must ensure that their funds are used solely to further their charitable purposes. One way to do this is by making grants to U.S. public charities. Public charities are subject to a thorough evaluation by the U.S. Internal Revenue Service (the “IRS”) to ensure that they are organized and operated exclusively for charitable purposes. In doing so, the IRS looks at the types of support an organization receives and the nature of its activities. While it is possible that some foreign organizations might seek public charity status directly from the IRS, most do not due to the financial and administrative burden associated with this process.

    U.S. funders, including private foundations, can treat a non-U.S. organization as equivalent to a U.S. public charity if the non-U.S. organization goes through the ED process. Once a non-U.S. organization has been certified as the equivalent of a U.S. public charity, a funder may make grants to the non-U.S. organization in the same way it would to a U.S. public charity. This is one very important way that a grantmaker can ensure that its grants to foreign organizations comply with U.S. tax laws without having to go through a more burdensome and time-consuming process called “expenditure responsibility,” or “ER.”

  • An ED is based on a set of detailed information about the organization's operations and finance.  Specifically, a non-U.S. organization is deemed equivalent to a U.S. public charity if it meets this three-prong test:

    1. It is organized like a U.S. public charity;
    2. It is operated like a U.S. public charity; and
    3. It meets certain minimum public support requirements (if required).

    For more information on these concepts, see our LegalEASE blog.

  • Equivalency determination (ED) is a process dictated by U.S. tax law regulations. It permits a U.S. private foundation or donor-advised fund to make a good faith determination that a non-U.S. organization is the equivalent of a U.S. public charity or operating foundation. When using ED, the payment is a “qualifying distribution,” a grant for which expenditure responsibility (ER) is not required. To make this determination, a qualified reviewer collects and analyzes detailed information about a non-U.S. organization’s operations and finances (when required) and, based upon this information, makes a determination about whether the organization is equivalent to a U.S. public charity.  

    Read "What is equivalency determination?" for more details.

The NGO's Experience

  • To help prepare your potential grantees, we encourage you to use the prescreening questions below. It provides a framework to help you assess which organizations are most likely to be ready for the ED process. Please keep in mind, the questions cannot conclusively determine whether an organization will qualify for an ED, but it can serve as a guide for you and the grantee.

    1. Is the organization already registered with the IRS or does it have a U.S. office? Grantmakers can search GuideStar to see if the organization is listed there. EDs are necessary for international organizations. If the organization has a U.S. presence, please contact us for more information to see if an ED is necessary.
    2. Is the applicant an organization, as opposed to a program or project with no formal organizational structure? Applicants must be an organization to qualify.
    3. What is the nature of the applicant’s overall activities? What is its mission and purpose? Applicants must be required to engage primarily in charitable purposes.
    4. Does it seem charitable and/or does it seem to serve the general public?
    5. Does the grantee engage in any activity involving the election of public officials? If they engage in any amount, the applicant will not qualify.
    6. What happens to the organization’s assets upon dissolution?
  • NGOsource currently supports English, Spanish, French, Portuguese, and Mandarin Chinese. We will continue to add other languages in the future, based on international grantmaking trends and on-demand from NGOsource members.

  • U.S. law requires that the NGO's governing documents be in English. NGOsource members and their intended grantees may choose any translation service or method and must cover the costs of the translation themselves. However, translations need not to be official, and NGOs may use Google Translate, DeepL, or any other translation tool available to them.

    As is required by the IRS, NGOsource will conduct its ED review based solely on the translated governing documents provided by the NGO and will not be responsible for verifying the accuracy of the translation. 

  • Once the NGO's staff has completed and submitted its questionnaire, they are not able to go back and edit the responses. If changes need to be made, the NGO's staff should contact NGOsource at accountsupport@ngosource.org.

  • NGOsource will invite the NGO to complete their questionnaire as soon as we receive a Grantmaker ED request in Grantmaker Portal. We never wait for payment to proceed with an ED request. When grantmakers place a request, they will select a deadline, which serves as a guide to NGOsource. The NGO will be asked to complete their questionnaire 2 weeks before the deadline selected. If a grantmaker wishes to give the NGO more time, we recommend selecting a later deadline. This time frame takes into consideration the technological limitations that many NGOs face.

    While completing the questionnaire, the NGO will receive support from both the NGOsource team in San Francisco and the global partner assigned to the NGO. If the NGO needs a deadline extension, we encourage them to reach out to accountsupport@ngosource.org. We are happy to offer more time if necessary.

    During this critical phase, if the NGO is persistently unresponsive, NGOsource will contact the grantmaker to inform them of the situation. We will usually ask the grantmaker to help by reaching out directly to its intended grantee and encourage them to complete the questionnaire.

