How Foreign Charities Can Receive U.S. Funding Through Cross-Border Giving
Funding Without Borders
According to Federal Reserve data, U.S. nonprofit organizations held approximately $13.2 trillion in total assets at the end of 2023
That is a significant amount of charitable funding.
But for nonprofits and charities outside of the United States, accessing U.S. funding is not always simple. Many international nonprofits need a clearer way to identify U.S. funders, understand eligibility requirements, and use grant research software for nonprofits to find better-fit foundation opportunities.
US regulations state that, in order to receive tax-deductible contributions, the recipient must be recognized by the IRS as a qualified charitable organization (most commonly under Internal Revenue Code Section 501(c)(3)).
Since very few nonprofits outside of the USA have that status, this can make it difficult for a foreign charity, international nonprofit, or non-U.S. charitable organization to receive tax-deductible donations from U.S. donors.
There are some ‘Friends of…’ organizations registered with the IRS, but not every international charity has the time, resources, or structure to create one.
This makes it difficult for a foreign charity to receive funding from within the USA, because A US charity cannot receive tax deductions for giving to foreign charitable organizations.
This is a depressing thought, for foreign charities that desperately need money.
But wait! The solution is at hand.
CAF America and Cross-Border Giving
Enter the Charities Aid Foundation of America (CAF America).
Founded in 1992, Caf America is a US 501(c)3 public charity whose mission is to establish a safe, easy and effective pathway for US donors to give to international charities.
In other words, CAF America helps make cross-border giving possible.
As they say on their website, cafamerica.org, “CAF America helps donors create a lasting, philanthropic impact and support the causes they care about around the world.”
For international nonprofits and foreign charitable organizations, this can be extremely valuable.
Why?
Because CAF America can help U.S. donors give to charitable work outside the United States in a way that is compliant, structured, and properly validated.
How Can Foreign Charities Receive U.S. Donations?
So how does this work?
CAF America serves as an intermediary for international charitable giving.
A US donor makes their gift to CAF America, which is a US public charity. Because CAF America is a qualified charitable organization, the donor may receive the all-important tax receipt for that gift.
Along with the gift, the donor recommends that CAF America use the funds to support a specific foreign charitable organization, international nonprofit, or charitable project.
The money is then passed through to the named organization, if that organization is eligible.
That seems to be a roadblock.
How does a foreign charitable organization become eligible?
CAF America Grant Eligibility
The solution is CAF America’s grant eligibility and due diligence process.
CAF America is charged with conducting the due diligence necessary to determine the organization’s eligibility.
This validation process includes a unique blend of equivalency determination and expenditure responsibility, the two IRS protocols for conducting due diligence on international grantees.
That allows CAF America to report back with the appropriate information required to make international grants and support cross-border philanthropy.
That means that both the recipient, and CAF America itself are both secure that the grants are to legitimate charitable organizations and are used for their intended purposes. As they say on their website, “Our team will work with you to ensure your giving is regulatory compliant, mitigates risk, and protects you from reputational damage.”
For foreign charities seeking U.S. funding, this is one of the most important pieces of the puzzle.
How Long Does CAF America Eligibility Take?
So how long does that take? Not long.
CAF America requires that the foreign charitable organization complete a Grant Eligibility Application (GEA) as well as submit various supporting documents to apply for eligibility.
From the date of receipt of the completed GEA and all supporting documentation, the application review process generally takes between 4 and 6 weeks.
Once a charitable organization becomes eligible, it remains eligible for a period of 1-3 years, depending on the results of the eligibility process.
Organizations registered in the U.S., U.K., Australia, and Canada may be eligible for three years. Charitable organizations from other countries may be eligible for up to two years, depending on risk factors.
During that eligibility period, the organization can receive grants from U.S. donors through CAF America.
Renewing CAF America Eligibility
Renewal of status takes much less time, since much of the information will not have changed.
However, an updated Grant Eligibility Application and current financial documents are still required.
CAF America has an online database of eligible organizations that can receive grants from them at the recommendation of U.S. donors.
They grant to charities located around the world, as long as the country does not have current prohibitive sanctions and is not embargoed by the U.S. Government.
They also operate on a weekly granting cycle in order not to delay the delivery of critically needed funds.
For international charities, this can create a much more practical pathway to receiving U.S. charitable funding.
Helping Global Charities Reach American Donors
For foreign charities, international nonprofits, and charitable organizations working outside the United States, funding can be difficult to access.
Many U.S. donors want to support international causes, but they also want to know that their gift is compliant, tax-deductible when applicable, and going to a legitimate charitable organization.
CAF America helps bridge that gap.
It gives U.S. donors a way to support international charitable work while giving foreign charities a clearer path to funding from American donors.
This is especially helpful for organizations working in areas such as:
- International development
- Education
- Health care
- Disaster relief
- Poverty reduction
- Human rights
- Animal welfare
- Environmental protection
- Community development
- Food security
For nonprofits seeking international grant funding or trying to attract U.S. donors, this kind of cross-border giving pathway can be incredibly valuable.
Final Thoughts
To conclude, this service can be valuable to any registered charitable organization that is seeking to bolster its income by soliciting funds from U.S. donors, U.S. funders, or American philanthropic organizations.
For foreign charities, the challenge is not always finding donors who care.
Sometimes the challenge is giving those donors a safe, compliant way to give.
CAF America helps make that possible.
For international nonprofits looking for U.S. funding, cross-border giving may be one of the most important strategies to understand.
So to conclude, this service is valuable to any registered charitable organization that is seeking to bolster their income through soliciting funds from US Funders.
