The Council on Foundations defines “international grantmaking” to include grants made by U.S. foundations and corporations to overseas recipients as well as grants made to U.S.-based organizations operating international programs. This includes grants made toward activities wholly within the Unites States that have significant international purpose and impact.

There are several options available to U.S. foundations and corporations interested in international grantmaking:

U.S. 501(c)(3) Organizations

The simplest option is to make a grant directly to another U.S. 501(c)(3) charitable organization to support its international programs or activities.

• What is a U.S. 501(c)(3) organization?

“Friends of” Organizations

Another easy option is to make a grant to a U.S.-based 501(c)(3) “friends of” organization that has been set up to raise funds for a specific charitable program or activity outside the U.S., often a university, museum or hospital.

• "How a Private Foundation Can Use "Friends Of" Organizations," by Victoria B. Bjorklund and Jennifer I. Goldberg, Simpson, Thatcher & Bartlett. Legal Dimensions of International Grantmaking, Winter 1999.

Donor-Advised Funds

Still another relatively straightforward option is to establish a donor-advised fund with a U.S.-based 501(c)(3) public charity that can, for a fee, provide a range of legal and monitoring services to donors wishing to support organizations located outside the U.S. A growing option for making international grants is to set up a donor-advised fund with a willing U.S. community foundation, some of which are linking local ethnic communities they serve with their countries of origin.

A donor-advised fund is not a separate public charity but is, instead, owned, controlled, and administered by a public charity, subject to an agreement under which the donor (or an advisor designated by the donor) has the right to make recommendations with respect to the distributions and/or investments. Community foundations and some intermediary organizations offer donor-advised funds as a giving option for their donors.

Direct Cross-Border Grants

Making cross-border grants directly to organizations located in other countries is an option that requires some additional steps due to special IRS rules for private foundations, but the process need not be difficult. Many private foundations choose this option because it enables them to have a one-to-one relationship with their overseas grantee partners.

The legal resources section explains the two approaches embodied in the IRS rules —equivalency determination and expenditure responsibility—that private foundations may choose if they wish to make direct grants to non-U.S. grantees. Public charities often follow these rules as well, as a good practice, although they are not required to do so.

NGOsource, a project of the Council on Foundations and TechSoup Global, helps U.S. grantmakers streamline their international giving by providing a reliable, low-cost, and easy-to-use equivalency determination service.