  • NGOsource always takes all steps possible to help an NGO qualify, including helping them amend governing documents. However, if an NGO cannot be certified, NGOsource will notify the grantmaker. The grantmaker then determines how to handle communication with the NGO about not being found equivalent to a U.S. public charity.

    Where we are unable to certify an NGO as equivalent, grantmakers may consider using the expenditure responsibility (ER) process instead. Although NGOsource does not provide support for the ER process, we will provide information collected from the NGO to support a grantmaker’s pre-grant inquiry for ER.

  • After an ED request is placed, the NGO immediately receives an invitation to log in and complete a questionnaire. The questionnaire primarily consists of yes or no questions about how the NGO is organized and operated. The NGO will also be asked to provide governing documents, such as a constitution, articles of incorporation, or bylaws. They may, depending on the type of organization, also be asked to provide detailed financial information.

    After the NGO submits their questionnaire, NGOsource completes 2 rounds of review. As part of this process, we may reach out to the NGO with additional questions. Most NGOs exchange several emails with NGOsource in order to complete our review.

  • Our goal is always to help as many organizations qualify as possible. We will do everything we can to clarify ED requirements and obtain the necessary information from NGOs, including helping NGOs amend their governing documents where applicable.

    NGOs will be assigned to one of our global partners, who will provide customer support by email and phone and, whenever possible, in the NGO's language. NGOs are also always welcome to reach out directly to our team at accountsupport@ngosource.org. The NGO may also refer to our FAQ for more information about the ED process, deadlines, completing the questionnaire, and the documentation requirements.

ED Certificate and Documentation

  • NGOsource redacts any information that identifies an individual from any country to ensure that we are both complying with the European Union's General Data Protection Regulation (GDPR), and continuing to represent best practices in the field. For this reason, we request that NGOs redact their governing documents so that names and identifying information (photographs, addresses, identification numbers, etc.) are not visible to any third party. In order to make the process as easy as possible for NGOs, we have a resource page on our website explaining how redactions may be achieved in various document types. Once documents are received, our team again combs through them to ensure that all personally identifying information is appropriately redacted before we share the documents with any grantmaker. Fortunately, such personally identifiable information is not relevant to the ED analysis and never appears in the opinion itself. 

    We place the utmost value on the personal information of our members, our NGO beneficiaries, our partners, and everyone who collaborates with NGOsource. Anyone who works with us should feel confident that their information is safe, and that any individual requests for anonymization or redaction will be strictly enforced by our team.

  • Yes. The email listed in Grantmaker Portal will receive email notices well in advance of an ED expiration date. NGOsource recommends that Grantmakers keep contact information up to date so as not to miss these important emails.

    Once the ED Certificate has expired, grantmakers will see an “Expired” status with an option for renewal next to the NGO’s name in the Grantmaker Portal.

  • According to U.S. law, unless the ED is certified and valid at the time of a grantmaker’s grant payment, another grantmaking method will need to be utilized. If the ED Certificate  expires before a grantmaker’s next grant payment, we recommend that the grantmaker request an ED renewal at least 2 months in advance of the next grant payment.

  • Grantmakers may access the governing and financial documents of their grantees via the online Grantmaker Portal. Certain personally identifying information contained in these documents may be redacted to comply with international privacy laws.

  • Unfortunately, no. Each ED Certificate is valid only for the NGOsource member named on the certificate and is not transferable. However, if an ED certification in NGOsource's database is valid at the time of another grantmaker’s request, they can request their own ED certificate for the same NGO for only $250, our ED processing fee for NGOs that are currently certified.

  • A grantmaker only needs an electronic or hard copy of the ED Certificate and accompanying paperwork for legal purposes and regulatory compliance. The certificate is issued in the name of the NGOsource member and is only valid for the grantmaker named on the certificate. The ED information available in the Grantmaker Portal remains accessible even once the ED has expired. Certificates and accompanying documentation are available through the Grantmaker Portal.

  • The validity period is dictated by law and will be clearly shown on the ED Certificate. The validity period for an ED is usually two years from the end of the last fiscal year for which financials are reviewed.

Services and Benefits

  • No. NGOsource focuses on satisfying the legal requirements associated with ED. NGOsource does not evaluate the effectiveness or programmatic quality of the NGO because it is not a legal requirement for ED. Grantmakers should connect with their grantees directly to discuss the programmatic expertise and services they provide and to evaluate their programs.

