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The International Journal
of Not-for-Profit Law

Volume 13, Issues 1-2, April 2011

A publication of the International Center for Not-for-Profit Law

Table of Contents

Letter from the Editor

Global Philanthropy

Legal Framework for Global Philanthropy: Barriers and Opportunities
David Moore and Douglas Rutzen
International Center for Not-for-Profit Law


Legal Framework of NGOs in Cambodia
Ke Bunthoeurn

Case Note: AID/WATCH Inc. v. Commissioner of Taxation
Myles McGregor-Lowndes

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Editorial Board

Legal Framework for Global Philanthropy: Barriers and Opportunities

David Moore and Douglas Rutzen

International Center for Not-for-Profit Law

I. Introduction

Recent years have witnessed a growth in philanthropy around the world. In Brazil, the number of private foundations increased 300% in twenty years; by 2008, Brazilian foundations gave away more than $5.5 billion.[1] In India, philanthropy exceeded $5 billion in 2006.[2] In Russia, corporate philanthropy was virtually non-existent in 1991 and by 2008 exceeded $2.5 billion.[3] In China, more than 800 private foundations were established during the past five years, an increase of 88%.[4] In Europe, there are now over 95,000 public benefit foundations.[5] In nine European countries (Belgium, Estonia, France, Italy, Luxembourg, Slovakia, Spain, and Sweden), 43% of foundations were established between 2003 and 2005.[6]

The growth of philanthropy has corresponded with a rise of private wealth in Brazil, India, Russia, China, and other countries. Revealingly, 16 of the top 50 billionaires in March 2010 are from India (6), Russia (4), China (3), Brazil (2) and Mexico (1).[7] India has registered the highest growth of donors anywhere in the world. The number of “high net worth individuals” in India has grown nearly 11% per year over the past decade and now totals more than 126,000 individuals.[8] China (including Hong Kong) currently has more than 100 billionaires.[9] Singapore has the highest concentration of millionaire households in the world, with 11.4% of families owning assets of $1 million or more. Springing in part from this increase in personal wealth, donations to charitable organizations in Singapore grew from $279 million in 2001 to $504 million in 2009.[10]

Among other prominent features of current landscape of giving, philanthropy is increasingly cross-border.[11] International giving from the largest U.S. foundations rose from $680 million in 1994 to $6.2 billion in 2008.[12] More broadly, the flow of private philanthropy from OECD countries to developing countries grew from approximately $5 billion in 1991 to $53 billion in 2008.[13] International or cross-border philanthropy embraces giving by foundations, donor-advised funds, and corporations, as well as other private donors. Foundations may include corporate or community foundations.

Barriers to Global Philanthropy[14]

While the growth of cross-border philanthropy is impressive, the legal environment and other factors have limited global philanthropy from reaching its full potential. Indeed, “[philanthropic] institutions are not functioning optimally, constrained by policies, accepted practice, and legal and structural limitations.”[15] Legal barriers include constraints imposed by the “donor” country on the outflow of philanthropy, as well as constraints imposed by the “recipient” country on the inflow of philanthropy. Global philanthropy is also impeded because some countries constrain the development of civil society, including the development of foundations and potential grantee organizations.

Donor country, or “outflow,” constraints include:

Recipient country, or “inflow,” constraints include:

Legal barriers to the formation and operation of eligible nonprofit beneficiaries include, among others:

To close out the discussion of legal barriers, we highlight two thematic issues of specific concern to global philanthropists: disaster relief and the Millennium Development Goals.

Scope of Research

Increasingly, foundations and the philanthropic community are called upon to help engage on issues of global concern, such as disaster relief,[16] the Millennium Development Goals,[17] and other key development challenges.[18] Unfortunately, however, as noted above, the legal framework often impedes effective cross-border philanthropy to address global needs. While a comprehensive treatment of the impact of legal barriers on global philanthropy is beyond the scope of this paper, we note that legal constraints may deter global philanthropy in a number of ways. For example:

Recognizing these challenges, the Council on Foundations commissioned the International Center for Not-for-Profit Law (ICNL) to conduct research on two issues: (a) the legal barriers to cross-border philanthropy, and (b) potential options to address these barriers. The goal of this paper is to support upcoming deliberations of the Global Philanthropy Leadership Initiative Task Force (“Task Force” or “GPLI”).

