501(c) status for non-us NGOs?
May 22, 2009 6:40 AM   Subscribe

501(c) status for non-US NGOs?

I have a registered NGO outside of the US. We do grant-funded teacher training / minority education type stuff. I am looking into various online / crowdfunding options to raise funds for our projects.

And much to my frustration it seems that many / most of these places require status as a US 501(c) organisation. What about the rest of the world??? :(

I am hoping the answer isn't "it's impossible" although I fear it may be... How the hell do I go about getting this status when all of my activities, business, grant work, staff, etc., are non-US and outside of the US?

Failing that, my alternate question: where on the Internet can I do crowdfunding type of fundraising for my charitable / nonprofit work as a NOT US 501(c)? And please note that although we do valuable good work, we are not in the "save the dying children in Africa" sort of charity world... our work is not as sexy, we are not meeting the same kind of immediate pressing humanitarian emergency needs.
posted by Meatbomb to Law & Government (9 answers total)
 
If you want 501 (c)(3) status, I guess the only answer would be to partner with a US citizen and incorporate as a non-profit in one of the states, then apply to the IRS for tax exemption.
Where are you registered?
posted by readery at 8:25 AM on May 22, 2009


My recollection is that you would have to organize in the U.S., the reason being that you need an EIN and proof of incorporation in order to even fill out the application. Additionally, IIRC, you would have to house at least some of your operations in the U.S., so your organization, as it is currently operated, would not be eligible.

The IRS, however, should be able to provide guidance -- Here is their contact info for exempt organization questions. Good luck!
posted by ailouros08 at 8:42 AM on May 22, 2009


For a small (read: large) "consulting" fee, I volunteer to be the front US contact for Meatbomb World Services. I'll tell all these fundies down here that we're bringing benighted Bulgarians to Jeebus through the magic of ESL teacher training and they'll shower you with sweet, sweet cash.

Have you considered reorganizing as a cult? Then you'd get all the ancillary tax benefits, plus brainwashed minions and multiple wives.

Real answer: what readery said. Is there no Canadian equivalent of a 501 (c)(3) that applies?
posted by BitterOldPunk at 9:00 AM on May 22, 2009


You're going to want to get in touch with a non-profit lawyer in the US. Doesn't really matter what state; pick whatever is convenient for you. Your lawyer will be able to walk you through incorporation--which is required for 501(c)(3) status IIRC--and then getting your status as a tax-deductible non-profit.

This will cost you some money, but the legal fees should be a few hundred dollars at most, and incorporation fees are pretty minor. After that, you'll probably need to pay an annual sum, not large, to maintain your status and comply with various record-keeping and transparency requirements.

I'm not sure whether ailourous08 is correct on the requirement of some US presence. I think this can probably be pretty nominal. For instance, the vast majority of corporations in the US are chartered in either Nevada or Delaware, but as one might expect, most of those corporations actually do the vast majority of their business elsewhere. They've just got favorable incorporation laws. Delaware also has the added advantage of an equity court rich in experience dealing with big corporate cases. But your US contact may not need to be anything more than a PO box, which should be pretty doable. This is definitely something you should talk to your lawyer about.

Short answer: get a lawyer and he'll help you straighten things out. I'm not aware of any insurmountable obstacles, but be prepared to jump through some hoops.
posted by valkyryn at 9:13 AM on May 22, 2009


Also, the IRS will not allow a domestic charity to be simply a “money conduit” to a foreign organization. US law does not allow such direct-affiliate organizations. In other words, a US charity cannot exist for the sole purpose of financially supporting a specific foreign charity. A US charity must be organized for specific charitable purposes that it alone is responsible for, one of which may be the support of foreign charitable work. It is best when that support is not tied to any specific foreign charity on an exclusive basis. For a new organization it is OK to name the foreign charities to be supported initially, but it would be a big mistake to make the support of those named charities the sole purpose. The IRS would probably deny the application for 501(c)(3) status. Revenue rulings 63-252 and 66-79 deal with some of these issues directly. -- 501c3.org
posted by dhartung at 10:06 AM on May 22, 2009 [1 favorite]


Response by poster: Where are you registered? Bulgaria.

dhartung: well, that sounds pretty insurmountable to me... :(
posted by Meatbomb at 11:59 AM on May 22, 2009


Response by poster: BitterOldPunk: It sounds so tempting, but sadly this is part of my straight gig, and has to be legit.
posted by Meatbomb at 12:00 PM on May 22, 2009


Can you find an exempt US organization to serve as your fiscal sponsor? They'll take a percentage of all funds that they process for you, usually around 5%, and take care of all the relevant paperwork on the US end. I believe you'll need to have the equivalent of 501(c)(whatever) status in whatever country you're operating in, though.
posted by elizardbits at 2:27 PM on May 22, 2009


How much do you want the crowdfunding? You should send some emails an make some telephone calls and see if your european contacts know of / want to start a world compatible crowdsourcing gig. Also, you could email famous crowfunding sites and see if they recommend anybody.
posted by By The Grace of God at 4:23 PM on May 30, 2009


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