  • NGOsource prides itself on creating positive grantee experiences.  Our global partners offer superior NGO support, interacting with NGO staff in their own language and during their office hours whenever possible. Additionally, by centralizing the process, NGOs need only complete the ED process once for multiple grantmakers, freeing up time to do important programmatic work.

    In addition, NGOsource only works on EDs, all day, every day. We excel at helping NGOs meet ED requirements, even where other reviewing organizations may not be able to do so.

    Using NGOsource also helps centralize, standardize, and streamline the ED process, which benefits the entire philanthropic community. Because grantmakers often have overlapping needs, grantmaker members benefit from our discounted rates.

  • Because current legal obligations do not require audited financial statements for ED, we do not verify the accuracy of such information provided by the NGO unless we have a reason to know the information we have received is erroneous. However, we always analyze the financial data provided by the NGO and check for reasonableness and consistency. In addition, all NGOs are asked to certify the accuracy of the information provided to us upon submitting their questionnaire.

  • NGOsource does not currently conduct USA PATRIOT Act OFAC list and terrorism checks as they are not legal requirements for ED. Although we may in the future conduct checks on organizational names only, as a matter of practice, we nevertheless recommend that such checks be additionally conducted by the grantmaker before making international grants, especially since the OFAC sanctions constitute a strict liability regime. We have found that funders’ risk assessment and due diligence standards vary considerably in this area. For more information, visit the US Department of Treasury website.

  • No, NGOsource cannot facilitate expenditure responsibility. Expenditure responsibility (ER), a more restrictive alternative to ED, is simply too specific to each grantmaker's particular grant agreement and program needs with an NGO. ER also requires extensive record-keeping and reporting on the part of the grantee during the grant period, specific to the grant. Thus, there are few economies of scale available to effectively reduce costs to the grantmaking community.

    However, if, during our due diligence, we are unable to reasonably qualify an NGO as equivalent, we will provide the requesting funder with a file of information such that the pre-grant inquiry for an ER grant may be expedited.

  • No. NGOsource does not provide grants or assist with fundraising. We encourage grantseekers to visit the Candid, which offers a wealth of resources for grantseekers, including information about international grants.

ED Standards and Liability

The ED Request Process

  • The average turnaround time for NGOsource to complete an ED is 4 to 6 weeks. This time is primarily determined by the responsiveness of the NGO, which varies widely. Since the beginning of the COVID-19 pandemic, we have seen a significant delay in the responsiveness of NGOs, which has resulted in longer turnaround times.

    As part of our streamlined and legally compliant ED process, we ask grantmakers to introduce their intended grantees to NGOsource. This additional step significantly speeds up the ED process.

  • Typically, unresponsiveness by the intended grantee (for a multitude of reasons, such as the unavailability of key staff due to program deadlines or vacation) is the most likely cause of delay. NGOsource works with both the grantmaker and the NGO to find solutions to these obstacles. 

  • NGOsource offers four-week expedited equivalency determination (ED) reviews. The fee to expedite is $500. During our peak periods, such as the end of year and midyear, we must limit expedited service.

    Before we can move forward with an expedited request ED, we ask that the grantmaker confirm the $500 fee. Once the additional cost is confirmed, we will reach out to the organization and inform them of the expedited timeline. We will aim to complete this review within four weeks. Please be aware that our review may be delayed if the NGO is unresponsive to our requests, and we encourage grantmakers to reach out to the NGO as well to avoid any delays. Because we cannot control the NGO’s response time, we are unable to waive the fee if our review is delayed by the NGO. In order to accomplish such a fast turnaround, we require that the NGO provide all information and documentation within 1 week.

    If you'd like your ED review expedited, simply let us know in the “Special Instructions for NGOsource Staff” field when submitting the ED request through our online Grantmaker Portal, or contact us.

  • NGOsource members can log in to the Grantmaker Portal at any time to check the status of their ED requests. Statuses are shown in the aggregate format in a graph, and members can drill down to see further details about individual ED requests.

    Additionally, NGOsource sends notification emails to grantmakers throughout the ED process. If you have questions about the status of a specific ED, please contact accountsupport@ngosource.org.

  • Grantmakers receive an email when the determination is made. Grantmakers are also able to check the status of their ED requests at any time using the Grantmaker Portal.

  • As a policy, and only after multiple attempts to reach an unresponsive NGO, we will discontinue outreach if an organization has not responded to our emails within six months from the date of the invitation to complete an ED. There are different reasons for an NGO’s lack of response. NGOsource may not have current contacts on file or the NGO is no longer in operation, both of which indicate that our continued outreach would not be fruitful. Some NGOs may simply not have the capacity or interest to undergo the process, and in such cases, we endeavor to respect their time and their choice. Whenever an NGO has not yet started a questionnaire, the grantmaker will be credited the cost of the canceled ED.

