The capacity to address the world’s most pressing needs and respond to a crisis requires that grantmakers are well-equipped to deliver help in every corner of the world. Since the early 2000s, international grantmaking has increased from about 14 to about 30 percent of all foundation giving. But, unfortunately, challenges and restrictions can make global grantmaking complicated.

The landscape of global grantmaking continues to grow increasingly complex, between regulatory, legal, and taxation structures. The cost and complexity of vetting can restrict the scale of international grantmaking programs. However, effectively and efficiently distributing aid across borders can involve specialized administrative maneuvers to ease the complications of international giving.

Due Diligence and Why It Matters

Due diligence increases the likelihood that a philanthropic grant will achieve its objectives and mitigates potential risks. In addition, it protects against commercial, reputational, and legal risks. Overall, due diligence is primarily used to address one of four risks: 

• Legal risks 

• Mission alignment (or lack thereof)

• Financial security

• Reputational risk

However, it may be necessary to conduct intensive and exhaustive research on each grantee. It may involve reviewing a potential grantee based on various criteria, including experience, the grantee’s geography, existing safeguards (such as local grantmaker staff or partners on-site), and the current political climate in the grantmaker's country and the grantmaker’s country grantee's. 

Counterterrorism Laws and Regulations

Compliance with counterterrorism laws is an ever-growing area of legal risk for organizations of all types. Counter-terrorism laws are adopted by intergovernmental bodies and states to deter and punish terrorist acts and to prevent terrorist groups from accessing resources that support their terrorist acts.

ABC and AML Compliance and Related Sanctions

ABC stands for "Anti-Bribery and Corruption," and AML stands for "Anti-Money Laundering." Like counterterrorism legislation, international, national, and local governments can implement significant civil and criminal penalties if a funder makes a grant to an individual or entity engaged in bribery, corruption, or money laundering. 

Mission Alignment

The principal goal of a charitable organization is to further its mission, so it’s necessary to apply due diligence to answer several questions: Is the grantee pursuing programs that align with the funder’s charitable goals? How likely is it that the grant will be used efficiently and effectively? How risk-averse is the funder? Does it only want to fund entities with certain track records? Or support entities with proven commitments to diversity, for example? These are all important questions to answer when considering your grants to international charities.

Financial security

While financial risk isn’t a significant concern to charitable funders since there is no expectation of return on investment in the financial sense, financial risk does exist for grantmakers. 

First, grantmakers want to ensure they are getting the most results from their charitable investment. Grantmakers also want to ensure that their funds are not being diverted for inappropriate purposes, including criminal intents or purposes inconsistent with the grantmakers’ charitable status. The kind of financial risk that due diligence exercises address for charitable funders is closely linked to the legal and mission-alignment components described above.

Reputational risk

Avoiding risks that can damage a funder’s reputation, whether from criminal behavior or supporting an organization embroiled in scandal, is critical to a grantmaker’s reputation. Accordingly, grantmakers must undertake various methods to mitigate reputational risk, including a rigorous review of the grantee’s safeguards against fraud or abuse. 

Increase Your Global Grantmaking Abilities

Most grantmakers do not have the necessary resources, capacity, language skills, or in-house expertise to pursue documentation from grant candidates in various countries to conduct needed due diligence. Global grantmakers can utilize the invaluable resources, and expertise TrustBridge Global provides to navigate cross-border regulatory nuances affecting global grantmaking, including issues of equivalency determination and expenditure responsibility.

Whether you’re experienced in global grantmaking or just beginning the journey, working with TrustBridge Global to process your international grants can be a significant benefit. Our extensive knowledge reduces risk exposure and workload to enhance your global grantmaking.