‘Equivalency determination’ takes on a new face

NGOsource, a first-of-its-kind equivalency determination information repository, will go live this March. Developed by the San Francisco-based non-profit TechSoup Global in partnership with the Council on Foundations, Foundation Center, Independent Sector, InterAction and a consortium of donors, the repository will help streamline what is now a cumbersome process for cross-border grantmaking. Equivalency determination is how foundations currently determine if a non-US organization can be considered the equivalent of a US Internal Revenue Service-designated 501(c)(3) public charity.

An advisory council worked for five years to develop the concept, select a repository host and oversee its creation – with several early users working with NGOsource to test the service. However, the repository’s future wasn’t assured until US Secretary of State Hillary Clinton, after working through the particulars with Treasury, the IRS and various legal experts, announced a regulatory change at last September’s Clinton Global Initiative meeting. At a Global Philanthropy Working Group press conference, she said the new procedures would considerably reduce the costs associated with equivalency determination and ‘clear the way for foundations to set up organizations that can serve as repositories of this determination’.

Regulations in place at the time of the announcement required each foundation to conduct its own determination, upon which only it could rely, an inefficient and costly process. The new process will allow international funders to make use of determinations done for other funders. Once an initial equivalency determination is issued for a specific grantee, the same information will be available for the repository’s experts to issue EDs to other foundations.

As a result, the cost to foundations of equivalency determinations will be significantly reduced, as will the administrative burden on prospective grantees, who will need to undergo equivalency determination only once, with periodic updates to ensure compliance with regulations. The repository may also encourage a wider range of funders to make grants outside the US.

Finally, it will promote a consistency of practice across the sector. As advisory council member Pamela Foster of the Rockefeller Foundation notes: ‘The real promise for international grantmakers comes from the ability to standardize what is currently done erratically, or not at all, by funders.’

Kyle Reis is manager of strategy and operations at the Ford Foundation. He was an original member of the project’s exploratory committee and continues to represent the Grants Managers Network on the advisory council. Email k.reis@fordfoundation.org


Comments (0)

Leave a Reply

Your email address will not be published.



 
Next News to read

Foundation Center: Reporting Commitment makes huge strides towards transparency

Alliance magazine