Section II of this report provides a summary of the legal constraints and draws on examples from the U.S., Europe, and other regions. The examples are illustrative only; no attempt has been made to comprehensively index all existing barriers or all countries with barriers. Moreover, the research is confined to legal impediments to cross-border giving; the social, economic, cultural, and other barriers that may bear upon cross-border giving are excluded from the scope of this report.

Section III of this report sets forth potentially available options or “next steps” for the consideration of the Council on Foundations and the Task Force. Specifically, we recognize that the Council on Foundations and the Task Force are in the best position to develop and implement strategic solutions. Accordingly, we do not present “recommendations” but rather discuss a few “options,” some of which are currently being developed by Task Force members, such as the Mercator Fund.

We at ICNL welcome feedback on the report, and stand ready to address any concerns that the Council of Foundations or Task Force may have. We are honored to play a supportive role in this endeavor, and look forward to ongoing cooperation with the Council on Foundations and the Task Force.

This section will examine the legal barriers that donor countries place on the outflow of philanthropy – that is, the ability of philanthropic organizations to provide funding to recipients outside their home countries. Donor country constraints may prevent global philanthropy or otherwise burden the process of cross-border giving. Outflow barriers include (1) significant limitations on cross-border philanthropy by tax-exempt entities; (2) advance governmental approval to make foreign grants; (3) the limited availability of tax incentives for donations to foreign recipients; (4) burdensome procedural requirements to engage in global philanthropy; (5) counter-terrorism measures; and (6) restrictions on financial transactions with sanctioned countries.

(1) Significant Limitations on Cross-Border Philanthropy by Tax-Exempt Entities
“It is striking that at the present time, the development of philanthropic organizations across borders is hampered to such extent by restrictions in tax regimes which can be summarized under the label of landlock.”[19] For example:

(2) Advance Governmental Approval


(3) Limited, or No, Tax Incentives for International Philanthropy

Tax incentives, in the form of tax deductions, credits, or other preferences, are often available to individuals and/or corporate entities that make donations to certain categories of CSOs. In most countries, however, such tax incentives are available only for donations to domestic recipients.[26]

This approach is another manifestation of “landlock” tax restrictions: “Where today international philanthropy is the area in international tax in which discrimination remains a common feature, the environment for cross-border philanthropy lags behind in this rapidly changing and increasingly internationalized society in which citizens move and trade, and investment has gone global.”[27] As but a few examples of this global phenomenon:

While tax codes often include donor incentives for domestic donations, few envision incentives for cross-border gifts. There are, however, important exceptions. Most recently, a decision by the European Court of Justice (“ECJ”) has led to an erosion of cross-border giving barriers within the European Union (“EU”). Specifically, in January 2009, the European Court of Justice issued its judgment in the case of Hein Persche v Finanzamt Ludenscheid.[32] The case was brought by Mr. Persche, a German national, who made a gift in kind, valued at about EUR 18,180, to the Centre Popular de Lagoa, in Portugal (a retirement home to which a children’s home is attached); claimed a tax deduction in his tax return; but was refused the deduction by the Finanzamt (District Tax Office) on the ground that the beneficiary of the gift was not established in Germany.[33] The ECJ ruled in favor of Mr. Persche.

As explained by the European Foundation Centre: “The ECJ has ruled that tax laws which discriminate against donations to public-benefit organisations based in other EU Member States are against the EC Treaty, as long as the recipient organisations based in other Member States are to be considered ‘equivalent’ to resident public benefit foundations.”[34] In other words, where donor incentives are available for donations to domestic recipients, they must also be available for donations to foreign recipients based in EU Member States or the European Economic Area (EEA), provided they are equivalent to domestic public benefit organizations.

