If you have a question that is not answered below, please contact us.
What is NGOsource?
NGOsource is a project of TechSoup Global and the Council on Foundations (both U.S. 501(c)(3) charities) that was created in order to help U.S. grantmakers streamline their international giving. NGOsource simplifies the task of evaluating whether a non-U.S. organization is the equivalent of a U.S. public charity — a process known as equivalency determination or “ED” – by making a complicated process easier and more efficient for both the U.S. grantmaker and the non-U.S. grantee. NGOsource currently operates as a program of TechSoup Global.
What is an Equivalency Determination (ED)?
Equivalency determination (ED) is a process dictated by U.S. tax law regulations that 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. An equivalency determination permits a U.S. private foundation or donor-advised fund to make a grant to a non-U.S. organization with fewer restrictions and reporting requirements (than expenditure responsibility). As part of the ED process, a qualified tax practitioner collects and analyzes detailed information about a non-U.S. organization’s organizational structure, operations and finances and, based on this information, may make a determination that the organization is equivalent to a U.S. public charity. Download our free Guide to Equivalency Determination for more information.
Where do these rules come from?
The rules related to ED – the information we collect, and the tests we apply – are taken entirely from the U.S. Internal Revenue Code, Treasury Regulations, and related rulings and guidance issued by the U.S. Internal Revenue Service (IRS). NGOsource neither creates nor modifies these rules, although we have provided comments in limited circumstances.
What can I expect if I receive a request to begin the ED process?
See our page on How It Works.
Does NGOsource provide grants?
NGOsource does not provide grants or assist with fundraising. We encourage grantseekers to visit the Foundation Center, which offers a wealth of resources for grantseekers, including information about international grants.
What if we are a fiscally sponsored project, not yet independently incorporated?
ED can only be conducted on an independent legal entity. If you have not yet been independently incorporated, then we cannot conduct ED on your organization – if requested by the grantmaker, we may instead be able to conduct ED on your fiscal sponsor.
What if we are a semi-autonomous department of a university (such as a department, center, or lab)?
ED can only be conducted on an independent legal entity. If you are a department of a university but do not have your own legal existence and governance documents, as well as your own financial accounting, then we cannot conduct ED on your organization – we will need to conduct ED on the university as a whole.
What does it mean to be certified in the NGOsource repository?
Organizations certified in the ED repository have completed the ED process and have been deemed to be equivalent to U.S. public charities (or, in some instances, are determined to be government agencies or instrumentalities) at a moment in time. This process is entirely dictated by U.S. tax law governing charitable organizations. Once an organization is in the NGOsource repository, U.S. grantmakers can more quickly and efficiently make grants to the organization.
What does it mean to be deemed a “foreign government agency or instrumentality”?
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 U.S. Internal Revenue Service (IRS). For more information on this topic, see our blog on government entities.
How long is the ED Certificate valid?
The validity period is dictated by law and will be clearly shown on the ED Certificate. EDs are generally valid for two years from the last completed fiscal year for which information was made available for review. In practice, therefore, the validity period is usually approximately 1-1.5 years from the date it is completed. For example, if you submit actual financial income information through December 31, 2020, then the validity period of the certificate will be through December 31, 2022.
Why do we not receive a copy of the ED Certificate?
The ED Certificate may only be relied upon by the specific grantmaker who requested it, for a limited validity period. It is not a blanket stamp of approval that allows any entity to fund a non-U.S. organization. The ED certificate indicates the same, and it cannot, by law, be shared among other grantmakers. These are explicit requirements under U.S. tax law. For this reason, the Certificate is only made available to the U.S. grantmaker who requested it. NGOs are nonetheless welcome to inform other U.S. grantmakers of their NGOsource certification. Being in the NGOsource repository means that an organization’s current ED Certificate will be available for reissuance to our member grantmakers for a small processing fee, often with little or no additional effort on the part of the non-U.S. organization.
We have individual donors who want to donate to us. Does our certification provide tax benefits for them?
No. The ED is solely valid for the entity that requested it, and its only legal significance is that it permits the named private foundation or donor-advised fund that requested it to make grants to it with fewer restrictions and reporting requirements (than otherwise would be required). Having an ED grants no tax benefits to any individual donors.
We were just certified. Do we have the equivalent of a U.S. charity number?
No. Although an ED is a legal opinion that your organization meets the requirements of U.S. charities under U.S. tax law, an ED is NOT the same thing as a letter from the Internal Revenue Service (IRS) that your organization is a 501(c)(3) public charity. An ED’s only legal significance is that it permits the named private foundation or donor-advised fund that requested it to make grants to it with fewer restrictions and reporting requirements (than otherwise would be required). The ED grants no other special benefits to the non-U.S. organization or to individual donors to it.
Now that we’re certified, do you have any resources on how we can reach out to more U.S. funders?
You might visit one of the following websites to learn more about U.S. funders and funder outreach:
In your certification email from NGOsource, we provide sample language that you might use when reaching out to other funders, indicating that you have an ED on file with NGOsource.
Can we request our own ED?
