New service makes it easier to provide direct aid to international charities

By Jill Warren Lucas NGOsource

NGOsource recently launched a new service that makes it easier for donors and grant makers to provide international aid. While such philanthropy used to be fraught with risk, there now is increased assurance that funds directed thousands of miles away will be managed by a foreign non-government organization (NGO) that meets the rigorous standards imposed on tax-exempt organizations in the U.S.

“It’s going gangbusters. We get new clients every day,” says NGOsource General Counsel Sheila Warren of the early response. “It’s been unbelievably rewarding. People have been waiting for this for a long time.”

In anticipation of a streamlined  process allowed by the U.S. Treasury and Secretary of State, NGOsource was chosen in 2009 by the Council on Foundations to build a repository of so-called “equivalency determinations” (EDs) that can be shared. This significantly reduces the cost of obtaining a determination, allowing more funds to be applied to direct aid while boosting donor confidence and ensuring credit for tax-exempt giving.

Some of the inaugural members of NGOSource include The Rockefeller FoundationIntel FoundationThe William and Flora Hewlett FoundationGive2AsiaThe Greenbaum Foundation and Schwab Charitable. Each of these organizations issue 100 or more international grants annually.

Darin McKeever, deputy director at the Bill & Melinda Gates Foundation, says they also use NGOsource as a way to “to improve the effectiveness of our charitable community and philanthropic sector.”

“Our expectation – or certainly our hope – is that the application of clear and consistent standards for making equivalency determinations will promote and increase compliance with U.S. tax laws and regulations, decrease duplication of effort for donors and grantees, and ultimately, increase the direct resources available to conduct the programs and projects that will change the lives of those most in need,” McKeever says.

The online repository features two portals. One is for grantmakers to keep track of all EDs, including the status of various initiatives. The other is for grantees (the NGO side), to submit information online for review. In places where internet conductivity is a challenge, information still may be submitted with traditional paper and pen.

Warren says the website operates in partnership with the TechSoup Global network, which has about 40 on-the-ground partners to support global applicants in various languages and time zones. “We wanted to design a simple system that would work for everyone,” she says. “A small grantee in a rural setting has very different needs than one in London, but they’ll both benefit from the economies of scale.”

Members pay fees based on the number of NGOs that need to be certified or recertified. The cost for an agency to manage the process from scratch, in consultation with legal counsel, can range from $5,000 to $10,000 per grant; depending on membership level, the NGOsource fee is $1,490-$1,760.

We’re all about capacity building,” Warren says. “This helps [our members] to free up staff to do what they really need to be doing, which is providing services to their community.”

McKeever of the Gates Foundation says the repository of EDs “will facilitate our international work by transferring work currently being conducted in-house to an external third party.”

“We would do this work with or without the repository,” he adds. “The difference is that others might benefit from our work, in the sense that information that populates the repository from our grants will readily be available to other grantmaking organizations, thereby eliminating waste of resources and duplicated effort.”

Warren says the review process will be no less rigorous, and the outcomes just as reliable. “The IRS didn’t make it any easier to do it, but there is recognition in the grantmaker community of the value of having all of these resources in one place.”

Because it started the process five years ago, NGOsource says other organizations are unlikely to provide similar services at the same scale and level of cooperation.

“There are a lot of heavyweights who came together to make this possible,” Warren says.  “For those who can’t otherwise afford the process, it’s the golden ticket that allows them to move forward with their plans. This will be a game-changer for international philanthropy.”

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