The ruling in the Persche case has triggered a wave of reform of tax legislation within the EU. Prior to the ruling, most national tax laws did not treat donations to domestic and foreign public benefit organizations on an equal footing. Subsequent to the ruling, most countries have now reformed tax laws to comply with the ECJ ruling[35] and recognize the ability of donors to claim deductions for gifts to qualifying foreign organizations resident in the EU or EEA.

While the Court’s judgment held clearly that tax deductions could not be restricted based on the nationality of the recipient alone, it also acknowledged that tax authorities may require taxpayers “to provide such proof as they may consider necessary to determine whether the conditions for deducting expenditure provided for in the legislation at issue have been met and, consequently, whether or not it is appropriate to allow the deduction claimed.”[36] As a result, in those countries that have reformed legislation to allow for tax relief for cross-border gifts (to recipients in the EU or countries in the EEA), procedural rules have also been established to help ensure that the foreign recipient is equivalent to resident public benefit organizations. For example:

In addition, in North America, countries have concluded bilateral treaties, which address cross-border giving. The scope of support for cross-border giving is, however, limited:


[1] These figures are drawn from the article entitled The New Face of Global Philanthropy, which the Council on Foundations kindly provided to ICNL. We are unaware of the author, date, or copyright for this article, but would be happy to provide a more complete citation based on guidance from the Council. For the data on Brazil, reference is made to the Institute for the Development of Social Investment (IDIS).

[2] Arpan Sheth, An Overview of Philanthropy in India, (c) 2010 Bain & Company, Inc., page 2, available at http://www.bain.com/bainweb/PDFs/cms/Public/India_Sheth_Speech.pdf.

[3] Olga Alexeeva, Russia: historic growth in private giving, Philanthropy/UK: newsletter, Issue 34, September 2008, http://www.philanthropyuk.org/Newsletter/Sep2008Issue34/Russia.

[4]The New Face of Global Philanthropy, with reference made to the China Foundation Center.

[5]The New Face of Global Philanthropy, with reference made to the Global Philanthropic Capital Project.

[6]The New Face of Global Philanthropy.

[7] Id.

[8] Sheth, An Overview of Philanthropy in India, page 4; see also High net worth individuals in India up 51% in 2009, The Financial Express, June 24, 2010, http://www.financialexpress.com/news/high-net-worth-individuals-in-india-up-51-in-2009/637684/.

[9]The New Face of Global Philanthropy.

[10]Singapore gives more in philanthropy, China Daily, August 16, 2010, available at http://www.chinadaily.com.cn/world/2010-08/16/content_1137803.htm.

[11]“Charitable giving increasingly needs to be understood in an international context. With populations migrating and the growth in public awareness of international issues and needs, more people globally are interested in making cross-border charitable donations to charity.” CAF briefing paper, International comparisons of charitable giving (November 2006), available at www.efc.be/ftp/public/cpi/Newsletter_Jan07/InternationalGivinghighlights.pdf.

[12] The Foundation Center, The Global Role of U.S. Foundations, © 2010 by the Foundation Center, pg. 18.

[13] The Hudson Institute, Index of Global Philanthropy, 2010, pg. 14, fig. 4.

[14]“Philanthropy may be defined as voluntary and private initiative to support a public objective.” Ineke A. Koele, International Taxation of Philanthropy, IBFD © 2007 Ineke A. Koele, page 3. For purposes of the remainder of this paper, “global philanthropy” refers to cross-border giving – that is the making of grant, donation or voluntary contribution from a private donor in one country to a recipient in another, in order to pursue a public objective. The report will use the terms “global philanthropy” and “cross-border giving” and “philanthropic giving” interchangeably.

[16] Council on Foundations, We Were There: The Role of Foundations in National Disasters, http://classic.cof.org/files/Documents/Publications/WeWereThere.pdf.

[17] United Nations Development Programme, Division for Foundation Affairs, http://www.undp.org/partners/foundations/Foundations-and-UNDP.pdf.

[19] Ineke A. Koele, International Taxation of Philanthropy, IBFD © 2007 Ineke A. Koele, page 4.

[20] Income Tax Act of 1961, § 11(1).