    In other instances, while uncommon, an NGO will begin the process but not respond to our requests for additional information, sometimes for six months or more. In these instances as well, we will discontinue outreach after six months of no response. In addition to the strain on resources that long-term and continuous outreach poses for both NGOsource and our global partners, the significant lapse in time also prevents us from being able to confidently rely on the information that was originally submitted. Because we would need new certifications and updated financial information, we would require that the NGO restart the process when it has renewed capacity to do so. In these cases, we are typically not able to refund the grantmaker, as we have already invested time in reviewing the organization’s submission.

    Please note that, if an NGO indicates it needs more time to respond or requests an extension of time to respond, we consider this a substantive response, and will not cancel the ED unless six months elapse without any additional communication from the NGO.

  • NGOsource members are able to search our online database at any time to view the current ED status of specific NGOs. This information is available only to NGOsource members and not the general public. For privacy reasons, members may not see which grantmakers initiated an ED request. However, feel free to contact us at NGOsource with specific questions about a particular ED request, at accountsupport@ngosource.org.

  • NGOsource members can always see the status of their own ED requests as they are being processed, but not the status of ED requests by other grantmakers. Once an ED has been completed by NGOsource, the new certification status and expiration date will be visible to all NGOsource members.

  • ED Requested - Payment Received 
    •    MEANS: we have received your payment for the ED
    •    NEXT STEP: NGOsource will contact the NGO to initiate the ED process

    NGO Invited - Awaiting Response
    •    MEANS: An invitation email was sent to the NGO, asking them to fill out the questionnaire
    •    NEXT STEP: The NGO must fill out the questionnaire

    Questionnaire in Process
    •    MEANS: The NGO has begun filling out the questionnaire
    •    NEXT STEP: NGOsource awaits the return of the completed questionnaire

    Questionnaire Submitted - In Review
    •    MEANS: The NGO has submitted the questionnaire
    •    NEXT STEP: NGOsource will check the questionnaire and contact the NGO if more information is required

    ED Certified:
    •    MEANS: Legal review has been completed
    •    NEXT STEP: If the NGO has been certified, the grantmaker will find the documents available on the Grantmaker Portal

Making the Determination

Membership

  • NGOsource is designed for U.S. grantmakers making grants to non-U.S. NGOs that are not registered as U.S. public charities. These grantmakers include public charities, private foundations, corporate foundations, independent foundations, community foundations, CSR programs, fiscal sponsors, donor-advised funds, family foundations, re-granting organizations, philanthropic service providers, "friends of" organizations, and U.S. government agencies.

    If you are a grantmaker that does not fit the types listed above, please contact us.

    If you're ready to join, apply now.

  • Yes. However, please bear in mind that ED Certificates can only be issued in the name of the NGOsource grantmaker member, which should be the payer of the grant funds. Therefore, if a philanthropic service provider will not make grants to NGOs itself, it will need to set up an NGOsource membership for each of the grantmakers it serves, even if they are making grants to the same NGO. On the other hand, if the philanthropic service provider is the payer of the grant funds, it will only need one membership for itself.

    We recommend that philanthropic service providers contact us to discuss their interest in NGOsource.

  • Yes. Using NGOsource's ED services helps all grantmakers determine with confidence the eligibility of a foreign NGO. However, bear in mind that ED Certificates can only be issued in the name of the NGOsource grantmaker member and the payer of the grant funds.

    We recommend that DAFs contact us to discuss their interest in NGOsource.

  • NGOsource's cost-effective ED services help make it possible for grantmakers with few or no staff to make grants to the NGOs that matter most to its donors and trustees, regardless of where they are in the world. NGOsource allows small grantmakers to keep operational overhead to a minimum while enhancing philanthropic efforts by facilitating grants to international NGOs.

    If you're ready to join, apply now.

  • Yes. While EDs are not required for U.S. public charities, EDs do provide an extra level of diligence for a nonprofit's grantmaking activities.

    If you're ready to join, apply now.

Pricing

  • Whether a grantmaker makes dozens of international grants each year or just a few, we offer a membership level that is right for every organization.

    The appropriate membership level is based on the number of EDs a grantmaker expects to request in a year. The average number of international grants a grantmaker has made over the last 3 years usually provides an accurate estimate of its annual ED needs. Once a grantmaker has an estimate, it can refer to the Membership Levels on our Pricing page to find the membership level that best corresponds to the estimated number of EDs.

    If you would like to know whether and how many of your intended grantees are already in the NGOsource repository (and thus qualify as a ready-to-go or renewal ED), please feel free to contact us.

