What You Need to Know About International Giving
There is no shortage of needs around the globe. Whether the need is feeding the hungry, sheltering refugees, providing medical care for the sick, the world offers many opportunities for generosity.
Recent events have demonstrated two things: Situations out of our control can quickly plunge people into desperate circumstances, and the devastation and conditions responsible don’t recognize borders. In other words, we are all potentially susceptible to a life that depends on the charity of others.
Thankfully, there’s also no shortage of people willing to help those in need either. That’s because humans are hardwired for altruism. A recent study even found evidence that the willingness of humans to help begins in infancy. However pure our intentions might be, human-made bureaucracy can complicate our desire to help those in need in other countries.
International charitable giving, also known as “international philanthropy” or “global philanthropy” when it involves multiple countries, can be complicated. Donors have to consider the complex network, including domestic tax laws in their country, international taxation rules, anti-corruption and counter-terrorism laws, and sometimes foreign law governing contributions.
Even when our hearts are in the right place, steps must be taken to ensure due diligence is completed before cross-border donors write a check or direct your financial institution to transfer funds.
Can an Individual or Trustee of Private Foundations Make Direct International Gifts?
Yes, but a direct gift is not tax-deductible for US citizens and registered private foundations, and intense due diligence is required, including following anti-terrorism guidelines.
Anti-terrorism guidelines: Since the terrorist events of September 11, 2001, U.S. law has barred both individuals and other entities (e.g., foundations) from engaging in transactions with domestic or foreign entities considered to be terrorists. The burden falls on donors to assess risk, conduct adequate due diligence, and to be aware of the voluntary anti-terrorism guidelines set out by the U.S. government.
Before making a gift across international borders, it is strongly recommended that both individuals and private foundations do the following:
Ensure that there are no sanctions against the country where the gift or grant will be made.
Ensure that the recipient organization is not on the U.S. Government’s main terrorism list.
Mechanisms for International Giving
Although several mechanisms facilitate global giving, including funding intermediaries, “Friends-of” organizations, or private foundations, establishing a donor-advised fund (DAF) is an excellent option.
A DAF is attractive to many donors who wish to make global charitable gifts for several reasons. Doing so offers an immediate tax-deductibility of the contribution to the fund (depending on the philanthropic rules in the donor’s country). A DAF also provides administrative convenience. That also includes performing due diligence to determine that international contributions comply with a county’s rules and regulations and meet with donor fund guidelines and local charity statutes.
Several DAFs have mechanisms to administer international contributions. A TrustBridge Global DAF’s unique qualities enable donors to establish a centralized charitable account, allowing them to make a charitable contribution, receive an immediate tax deduction, and then recommend grants from the fund over time. A TrustBridge Global DAF acts as a charitable savings account.
Donations to a contributor’s funds can be made via cash, cash equivalents, securities, or various other assets, enabling the selected charity to accumulate funds before drawing them down to their bank account. Unlike other DAFs, TrustBridge is recognized as a sponsoring organization of DAFs and a public charity. In Switzerland, it’s structured as a charitable organization at the cantonal and federal levels.
DAF Costs
Because TrustBridge Global is structured as a charity that sponsors a DAF program, there are no fees. Instead, it shares the cost of operating the foundation among the DAFs equitably, assessing them based upon their proportionate balance or activity. These assessments are made against amounts already held within the foundation, not paid separately as a fee might be. As a result, cost savings are significant.
Simply put, a TrustBridge DAF maximizes your contribution to the intended charity instead of paying organizational costs.
Whether you’re motivated to give internationally in response to a global crisis, driven to reduce disparities, or feel a personal connection to the global community, understanding the challenges of cross-border giving can help you make strategic plans for your donations.
TrustBridge Global can help you understand the complexities of cross-border giving and ensure that more of your donations flow to the corners of the globe where they are most needed.