[21] Australian Taxation Office, Income tax guide for non-profit organisations, http://www.ato.gov.au/nonprofit/content.asp?doc=/content/34269.htm&page=3&H3.

[22] Council on Foundations, United States International Grantmaking, Brazil country note, March 2010, http://www.usig.org/countryinfo/brazil.asp.

[23] ICNL, Civic Freedom Monitor, Egypt country report, July 30, 2010, http://www.icnl.org/knowledge/ngolawmonitor/egypt.htm.

[24] Inland Revenue Board of Malaysia, Guidelines for Application of Approval under subsection 44(6) of the Income Tax Act 1967, articles 3.3 and 3.11, available at: http://www.hasil.org.my/lhdnv3e/documents/GarisPanduanTeknikal/GuidelinesSection44(6).pdf.

[25] Regulation of Minister of Home Affairs Number 38 of 2008 on Receipt and Giving of Social Organization Aid from and to Foreign Parties, Article 33. Regulation No. 38 springs from Government Regulation No. 18/1986 on the Implementation of Social Organization Law. Thus, while Regulation No. 38 is of recent origin, the obligations described here and elsewhere in this paper (relating to Regulation No. 38), have existed since 1986.

[26] Note, however, that international CSOs are often precluded from receiving tax-deductible donations even if they have met the legal requirements to operate in a foreign jurisdiction. For example, a Singaporean taxpayer cannot receive a tax deduction for a contribution to an international organization that carries out publicly beneficial activities in Singapore if the organization is based outside the country. Consider also the situation where a multinational corporation and an international CSO have operations in the same country. In some cases, the corporation would have to route a donation through a third country (such as the country where the international CSO is based) in order to be eligible for a tax deduction. This requires considerable tax planning and is a further impediment to global philanthropy.

[27] Koele, International Taxation of Philanthropy, pg. 5.

[28] Australia Taxation Office, Deductible Gift Recipients, http://www.ato.gov.au/nonprofit/content.asp?doc=/content/34516.htm&page=2&H2. See also information on “Overseas Aid Gift Deduction Scheme,” available at http://www.ausaid.gov.au/ngos/tax.cfm. In brief, the Overseas Aid Gift Deduction Scheme (OAGDS) enables donations collected by organizations for their overseas aid activities to be tax deductible so donors can claim their contributions to the organization as a tax deduction. Tax deductibility is only allowable for gifts to aid activities in those countries declared as “developing” by the Minister for Foreign Affairs. There is a two-step process to achieve tax deductibility under the OAGDS. The first step is that an organization must be accepted as an “Approved Organisation” by the Minister for Foreign Affairs. To qualify, the organization must meet seven criteria, one of which is to be “clearly identifiable as Australian.” Second, the organization must put in place a developing country relief fund which is exclusively for the relief of persons in declared developing countries.

[29] Council on Foundations, United States International Grantmaking, India country note, May 2010, http://www.usig.org/countryinfo/india.asp.

[30] European Foundation Centre, Legal and Fiscal Comparative Charts, http://www.efc.be/Legal/Documents/FoundationLawsEU.pdf, section 24.

[31] In June 2010, the Revenue Commissioners introduced a procedure that allows certain foreign organizations to seek a Determination from the Revenue Commissioners that will allow them to receive tax relief in Ireland. To qualify, the body must be legally established in the EEA or EFTA state with its center of control and some operations therein. A majority of its trustees/directors must be resident within the EEA/EFTA state and its objects must conform to the definition of charity under Irish tax law and its governing instrument must bind the charity regarding the application of its income and/or property. In effect, the Revenue Commissioners will require the entity to meet its normal tests for charitable exempt status that it would expect of a domestic applicant charity with the exception of the residency requirement. However, this determination is narrow and is not available to non-EEA/EFTA charities.

[32] ECJ case number C-318/07. Full text of the judgment is available at http://bit.ly/fzDXb3.

[33] Curia, Judgment of the Court of Justice in Case C-318/07, Hein Persche v Finanzamt Ludenscheid, Press Release No. 05/09, January 27, 2009, http://curia.europa.eu/en/actu/communiques/cp09/aff/cp090005en.pdf .

