International charitable giving was already complex in a pre-COVID-19 world. The global pandemic has only exacerbated these complexities and raised additional uncertainties. To help support organizations as they navigate funding international COVID-19 response efforts, Global Impact, supported by KPMG LLP, created the COVID-19 Regulatory & Response Matrix. The matrix provides a centralized source of information on 124 countries and territories across the globe, compiled through extensive in-country and remote research.
This will be the first in a series of blog posts that explores some of the findings of this matrix. In this first edition, we will explore the regulatory requirements detailed in the report. Keep an eye on the Give Global Blog for further installments of this series.
What are regulatory requirements?
In the context of this survey, regulatory requirements refer to the interconnected web of rules and laws that govern charitable contributions: who can receive them, who can make them and what they can be used for. The matrix assesses four requirements in all 124 countries:
- Can grants be made by nonprofit funders to local organizations in-country?
- Can grants be made by nonprofit funders to local individuals in-country?
- What requirements or conditions may apply before or after nonprofit funders can make grants (e.g., disclosure requirements, reporting requirements, exchange controls, etc.)?
- Are grants from tax-exempt nonprofit funders to a resident of [country] taxable to the recipients (either an individual or organization)? If so, is there an obligation on either the nonprofit funder or the recipient’s employer to report the taxable income?
These are the kinds of questions that Global Impact contends with in order to grow global philanthropy. As an intermediary organization that helps provide funding to support causes around the world, we understand the importance of understanding the nuances in rules and reporting requirements in different jurisdictions. During the age of COVID-19, when international need is skyrocketing, having access to this information empowers members of the field to achieve an impact where it is needed most.
Of the 124 countries that were studied, it was found that 110 allow nonprofit funders to make donations to individuals. This is perhaps the most direct form of charity, and while it is not the most scalable way to impact populations, knowing that there is the opportunity to make such a precise intervention is a good tool to keep in a philanthropist’s tool belt.
Of the studied countries, 117 allowed nonprofit funders to make contributions to local charities, meaning that 94% surveyed allow this form of granting. The widespread feasibility of this kind of grant making is encouraging and shows that forming philanthropic partnerships across borders is a replicable model in a great many countries. These kinds of partnerships benefit the target populations by harnessing local talent and expertise to execute programs that would have taken significant resources for foreign organizations to set up – resources that can now be used within existing support systems to benefit the target audiences.
The least common form of acceptable donations, allowed by only 33 countries, were highly unrestricted donations to charities or foundations that do not impose prior requirements or conditions, are tax exempt for the recipient and do not require any reporting requirements for the donor. These highly unrestricted donations are not typically very popular, especially as anti-corruption measures and strong impact-per-dollar metrics become more common, but during a crisis like COVID-19, no-strings-attached funding can sometimes be the easiest way to help. When the recipient does is not concerned with reporting, they can focus more on solving the issue. At the same time, this opens up the donor to unpredicted outcomes of a donation, so when pursuing such a grant, it is especially prudent to perform your due diligence.
These are just a few of the pieces of information that can be drawn from the highly detailed impact matrix. You are encouraged to explore the research and see what you can learn for yourself and for your organization. Access the research, share it with your peers and keep an eye out for the next blog post in this series detailing countries’ COVID-19 situation and status for charitable giving.
Read COVID-19 international giving guide: Emergency status and charitable designations, part 2 of the COVID-19 giving series …