  • A grantmaker may request more than the number of EDs that are associated with its membership level at the same per ED fee. However, the overall costs will be lower if a grantmaker joins NGOsource at the membership level that is appropriate for its ED needs in the coming year. More information is available on our Pricing page. Please contact us if you have any questions.

  • Grantmakers can request a renewal at any time after the initial ED has been processed and completed, regardless of the expiration date. You can read more about timing your renewal requests at our LegalEase blog.

  • Because EDs cannot be shared, NGOsource can only issue an ED Certificate in the name of one grantmaker. Each ED Certificate is valid for only the named NGOsource grantmaker member. Other grantmakers may join NGOsource and request an ED for the same NGO in their name at any time. The fee for the subsequent request will be either the $250 fee for currently certified NGOs or the $850 fee for NGOs whose ED certificate has expired, depending on the timing of the request.

  • Grantmakers pay an annual membership fee based on the number of EDs they expect to request in a year and an ED processing fee for each ED request.

    NGOsource is focused on keeping grantmaker costs to a minimum. Fees cover the actual costs of processing an ED request, including the cost of supporting the NGO as it completes its NGO Questionnaire. More information is available on our Pricing page.

    If you're ready to join, apply now.

  • NGOsource is operated by TechSoup, a 501(c)(3) nonprofit organization, with a focus on keeping the cost of equivalency determination to a minimum. Our fees are competitive and significantly less than the typical cost of external legal fees, which can range from US$5,000 to US$15,000 per ED. While EDs may be available at lower prices, such EDs may not be fully compliant with IRS regulations, do not account for the costs of program and finance staff time, and often provide little to no NGO support.

Privacy and Data Security

  • NGOsource recognizes that NGOs often have legitimate safety and security concerns due to the nature or location of their work. We are committed to protecting the information entrusted to us.

    NGOsource uses a secure technical infrastructure and restricts access to data so that only NGOsource members are able to access our information about certified NGOs. To ensure the legitimacy of grantmaker members, all membership applications are reviewed by NGOsource staff. Grantmaker members are only able to see an NGO's name, country, and ED status. An NGO's detailed information — such as list of activities and budget — is only available to grantmakers who request, pay for, and receive an ED for that NGO. Personally identifiable information (such as individual contact names and email address of such individuals) are only available if specifically consented to by the NGO.

    Only personnel at TechSoup, which operates NGOsource, have regular access to an NGO's information. The NGOsource partner assigned to an NGO has access to the NGO's information only while it is supporting that NGO as it completes its questionnaire. Any statistics we share publicly about our ED services express data in aggregate only.

    An NGO also has the right to decline to provide information for an ED request; however, this will prevent NGOsource from making an ED. After the NGO has had an ED certified by NGOsource, grantmaker members can access information about the NGO by requesting an ED. At any time, an NGO can contact NGOsource to make their information inaccessible to other grantmakers but doing so will cause the NGO’s ED to be no longer visible in the repository. 

    Please contact us if you have specific concerns, or review our Privacy Policy.

Definitions and Terminology

  • NGO stands for non-governmental organization. While there is no universally agreed-upon definition of an NGO, typically it is a voluntary group or institution with a social mission, which operates independently from the government.

    NGOs or similar organizations exist in all parts of the world. What is considered an NGO in one country may not qualify as an NGO in another, as legal definitions, permitted activities, monitoring, and oversight differ from country to country. The term can encompass many types of organizations.

    Although these terms are not necessarily interchangeable, an organization similar to an NGO may be called nonprofit, charity, non-profit organization (NPO), civil society organization (CSO), citizen sector organization (CSO), social benefit organization (SBO), an advocacy organization, voluntary organization, grassroots support organization (GSO), and non-state actor (NSA). You may also hear the terms independent sector, volunteer sector, and civil society during discussions about NGOs.

  • Expenditure responsibility (ER) is a set of grantmaking and monitoring procedures and requirements designed to ensure that grant funds are used for charitable purposes. These procedures and requirements enable U.S. grantmakers to make grants to foreign organizations that are recognized as neither 501(c)(3) public charities nor the equivalents of U.S. public charities.

    Read "What is equivalency determination?" for more details on ER.

  • The Grantmaker Portal is the entry point for grantmaker members into NGOsource. This online system allows members to request and manage their EDs in a central location.

  • The ED Certificate is NGOsource's legal record that documents that a specific NGO is certified as equivalent to a U.S. public charity under the IRS' ED standards. Each ED Certificate is specific to one NGOsource member and has a set validity period prescribed by law.

    You can learn more in our FAQ section on the ED Certificate and documentation.