[34] European Foundation Centre, ECJ rules in favour of cross-border giving, EFC briefing, January 27, 2009, http://www.efc.be/EUAdvocacy/EU%20Communiqus%20%20Briefings/befc0908.pdf

[35] These countries include Austria, Bulgaria, Belgium, the Czech Republic, Denmark, Estonia, France, Germany, Greece, Ireland, Italy, Latvia, Luxembourg, the Netherlands, Poland, Slovenia and the U.K.

[36] Curia, Judgment of the Court of Justice in Case C-318/07, Hein Persche v Finanzamt Ludenscheid, Press Release No. 05/09, January 27, 2009, http://curia.europa.eu/en/actu/communiques/cp09/aff/cp090005en.pdf.

[37] Qualification is normally accomplished by registration at the Tax office. According to ICNL’s local partner, the European Commission in May 2010 objected to the registration requirement, and suggested that the only permissible requirement may be that the recipient would qualify as an ANBI; it is unclear how this determination will be made.

[38] Article 22 (2), US-Mexico Double Taxation Treaty.

[39] Council on Foundations, United States International Grantmaking, Mexico country note, May 2010, http://www.usig.org/countryinfo/mexico.asp HERE

[40] For additional information on the legal issues relating to international grantmaking and donor-advised funds, please see the following article: International Grantmaking from Donor-Advised Funds: New Requirements and Changing Practices after the Pension Protection Act of 2006, available at http://www.cof.org/files/Bamboo/programsandservices/legalinfo/images/International%20Grants%20from%20DAFs.pdf.

[41] U.S. Internal Revenue Service, Expenditure Responsibility, http://www.irs.gov/charities/foundations/article/0,,id=137613,00.html.

[42] Techsoup Global, What Is Equivalency Determination?, http://www.techsoupglobal.org/ngosource/ED.

[43] Canada Revenue Agency, Guidance: Canadian Registered Charities Carrying Out Activities Outside Canada, July 8, 2010, section 1, http://www.cra-arc.gc.ca/chrts-gvng/chrts/plcy/cgd/tsd-cnd-eng.html#_ftn1. Indeed, both charitable organizations and charitable foundations are required to expend at least 80% of the income for which donation tax receipts were issued in the previous year, and may meet this disbursement quota by distributing money to “qualified donees” or by carrying out activities themselves.

[44] The full list of qualified donees includes: a registered charity; a registered Canadian amateur athletic association; a housing corporation resident in Canada constituted exclusively to provide low-cost housing for the aged; a Canadian municipality; the United Nations and its agencies; a university that is outside Canada that is prescribed to be a university the student body of which ordinarily includes students from Canada; a charitable organization outside Canada to which Her Majesty in right of Canada has made a gift during the fiscal period or in the 12 months immediately preceding the period and Her Majesty in right of Canada or a province. See http://www.cra-arc.gc.ca/chrts-gvng/chrts/plcy/csp/csp-q01-eng.html. In addition, Canadian tax law also allows Canadians who live “near the border” to make donations to U.S. 501(c)(3) organizations if they have business or employment income from the U.S.

[46] The sample contractor agreement is available at http://ow.ly/29hM4. HERE

[47] Ineke A. Koele, International Taxation of Philanthropy, IBFD © 2007, page 373. Although beyond the scope of the research, there is evidence to suggest that international philanthropy “may be hampered by the threat of anti-terrorism measures.” For example, in a 2004 survey of international funders, the majority agreed that it was now more difficult to fund internationally, and 70% maintained that the war on terrorism complicates overseas funding due to increased security risks abroad. See Koele, page 11-12.

[49] Canada Revenue Agency, Guidance: Canadian Registered Charities Carrying Out Activities Outside Canada, July 8, 2010, section 4.3, http://www.cra-arc.gc.ca/chrts-gvng/chrts/plcy/cgd/tsd-cnd-eng.html#_Toc260732227.

[50]Holder et al. v. Humanitarian Law Project et al., 561 U.S. ___ (2010).

