International Grant-Making: Best Practices For U.S. Public Charities

U.S. public charities are blessed, but also challenged, by a relative lack of regulation governing their grants to foreign persons and foreign entities.

U.S. public charities are blessed by this lack of regulation because the rules applicable to them when making grants are fairly simple, flexible and easy to understand, particularly when compared to the rules applicable to foreign grants made by private foundations.  When a public charity makes a grant to an individual or organization, foreign or domestic, the funds must be used to further the public charity's exempt purpose.  If the public charity makes a grant to another Section 501(c)(3) organization, this requirement is presumed to be met.¹  If a grant is made to a party other than another Section 501(c)(3) organization, the public charity has added burdens. The charity must establish that the grant was made consistent with its exempt activity by retaining control and discretion over the use of the funds and by