Global grantmaking is the option for philanthropic efforts by organizations and nonprofits to expand its reach and impact on an international level to encourage and promote research efforts within the international community. With these efforts, there are many approaches and considerations that must be taken into account to ensure proper dissemination of the RFAs, a uniform application process, an unbiased review process, seamless disbursement of payments, and an emphasis on accountability and outcomes.
What are the benefits of global grantmaking in the biomedical research space?
The research community is largely collaborative and spans borders; the research efforts of publishing and data sharing is done so with the goals and the intentions of distributing findings on a global level through international journals and international meetings. Doing so not only encourages the maximum exposure of novel findings but it can also lead to building upon the current bodies of work which can further foster collaborations between research groups.
Global grantmaking offers opportunities for groups and individuals to contribute to their respective communities. This enables organizations and nonprofits to connect with a larger international network.
Efforts by both the philanthropic and the research communities broaden the impact of both grantmaking and research. This can promote the efficient use of funds and direct it towards accelerating strides in biomedical and clinical research. The potential impacts of these accomplishments greatly benefit the patients and their communities who are at the center of these biomedical nonprofits.
Funding opportunities can be made available to applicants either regionally or globally and these decisions are made entirely by the organization. There are complexities involved with funding grantees internationally, especially for organizations that are based in the United States. These complications lie within the legal and the financial frameworks that may make the grant making and funding process for each situation not uniform and unique. With these considerations, international grant makers must be adaptable and well-versed in the appropriate context.
Federal laws and guidelines to consider for U.S. grantmakers
While many donors and nonprofits may not have the infrastructure to address the legal ramifications that must be addressed, there are intermediaries that can be involved to aid in global grantmaking.
U.S. Equivalency Determination (ED)
This term describes whether an international organization or institution is the equivalent of a U.S. public charity. This is a good faith determination to confirm that an organization is operated primarily for charitable purposes. There are separate state and federal laws which determine the concept of nonprofit and charity.
ED is important to define the operations and the functions of an organization for financial and tax purposes. The following 3 requirements must be met for a non-U.S. organization to be the equivalent of a U.S. public charity:
- Its infrastructure is organized similarly to a U.S. public charity
- It is operated similarly to a U.S. public charity
- When required, it meets a certain minimum threshold of public support
Executive Order 13224 – President Bush signed this on September 23, 2001 to deter terrorist funding by blocking assets and financial support to groups and individuals involved in terrorist activities. Prior to funding, grantmakers must confirm that grantees are not on the lists. The Office of Foreign Assets Control (OFAC) is the entity that is part of the US Department of Treasury that publishes these lists and enforces the sanctions.
USA Patriot Act – These laws strengthen measures to prevent terrorist activities by deterring and punishing individuals and groups that participate in international money laundering and the like to finance terrorist activities.
Treasury Department Voluntary Guidelines – This is a best practices guide for nonprofits and organizations to promote global grantmaking that are compliant with anti-terrorist laws.
Statements of compliance can be included in the grant agreement or the terms and conditions.
“Compliance Generally.Throughout the term of this Agreement, the Grantee shall comply with all applicable laws, regulations, rules, judgments, decrees and orders, whether federal, state, local, domestic or foreign. The Grantee shall have and shall maintain in place throughout the term of this Agreement its own policies and procedures, including adequate procedures under applicable anti-corruption, economic sanctions, anti-money laundering, anti-terrorism financing laws and regulations. Compliance obligations are described further in the Economic Sanctions Compliance Section below. In addition, the Grantee certifies that it has its own vetting process to check the compliance of any sub-grantees.
Economic Sanctions Compliance.The Grantee represents that (i) it does not knowingly support (including through subgrants), employ or do business with, directly or indirectly, individuals, entities, or groups that are subject to economic sanctions, or with individuals, entities or groups known to the Grantee to support terrorism or to have violated economic sanctions regulations and (ii) it has not changed its name in the last five years except as previously disclosed in writing to the Grantor. These representations shall survive and continue in effect throughout the term of the Grant and a reasonable period thereafter.”
International laws to consider
International laws surrounding philanthropy are equally as important as domestic laws. The grantmaking process requires extensive research and an understanding of the legal considerations when awarding grantees. Each country will have their own set of laws and guidelines surrounding security clearance and foreign transactions. Funders and those that they consult with should be meticulous and thorough with the international laws prior to issuing payments during the funding period.
U.S. based organizations funding grants in China must comply and receive approval from the Chinese Ministry of Public Security. This is determined by the 2016 Chinese Nonprofit Law.
The Council of Foundations offers curated resources and “Country Notes” for specific countries. “Enhanced Country Notes” are also provided for the 13-most visited countries. Some of these reports are for COF members only.
The International Center for Non-Profit Law (ICNL) provides updated reports on philanthropy law for numerous countries.
HRA Meeting Breakout Session: Beyond Borders: Go International Act Locally/Think Globally
According to the Council on Foundations Accountability guide on international grantmaking, there are 7 principles that are centered around good practices for organizations interested in global grantmaking:
- Cooperation and Collaboration
This is the key variable in determining the success of global grantmaking, and clear and effective communication from both the grantmaker and the grantee will ensure efficient use of funding and advancement of the project. The grantmaker must determine which modes of communication will be utilized for the duration of the funding period.
Language can oftentimes be a barrier between funders and their grantees, so it is important to establish a shared language to communicate with. If one party is not proficient in the shared language, considerations of finding or hiring a translator must be taken into account.
- Will translating costs and services be included in the budgeting of the grant? Will these services be in-house or will they be outsourced? How do you ensure the translation services are of high quality?
- Will application materials be accepted in more than one language?
- Will certain groups or individuals not be reached if English is the primary language?
- How often will meetings or other forms of communication be expected, and how will the coordination of having a translator factor into that?
Post-funding reporting and progress reports
Establishing a reporting system is key to ensure clear communication through tracking progress. Consistent tracking can build and strengthen relationships between the grantees and the funding organizations, and this can aid in addressing problems as they occur
Being culturally aware of the wider audience, the applicants, and the grantees is essential in the entire process of global grantmaking, therefore the organization or the funder must prioritize efforts to learn and understand the populations that they are addressing. This requires extensive research of the backgrounds and the groups that they are aiming to reach. This can be done internally within the funding group, or intermediaries can be utilized to aid in these tasks.
It is important to consider currency exchange and the banking procedures as it varies between countries. Global grantmakers have recommended transferring funds via wire transfers with banks that have a large global presence. Wire transfers can ensure safety and protection in a timely manner. Devaluation and the fluctuations in the strength of the currencies can impact both grantees and grantmakers in different ways and it is encouraged to consult with financial experts prior to the awarding process.
Depending on the nature of the questions or the issues that need to be addressed, an organization may need to seek consultation with individuals or groups that can provide guidance in navigating the cultural, legal, or financial process of grantmaking.
An intermediary is a group or organization that provides services to aid in grantmaking within the international community. Funding through intermediaries is the simplest way for global grantmaking as they are staffed to address issues that include language and culture that may be heavily impacted by social and political influences. Their knowledge of local laws and regulations are essential for a streamlined funding process. In addition to tax benefits, intermediaries can save grantmakers time and money by helping funders with accounting and reporting. This collaboration is often a key factor in bridging funders and grantees.
“Regranting” intermediaries provide support by putting resources to work. These are charities that are defined by the U.S. Internal Revenue Service and are therefore allowed to receive tax-deductions from donations.