[52] U.S. Department of Treasury, Office of Foreign Assets Control, http://www.ustreas.gov/offices/enforcement/ofac/.

[53] Foreign Affairs and International Trade Canada, Export Controls to Belarus, http://www.international.gc.ca/controls-controles/systems-systemes/excol-ceed/notices-avis/148.aspx.

[54] U.N. Security Council, SC/9948, Security Council Imposes Additional Sanctions on Iran, June 9, 2010, http://www.un.org/News/Press/docs/2010/sc9948.doc.htm.

[55] European Commission, Sanctions or restrictive measures, http://ec.europa.eu/external_relations/cfsp/sanctions/index_en.htm.

[57] It should be noted, however, that an Egyptian administrative court found in a prior case involving another association that dissolution of an organization based on receipt of foreign funds without prior approval is unconstitutional. Cairo Institute for Human Rights Studies, Human Rights in the Arab Region (Annual Report 2008). (The Association of Human Rights Legal Aid (AHRLA), a similar organization, was dissolved in September 2007 for alleged acceptance of foreign funding without the approval of the Administrative authorities. On 26 October 2008 a judicial ruling was issued to halt the dissolution of the NGO.)

[58] In addition to the examples listed here, recent legal initiatives in the Middle East have sought to increase the degree of government engagement in controlling the inflow of foreign funding generally, including philanthropic funding. For example, in March 2009 the Iraqi Government sent to the legislature a draft federal law that requires NGOs receiving donations, grants, or bequests “from within the Republic of Iraq or from abroad” to obtain prior approval from the Department of NGOs in the Secretariat of the Council of Ministers, and also requires individuals who wish to donate to NGOs to notify this Department ahead of time (Article 17 of draft law). The law does not specify how permission is obtained or on what grounds permission will be granted or denied. This would have placed a potentially severe burden in the way of NGO sustainability. Fortunately, the version of the federal law enacted in January 2010 did not include this restriction. In July 2009, the Republic of Yemen’s Ministry of Labor and Social Affairs proposed a package of twenty amendments to the Law on Associations and Foundations (Law 1 of 2001), which, among other proposed changes, would have required domestic associations and foundations to obtain permission from the Minister of Labor and Social Affairs before obtaining any “material or financial support from a foreign person or from foreign actors, either abroad or within the Republic” (Revised Article 23, proposed Article 30). The Ministry would have had significant discretion to deny funding to organizations, and certain types of organizations that may rely heavily on foreign funding could potentially be starved of resources, essentially extinguishing their rights to associate.

[59] ICNL, Civic Freedom Monitor, Algeria country report, April 26, 2010, http://www.icnl.org/knowledge/ngolawmonitor/algeria.htm

[60] ICNL, Civic Freedom Monitor, Jordan country report, July 30, 2010, http://www.icnl.org/knowledge/ngolawmonitor/jordan.htm

[61] Presidential Decree No. 8 of March 12, 2001, para. 1(2).

[62] ICNL, Civic Freedom Monitor, Uzbekistan country report, July 28, 2010, http://www.icnl.org/knowledge/ngolawmonitor/uzbekistan.htm

[63] Decree # 27, Rules on registration of contracts (decisions) on receiving (giving) grants, of February 12, 2004.

[64] ICNL, Memorandum on grant registration problem in Azerbaijan, January 19, 2010.

[65] According to a local expert, the regulations should only apply to social organizations and not foundations and associations, although the Ministry of Internal Affairs continues to insist that all organizations are “social organizations” subject to this set of regulations. See Council on Foundations, United States International Grantmaking, Indonesia country note, April 2010, http://www.usig.org/countryinfo/indonesia.asp.

[66] 2008 Regulation on the Receipt and Giving of Social Organization Aids From and To Foreign Parties (Article 40(1)); see also John Aglionby, “Indonesian Funding Rule “Draconian,” Financial Express (20 December 2008), http://www.thefinancialexpress-bd.com/2008/12/20/53598.html.

[67] Regulation of Minister of Home Affairs Number 38 of 2008 on Receipt and Giving of Social Organization Aid from and to Foreign Parties, Article 10.

