Treasury and IRS rule changes reduce barriers to global grant making

The U.S. Department of the Treasury and the IRS have recommended a significant change in the process for determining whether a foreign nongovernmental organization (NGO) meets U.S. standards for charitable giving.

In “Reliance Standards for Making Good Faith Determinations,” a document just published in the Federal Register, Treasury and the IRS have proposed regulations that lessen the administrative and financial burdens for U.S. grantmakers to engage in international philanthropy. Secretary of State Hillary Clinton announced the guidance in an address at the Clinton Global Initiative, during which she unveiled the Global Philanthropy Working Group.

The process of evaluating whether a non-U.S. NGO is equivalent to a U.S. public charity has been subject to rules that have not changed for 20 years. Secretary Clinton noted in her remarks this morning that the change clears the way for the establishment of organizations that can serve as repositories for equivalency determinations, though the proposed regulations do not specifically address this matter.

“Secretary Clinton’s announcement and the IRS guidance support a shared cross-sector vision of ways to reduce redundancy and lower costs and are a welcome signal from the government to grantmakers and their grantees,” said Rebecca Masisak, co-CEO of TechSoup Global.

Kelly Shipp Simone, deputy general counsel of the Council on Foundations, said, “While this guidance is key to reducing the burdens of private foundations in making international grants, we expect it will also serve as a guide to public charities seeking to make similar grants. The net result will be to reduce the burden on potential grantees as well.”