About U.S. "friends" fundraising organizations

Does the U.S. Internal Revenue Service have special rules for U.S. organization's that raise funds for and make grants to organizations outside the U.S.?

Yes, the IRS has strict rules for organizations that make grants outside the U.S.including:

1. Your U.S. friends organization must be independent from any nongovernmental organization outside the U.S. to which you plan to make grants.  The international NGO may have one or more representatives on the U.S. friends organization board of directors.  However, the NGO representatives should make-up only a minority of the U.S. friends board, and must not vote on grants make to the NGO.

2. All grants to organizations outside the U.S. must be documents in writing and follow appropriate grant-making rules.

Ephaseus, Turkey

Ephaseus, Turkey

3. U.S. organizations that make grants to groups outside the U.S. must follow U.S. anti-terrorist financing guidelines, including OFAC (Office of Foreign Assets Control) rules.

4. U.S. fundraising organizations may not serve merely as "pass-through" entities. The U.S. friends organization must operate its own programs, including for example provide public awareness in the U.S. of the international programs supported.of your First, within about a week after we receive your information, we will provide you with draft articles of incorporation for your review. 

Who can serve on the board of a U.S. "friends" organization?

Anyone may serve on the board of directors of the organization. They do not have to be U.S. residents or citizens. We recommend at least 3-5 board members, with a majority not having any direct financial interest in the NGO to which grants may be made.

In what state should we incorporate?

The laws for nonprofit corporations are fairly similar in most states. That said, some states are easier to work with than others, and have lower registration fees. Another factor to consider is that your U.S. organization must have a "registered agent" in the state of incorporation. This is the person and address where the state will send notices and documents. Therefore you may want to select a state in which a member of your board of directors for the U.S. organization resides. Alternatively, you may hire a commercial company to serve as the registered agent. We will help you select a state that best serves your needs.

We've heard that the paperwork to manage and maintain a U.S. friends groups is extensive and for that reason we should consider using a donor-advised fund or other organization to raise tax-deductible U.S. donations. Do you agree?

How long does the registration process take?

Once you engage our firm and provide the necessary information, we typically have articles of incorporation drafted for your review in about a week. States vary significantly in the time they take to review filed articles of incorporation, from a few days to a few weeks, up to a month or more in states like California. 

While the articles of incorporation are under review in the state, we will draft the remaining documents for you including obtaining a federal tax identification number (employer identification number or EIN), drafting bylaws, grant procedures, and the IRS Form 1023 application.  Once filed with the IRS, it generally takes about 6 months for the IRS to review the application. The good news is that tax-exemption when granted by the IRS dates back to the original date of incorporation.  

Don’t delay.  Get started today.


Schedule a discovery session today to learn more about our U.S. friends program.

STEP 2.  Sign our engagement letter.

Our engagement letter sets out the financial details our relationship and must be signed before we can begin working with each client. The space provided allows you to send your digital signature so you can quickly email it back to our firm.

STEP 3.  Pay our fees online.

Finally, use the attached link to pay the required fees.  We accept all major credit cards.


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