Wonder

Research Outline

Prepared for Deleted 5. | Delivered September 23, 2020

Routes of Fundraising for International NGOs

Goals

To identify examples and obtain insights that help to understand the advantages and disadvantages of the following routes of fundraising for international NGOs: i) fiscal sponsorship, ii) equivalency determination, and iii) expenditure responsibility. The examples and insights should explain why the international NGOs choose one route over another, or a combination of the three, and help to ascertain the costs and benefits associated with each route.

Early Findings

Fiscal SponsorshipFor organizations seeking grants and donations, one of the most important advantages of choosing fiscal sponsorship is that it equips the organization with the ability to ask for grants without having to build a tax-exempt organization.
However, this route of fundraising comes with the following drawbacks: i) risk of funds, ii) loss of control and iii) difficulties in finding an appropriate sponsor.
International NGOs that have been operational for years with a history of success are in an advantageous position to find a fiscal sponsor.
Organizations that are into activities that are flexible and short-term in nature are the best suited to get fiscal sponsors. Examples of such activities could be art exhibitions, disaster relief efforts, etc.
Equivalency Determination Equivalency determination is considered an advantageous route for international NGOs to raise funds as the US-based private foundations often find funding foreign grantees through this route less difficult.
The process of equivalency determination (ED) usually takes 3-4 weeks. Once a completed ED enters into the repository, it becomes available to other grant makers for consideration as long as the ED remains current. 
The cost of employing an outside counsel for completing the procedure of a single ED can range from US$5,000 to US$10,000. 
However, there are providers such as NGOsource.org that offer up to 9 EDs in a year at a cost of US$1,000.
Expenditure Responsibility Expenditure responsibility is beneficial for those non-U.S. entities to receive grants that have neither been recognized by the IRS nor by the grantmaker as a 501(c)(3) public charity.
However, the scope of expenditure responsibility does not apply for entities that are non-U.S. government agencies or instrumentalities, or international organizations designated by executive order.