According to research reported in the Nonprofit Times, multiple factors are prompting Americans to donate to support war relief efforts. Top areas of concern are medical support, children’s issues, and short-term humanitarian aid. Supporting long-term needs is also a motivator, including focus areas such as rebuilding Ukraine, refugee support, mental health, and democracy.
Particularly interesting are the roots of motivation: 32% of those surveyed said they believed their donation would make a difference; 31% gave because they did not know what else to do; and the rest mentioned both. Plus, gifts of cryptocurrency are skyrocketing, totallling nearly $60 million given to Ukrainian causes from the start of the war through early March.
If you are a wealth advisor, estate attorney, or CPA, before you answer your clients’ questions about how they can best help Ukrainians in need, you’ll want to brush up on tax law. And as always, the team at the community foundation is just a phone call away; we’re happy to help.
The tax-deductibility of gifts to international organizations has long been the subject of complicated rules. You and your client must navigate a web of laws and regulations, especially if your client decides to venture into making direct grants to organizations in the affected region. You’ll still want to be careful even if your client decides to work through a United States charity or even an intermediary fund managed by an organization in the United States because international giving in any form is a complex endeavor.
For example, if a client wants to make a direct grant to a foreign nongovernmental organization, you need to understand what would be required in terms of making an “Equivalency Determination” or exercising the proper “Expenditure Responsibility” over the grants.
Remember, too, that embargoes and trade sanctions play a role in the viability of making a grant to an international organization, as does a law known as Executive Order 13224 which extends the United States government’s ability to freeze assets of individuals and organizations that support terrorism. This power extends to donations received by those individuals and organizations. In addition, the Foreign Corrupt Practices Act and the U.S. Patriot Act impose further safeguards designed to prevent charitable donations from being deployed to fund bribes or terrorist activities.
The layers of laws and regulations are the reason many of your clients may choose to give to a United States 501(c)(3) organization that is working in the affected region. The team at the community foundation can help you and your clients review a wide variety of options, structure gifts for maximum tax benefit, and identify the most effective ways to make an impact given a client's charitable goals, risk tolerance, and level of desire for proximity of the organization to the people in need.