If you would like to request your own ED we may be able to assist you, but we typically discourage NGOs from doing so for the following reasons:
- An ED cannot be shared between grantmakers (though the information can be shared). Thus an ED is not a “stamp of approval” or open channel to receive U.S.-based grantmaker support. An ED must be from one grantmaker to one NGO.
- Per above, every ED must be requested by a grantmaker (even if an NGO requests an ED for itself). So, if your organization requests and pays for your own ED review and determination, any grantmakers interested in funding your organization would first need to become NGOsource members (if they aren’t already), and then pay an additional fee to request the ED for the organization. Please be aware EDs are typically valid for two years from the last completed fiscal year for which information was made available for review. In practice, therefore, the validity period is usually approximately 1-1.5 years from the date it is completed. After the validity period has passed, the cost of ordering a renewal ED is higher, depending on the grantmaker’s membership level.
As you can see, due to the way EDs function and the U.S. tax rules governing them, NGOsource is designed to be grantmaker driven. It is important that NGOs recognize the realities and limitations before investing in this expense.
ED Questionnaire & Governing Documents
What does it mean “(1) to give instruction to individuals for the purpose of improving or developing their capabilities, or (2) to give instruction to the public on subjects useful to the individual and beneficial to the community”?
This language describes activities or programs that are educational in nature. For example, if you publish informational articles, blogs, reports, white papers or research on your website or elsewhere, or if you offer courses, trainings, lectures, workshops, or similar programs on either a group or individual basis, for a fee or without charge you should respond “yes.”
What does it mean to “receive more than ten percent of your financial support from the public in the form of gifts, grants, or contributions”?
This means at least ten percent of your income is from a combination of gifts, grants, and contributions from individuals, foundations, companies, other charities, or the government.
How do we determine the date of our formation?
This is the date on which you were legally incorporated or registered in your country. Typically the date is on the original Certificate of Incorporation, Articles of Incorporation, or Trust Deed, for example.
What does it mean for an activity to be “charitable”?
The term “charitable” has a broad meaning under U.S. tax law that does not always align with its definition in other contexts or countries. The U.S. Treasury Regulations explain that
The term "charitable" is used in section 501(c)(3) in its generally accepted legal sense and is, therefore, not to be construed as limited by the separate enumeration in section 501(c)(3) of other tax-exempt purposes which may fall within the broad outlines of ‘charity’ as developed by judicial decisions. Such term includes: Relief of the poor and distressed or of the underprivileged; advancement of religion; advancement of education or science; erection or maintenance of public buildings, monuments, or works; lessening of the burdens of government; and promotion of social welfare by organization designed to accomplish any of the above purposes, or (i) to lessen neighborhood tensions; (ii) to eliminate prejudice and discrimination; (iii) to defend human and civil rights secured by law; or (iv) to combat community deterioration and juvenile delinquency.
A charity may also earn income on its charitable activities, such as a school that charges tuition, a museum that charges entrance fees, or a charitable thrift shop that collects donated items and resells them below cost. For more information on income-earning activities of charities, see our blog on Charitable Income-Generating Activities.It is often presumed that being “charitable” is the same as being “nonprofit.” This is not true. A nonprofit organization might include any number of organizations that do not seek to earn a profit, but that are not considered charitable. For example, trade associations, labor unions, homeowners associations, political organizations, or social clubs are all typically nonprofit, but not charitable under U.S. law. For more information, see our blog on Nonprofit vs. Charity.
What does “influencing legislation” mean?
“Influencing legislation” is a technical term under U.S. tax law that refers to a charity’s communication (written or verbal) with legislators (and government officials with authority to make, approve, or veto legislation) that refers to and reflects a view on specific (identifiable) legislation (“direct lobbying”). Influencing legislation also includes communications with the general public that refer to and reflect a view on specific legislation and that expressly encourage the public to take action by contacting their legislators (“grassroots lobbying”).
Specific legislation includes, in any country, action by a federal or state legislature, any local council, or similar legislative body, or by the public in a referendum, ballot initiative, constitutional amendment, or similar procedure. “Specific legislation” includes both legislation that has already been introduced in a legislative body and a specific legislative proposal that an organization either supports or opposes.
Not all advocacy qualifies as influencing legislation. There are many exceptions to direct and grassroots lobbying, including for example:
- Attempting to influence decisions of regulatory and administrative bodies such as school boards, housing authorities, sewer and water districts, zoning boards, and other similar Federal, State, or local special purpose bodies, whether elective or appointive.
- Attempts to change laws through litigation or other judicial means.
- Engaging in nonpartisan analysis, study, or research and making available to the general public or a segment or members thereof or to governmental bodies, officials, or employees an independent and objective exposition of a particular subject matter. Such communication may advocate a particular position or viewpoint so long as there is a sufficiently full and fair exposition of the pertinent facts to enable the public or an individual to form an independent opinion or conclusion. The mere presentation of unsupported opinion, however, does not qualify as “nonpartisan analysis, study, or research.”
