How Myriad USA Manages Risk: Comprehensive Due Diligence for Impactful International Charitable Giving

Ensuring thorough due diligence in international charitable giving is essential for minimizing risk, complying with IRS regulations, and building impactful, trusted partnerships between donors and nonprofits. Cross-border grantmaking comes with unique rules and regulations, making due diligence a critical part of a grantmaker’s process. 

There are two ways to support a foreign charity and potentially receive a tax advantage: 

• Equivalency Determination (ED) is where a grantmaker assesses whether a foreign grantee is equivalent to a U.S. public charity. If deemed equivalent, the grantmaker can reduce restrictions on the grant funds and grant reporting requirements.   
• Expenditure Responsibility (ER) is where a grantmaker ensures that the funded project is charitable, regardless of the grantee’s equivalency. It requires a grant agreement outlining spending and reporting responsibilities, mandates the grantee to maintain grant funds in a separate account, and necessitates detailed reporting on fund usage, including any required tax reporting. 

ED is often better for flexible, unrestricted grants and capital expenditures but is more expensive and administratively onerous upfront. ER has a lower barrier to entry and is better for nonprofits of all sizes but has more restrictions on activities.  

At Myriad USA, we can support the ER or ED process depending on the nature of the grant activity and donor intent. We also take measures to ensure additional risk management of all grants, going above the minimum requirements of either process.   

Our meticulous due diligence minimizes risk and ensures compliance by verifying the legal status of potential grantees, assessing their eligibility for charitable activities, and evaluating their capacity to manage foreign funds. Myriad USA’s differentiator is leveraging local expertise and knowledge to ensure a higher level of compliance that reflects the unique requirements of each country where we make grants.  

Importance of local expertise in compliance 

Donors interested in supporting nonprofit initiatives abroad may encounter various obstacles in the due diligence process such as navigating language barriers and keeping up with local regulations. Our team of regional and in-country experts plays a crucial role in keeping up with trends and reviewing application materials with an understanding of local compliance requirements that differ from one country to another. Their deep knowledge of the domestic civil sector, local legalities, and regulations ensures compliance with specific in-country requirements and provides insights on evolving trends that may impact risks. Further, to lower the administrative burden on grantees, we accept applications in any local language.  

With an eye to both compliance and reputation, Myriad USA not only meets regulatory standards but also builds a foundation of trust and transparency with our donors and grantees.