No, not without jeopardizing the tax deductibility of the original contribution. The topic is complicated, but Revenue Ruling 63-252 is the starting point. Normally, individuals donating to a foreign charity do not qualify for a tax deduction. 63-252 says that simply 'washing' the funds through a US-based nonprofit is insufficient for making them tax deductible. It outlines two approaches that are not considered simply earmarking or serving as a conduit. One approach is for the US org to make grants to foreign charities (who would qualify for a c3 if they were US-based) on the basis of grant applications for programs that further the US org's charitable mission. Another is for a US org to create a subsidiary org in a foreign country that actually does the programming, and is closely managed by the US parent.
In practice, large DAF sponsors like Schwab or National Philanthropic Trust already provide services to their DAF-holders to facilitate international grantmaking by verifying that the international recipient is equivalent to a US 501c3, and ensuring that there is appropriate expenditure responsibility at that organization. This is probably going to be a better route for your donors to explore.
Thank you,
Isaac Shalev
Data Strategy Expert
Sage70, Inc.
(917) 859-0151
isaac@sage70.com
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Original Message:
Sent: 3/4/2024 9:54:00 AM
From: Ala Rasoul
Subject: Can we accept a DAF or IRA distribution and pass 100% of the funds to an organization outside the country?
we work with international partners and some of our donors are asking us to facilitate the acceptance of their DAF and IRA distributions on behalf of our partners outside the U.S., it's much easier for us to transfer those funds internationally. Is this something we can do? or are we only allowed to accept distributions that meant to fully benefit our organization only?