- Examinations and discussions of broad social, economic, and similar problems, even if the problems are of the type with which government would be expected to deal ultimately. This might include public discussion, or communications with members of legislative bodies or governmental employees, the general subject of which is also the subject of legislation before a legislative body, so long as such discussion does not address itself to the merits of a specific legislative proposal and so long as such discussion does not directly encourage recipients to take action with respect to legislation.
- Providing technical advice or assistance to a governmental body, a governmental committee, or a subdivision of either in response to a written request by the body, committee, or subdivision.
- Appearing before, or communicating with, any legislative body with respect to a possible action by the body that might affect the existence of the electing public charity, its powers and duties, its tax-exempt status, or the deductibility of contributions to the organization.
For more information, see our blog on Lobbying by U.S. Public Charities and Their Foreign Equivalents.
Why does NGOsource ask about the organization’s assets on dissolution?
In order to be recognized as a public charity in the U.S., an organization’s governing documents must contain a clause that requires it (or it must be legally obligated by law) to guarantee that if it is ever dissolved its remaining assets will be distributed for charitable purposes or to a government for public purposes (“dedication of assets” requirement). The idea is that, in order for a charity to be truly charitable, its assets must be permanently dedicated to charitable purposes. If an organization’s assets are required to be distributed to another charity or government, then such language in a dissolution clause is usually sufficient. Alternatively, if an organization’s governing documents or local law expressly require that it apply its income and property exclusively and solely toward its own charitable purposes, then this might also meet the “dedication of assets” requirement.
What should I attach as the organization’s governing documents?
Governing documents are those documents that were used to establish, incorporate, or register the organization (Certificate of Incorporation, Articles of Incorporation, Trust Deed, Certificate of Registration, Recognition Letter, etc.), as well as those documents approved by the organization’s governing body that explain the mission, governance, rules, and restrictions that apply to the organization (Trust Deed, Constitution, Memorandum and Articles of Association, Bylaws, Statutes, Charter, etc.).
Do the governing documents have to be in English? Can we submit excerpts?
Yes. U.S. law requires that we review governing documents in English. Translations need not be certified or “official.” You may do your own translations if you are able to do so. We cannot accept excerpts from governing documents. You must submit the entire governing documents translated into English.
Why do we need to redact personal information from the governing documents, and how do we do so?
Because the governing documents are shared as part of the ED file with any grantmaker who requests an ED, we must ensure that no personal data of third parties is inadvertently disclosed without their consent. For this reason, we request that you completely redact any names, signatures, identification numbers, photos, addresses, or any other information that identifies an individual in any way. For more information on what must be redacted and how you can do so, see our article on the topic, here.
Should I submit financial information in USD?
We prefer that you submit your financial information in the currency in which you currently operate. You may submit information in any currency; however, we find it simpler for all involved if you use a currency that matches your own financial statements and does not require conversion to USD.
Do you require audited financials?
We do NOT require audited financials. We do, however, require that the financial information be accurate, current, and complete. We do not accept estimates (for any completed financial years), or figures that have been rounded up or down.
What if our fiscal year does not end on a calendar year?
If your fiscal year is on a non-calendar basis, then your reporting year should correspond with the year in which your fiscal year ends. Therefore, if your fiscal year runs from April 1 to March 31, then your “2020 fiscal year” is from April 1, 2019 to March 31, 2020.
What if our organization has not yet been in existence for five years?
For organizations fewer than five years old, we require actual financial information for any completed fiscal years, as well as estimated financial income for any future fiscal years, totaling five fiscal years. Your anticipated financial income should include good-faith estimates of what you hope and realistically expect to receive. It should include revenue from grants and activities that you plan to solicit, for example, not just those funds already committed or guaranteed.
What are gross receipts from mission-related activities?
Income earned from activities that are related to an organization's charitable purposes is often referred to as "gross receipts from related activities," or “mission-related income.” The income-earning activity itself must further one of the organization’s charitable purposes. Typical examples of gross receipts from mission-related activities include ticket earnings at museums, zoos, symphonies, operas, theaters, ballets, and similar institutions, as well as tuition fees from educational programs, or sales of educational publications. See also our blog on Characterizing Income of 501(c)(3) Public Charities and on Charitable Income-Generating Activities.
What is a private foundation?
A private foundation is a charitable organization that receives its funds from a single or small number of donors (such as a family or business) and that typically is primarily engaged in grantmaking rather than direct programs. For more information see our blog on The Difference Between Public Charities and Private Foundations.
What is a U.S. public charity?
A U.S. public charity is a charity that has been recognized by the U.S. Internal Revenue Service (IRS) to be organized and operated exclusively for charitable purposes, and that also meets either a public support test (most charities) or that qualifies by virtue of its activities (such as churches, hospitals, or schools). For more information see our blogs on The Difference Between Public Charities and Private Foundations and Public Charity Classifications.
What is a foreign publicly supported charity?
A foreign publicly supported charity is either a non-U.S. charity that has received a determination letter from the U.S. Internal Revenue Service (IRS) that it is a 501(c)(3) public charity or that has been deemed equivalent to a 501(c)(3) public charity.