Can donor-advised funds give to foreign charities?

For Internet-native investors holding cryptocurrency or stocks, the question of whether donor-advised funds (DAFs) can support foreign charities is increasingly relevant. This article explores how Endaoment facilitates international giving through DAFs while adhering to IRS guidelines and legal requirements.

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Understanding Donor-Advised Funds at Endaoment

Donor-advised funds are philanthropic vehicles managed by sponsoring organizations like Endaoment. These funds allow donors to:

1. Make charitable contributions
2. Receive immediate tax benefits
3. Recommend grants over time

Endaoment operates under Section 4966 of the Internal Revenue Code, ensuring all activities—including foreign charity recommendations—comply with U.S. laws.

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The Indirect Path to Foreign Charity Support

While DAFs cannot directly grant to non-U.S. entities, Endaoment provides a solution: donors can recommend grants to U.S.-based 501(c)(3) intermediaries that support international causes. This approach allows DAF holders to indirectly support foreign charities while maintaining compliance with IRS regulations.

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Endaoment’s Grant Recommendation Process for Foreign Charities

Endaoment’s rigorous due diligence process ensures that recommended foreign charities through U.S. intermediaries meet 501(c)(3) status or equivalent. Here’s how it works:

1. Donor recommends a grant to a U.S. intermediary supporting a foreign charity
2. Endaoment reviews the recommendation
3. Due diligence is performed on the intermediary and foreign charity
4. If approved, Endaoment disburses the grant to the U.S. intermediary

This process maintains transparency and legal compliance throughout the international giving journey.

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Compliance and Restrictions in Funding Foreign Charities

IRS regulations prohibit direct grants to non-U.S. entities from DAFs. However, grants to qualified U.S.-based 501(c)(3) organizations supporting foreign charities are permitted. Endaoment adheres to strict compliance measures, including:

• No Donor Benefit Clause: Ensures donors do not receive benefits that could jeopardize tax deductions
• Maintaining 501(c)(3) status for the fund
• Verifying the charitable purpose of foreign organizations

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Benefits of Using Endaoment DAFs for International Giving

Endaoment’s DAF platform offers several advantages for international philanthropy:

• Simplifies complex legal requirements
• Provides a tax-efficient way to support global causes
• Offers a user-friendly interface for managing international grants
• Conducts thorough due diligence on foreign charities

For example, a crypto investor could use their Endaoment DAF to support disaster relief efforts in Southeast Asia through a U.S.-based international aid organization, ensuring their contribution reaches those in need while maintaining tax benefits.

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International Grant-Making Made Simple

Endaoment’s platform streamlines the process of supporting foreign charities through DAFs. By leveraging U.S.-based intermediaries, donors can:

• Expand their philanthropic reach globally
• Maintain tax advantages associated with DAF contributions
• Ensure compliance with IRS regulations
• Support a diverse range of international causes