U.S. Government Simplifies Cross-border Funding for U.S. Foundations (5/2014)

This article was first published in the German magazine “Stiftung & Sponsoring” (4/2014).

The U.S. Treasury recently adopted new guidelines for U.S.-American foundations awarding grants to foreign recipients, which will significantly simplify the process of international giving. German charities can benefit as well.

More than € 2.5 billion Euros are awarded annually by foundations in the United States to foreign organizations. Apart from the Bill & Melinda Gates Foundation the Ford Foundation, the Rockefeller Foundation or the Coca Cola Foundation give high double-digit millions of Euros to foreign charities. There are also thousands of small and medium-sized foundations that send regular or irregular checks across the pond. “Even German NPOs benefit. 2012, they received at least $ 64 million from U.S. foundations “, has the New York fundraising expert Eelco Keij researched whose consulting firm KeyLance supports NPOs worldwide in acquiring grants from American foundations.

The potential for grants is huge. But equally huge is the red tape for German NPOs to comply with the strict regulations of the U.S. tax authority IRS. After all, for a few years German organizations don’t have necessarily any more to apply for a non-profit status with the IRS before a grant application at U.S. foundations. A process that can take up to half a year. Instead, US-foundations can now prove to their financial authority that the foreign NPO that they seek to fund meets all U.S. non-profit requirements. Such a proof – that must be provided for each grant giving process – includes the statute of the funded organization, its founding documents, annual reports, financial reports and many other documents, all with English translation.

This may change in the future. For, the United States Treasury was meeting a demand of many U.S.-foundations to centrally store the documents of foreign recipient organizations on an online database where they can reference to. “At the moment the American Council of Foundations and the NGO Global Network Techsoup are setting up such a database under the brand NGOsource”, says Eelco Keij. If NGOsource (www.ngosource.org) has been established, the new system will save a lot of work to all parties involved. Instead of having to submit and translate all necessary documents and reports for each application, nonprofit organizations will probably have this effort is in the future only once a year. For other applications in the same year they may refer to the database.

We can only hope that this new concept becomes established quickly and more German charities will discover the opportunities of this lucrative funding market.