WHD Blog

Gifts and Grants to Foreign Organizations

by Douglas A. Pessefall, posted Monday, February 01, 2010 12:00 AM

Image
In today's global economy, charitable activities, like business activities, often go international. The recent earthquake in Haiti serves as just one example. However, there are unique issues that arise in the context of international charitable giving and grant making for the donor and the organizations the donors choose to support.
 
Charitable contributions that are made directly to a foreign organization by a U.S. individual are generally not deductible for U.S. federal income tax purposes. The same rule of non-deductibility applies to charitable contributions that are earmarked (or solicited by a U.S. organization) specifically for the use of a foreign organization. Some exceptions exist for contributions made to certain charities in Canada, Israel and Mexico. However, a U.S. organization may solicit charitable contributions for its own exempt purposes and, in turn, choose to make gifts or grants to foreign organizations (e.g., Haitian relief). The U.S. tax treatment of those gifts and grants will generally turn on whether the U.S. organization has discretion and control over the contributions it received—in other words, in receiving or soliciting the funds, the U.S. organization cannot be legally bound to use the funds abroad if the donor is to be entitled to a charitable deduction; whether the foreign organization has a determination letter from the Internal Revenue Service (recognizing the organization’s tax exempt status); how the foreign organization intends to use the grant; and/or whether the U.S. organization is a public charity or a private foundation.
 
To view the full article, click here.
 
Comments (0)
 

Leave A Comment

Name (required)


Title (required)


Email (optional, will not be displayed)


Your URL (optional)


Comments (required)