Best practices for global nonprofit workU.S.-based nonprofits face various issues when operating abroad — including compliance with the applicable laws, the risks of noncompliance, and protective measures for the organization, the employees and the volunteers. Here's a primer on the basics.
Before taking the leap of operating abroad, consider whether you could further your charitable goals by supporting the work of another charity already qualified to operate in a given foreign country. This partnership could be a collaborative effort documented in a simple memorandum of understanding or a more formal legal partnership. Providing grants and operational support are additional ways your organization might advance its purpose abroad.
It's common for countries, states, and cities or municipalities to require foreign corporations, including nonprofits, to register with the relevant governmental agency and be subject to its regulations. Failing to comply with these requirements may result in fines or — in the worst case scenario — imprisonment.
Deciphering and complying with foreign registration requirements for particular countries at the various levels of government can be a difficult and time-consuming process. The Civic Freedom Monitor from the International Center for Not-For-Profit Law is a good starting place to determine what may be required for particular countries.
It's also important to keep in mind that certain activities, such as education or health care, might be subject to additional licensing and permit requirements. Simply opening a school or a health clinic in a foreign country can result in harsh penalties for the charitable organization, including its staff and volunteers.
Anti-terrorism and sanctioned countries
Executive Order 13224, issued by President Bush shortly after the 9/11 terrorist attacks, blocks the property of and prohibits transactions with persons and entities that commit, threaten to commit or support terrorism ("prohibited persons"). Donations of food, clothing, medicine or other items intended to relieve human suffering are included in these prohibited transactions.
In other words, it's against federal law for any American nonprofit to provide goods or services of any kind to prohibited persons. The Office of Foreign Assets Control maintains a list of individuals and companies deemed prohibited persons, called the Specially Designated Nationals and Blocked Persons List. Compliance can be challenging, especially when a person or entity on the list has a common name.
In response to concerns from nonprofits on how to comply with anti-terrorism laws, the Department of Treasury offers a summary of voluntary best practices for U.S.-based charities. Another resource to help nonprofits navigate anti-terrorism laws, entitled the Principles of International Charity, was created by a coalition of more than 40 nonprofits led by the Council of Foundations.
It's also important for nonprofits operating abroad to avoid violating any restrictions against the transfer of assets to a sanctioned country or operating within a sanctioned country without an appropriate license from the Office of Foreign Assets Control. The U.S. Department of Treasury maintains a comprehensive list of sanctions programs and country information, and the Office of Foreign Assets Control provides guidance related to the provision of humanitarian assistance by nonprofits.
Foreign bank accounts
The Report of Foreign Bank and Financial Accounts (FBAR) is an annual report filed with the U.S. Treasury Department. American nonprofits that maintain foreign bank accounts above a certain threshold must file an annual FBAR. For details, here's a summary on FBAR reporting requirements for nonprofits from the Pro Bono Partnership/Atlanta.
Trademark protection extended to your nonprofit in the U.S. will likely not apply when you're operating in a foreign country. In most countries, trademark protection is based on registration with the applicable authorities. Many jurisdictions also have a "first to file" rule, meaning that a nonprofit operating without trademark protection could lose its trademark if another entity registers it first. To avoid the risk of losing your trademark in another country, be careful to comply with registration requirements before conducting any charitable activities abroad.
Political activities or lobbying
The prohibition against tax-exempt organizations participating in political activities or lobbying for the election of a specific candidate applies with equal force to elections in the U.S. and in foreign countries. Additionally, even political activities that are permissible for nonprofits in the U.S. — such as nonpartisan voter registration drives — may not be permissible in foreign countries and could even constitute a crime. It's imperative to understand the applicable rules before engaging in any political activities in a foreign country.
Your U.S.-based insurance coverage may not extend to activities pursued in a foreign country. Anticipate in advance a foreign employee or volunteer getting injured, arrested or otherwise creating legal liabilities for your nonprofit abroad. Check with your insurance broker for recommendations on the most appropriate coverage.
The bottom line
Consider talking to international nonprofits already operating in your destination country to find out what steps they took or what unforeseen issues they faced. Above all, be sure to consult a qualified legal adviser in your targeted country to ensure you're operating in a safe and legal manner.
The Lawfare Institute: The national emergency under Executive Order 13224 moves into year 16 by Zac Copeland (2016)
Council on Foundations: Handbook on counter-terrorism measures: What US nonprofits and grant makers need to know (2004)
Nonprofit Risk Management Center: Travel safe: Managing the legal risks that arise from international operations by Jefferson C. Glassie