[68] Id., Article 11.

[69] Id., Article 12.

[70] Id., Article 13.

[71] At the time of writing, a new Foreign Contributions Regulation Bill was pending in India.

[72] Council on Foundations, United States International Grantmaking, India country note, May 2010, http://www.usig.org/countryinfo/india.asp.

[73] Zimbabwe Electoral Commission Act, § 16.

[74] Article 2(15) of the Proclamation to Provide for the Registration and Regulation of Charities and Societies, 2009.

[75] Debebe Hailegebriel, Ethiopia: Restrictions on Foreign Funding of Civil Society, The International Journal for Not-for-Profit Law, Vol. 12, Issue 3, May 2010, http://www.icnl.org/knowledge/ijnl/vol12iss3/special_3.htm.

[77] 2008 Receipt and Giving of Social Organization Aids From and To Foreign Parties (Article 6(2)(e)).

[78]Proclamation No. 145/2005, A Proclamation to Determine the Administration of Non-governmental Organizations [Eritrea], No. 145/2005, 11 May 2005, Article 9(1), available at: http://www.unhcr.org/refworld/docid/493507c92.html

[79] Sunil Jayasiri, “All foreign aid should go through Govt.: Minister Keheliya Rambukwella(9 March 2009), http://www.lankamission.org/content/view/1723/9/; see also Sri Lanka government expects transparency from NGOs” ColomboPage (6 March 2009), http://www.colombopage.com/archive_09/March6160421RA.html; although the Sri Lankan government has not taken any legislative action as of this writing, government spokespeople have been promising imminent action. 

[80] Sandun A. Jayasekera, “Ministry accuses NGOs of fraud,” Daily Mirror (27 March 2009), http://www.dailymirror.lk/DM_BLOG/Sections/frmNewsDetailView.aspx?ARTID=44613.

[81] Asamblea Nacional anunció agenda legislativa de 2009 (10 March 2009), http://www.asambleanacional.gob.ve/index.php?option=com_content&task=view&id=21299&Itemid=27.

[82] ICNL, Civic Freedom Monitor, Turkey country report, July 12, 2010, http://www.icnl.org/knowledge/ngolawmonitor/turkey.htm

[83] ICNL, Civic Freedom Monitor, Uzbekistan country report, July 28, 2010, http://www.icnl.org/knowledge/ngolawmonitor/uzbekistan.htm

[84] Council on Foundations, United States International Grantmaking, India country note, May 2010, http://www.usig.org/countryinfo/india.asp.

[85] Regulation of Minister of Home Affairs Number 38 of 2008 on Receipt and Giving of Social Organization Aid from and to Foreign Parties, Article 17(2).

[86] Regulation No. 38, Article 40(1-2).

[87] While not relating directly to foreign grantmaking per se, local partners in India have raised concerns with the tax treatment of anonymous donations to charitable organizations. According to §115BBC of the Finance Act, 2006, anonymous donations to charitable organizations are subject to the maximum marginal rate of 30%. Subsequently, Finance (No. 2) Act, 2009, provided some relief, in that anonymous donations aggregating up to five years of the total income of an organization or a sum of Rs 100,000, whichever is higher, will not be taxed. Still, charitable organizations in India – and especially those organizations, like the Salvation Army India, which raise funds through donation collection boxes – find that §115BBC is a deterrent to mobilize funds for welfare and developmental work from the general public. Indeed, several such organizations have been compelled to remove these collection boxes.

[88] It is important to recognize that a “grant” and a “donation” are distinct concepts under Russian law. Foreign donors need not be on a government-approved list in order to make tax-exempt donations.

[89] Since the introduction of the multiple currency system, however, grant recipients are no longer affected by exchange rate problems.

[90] More recently, the Rockefeller Brothers Fund (RBF) launched a long-term project in six countries of the West Balkans to promote a legal-fiscal environment that encourages the creation and sustainability of indigenous private foundations so that they remain as funders of local NGOs after the withdrawal of international foundations.

[91]Defending Civil Society, A Report of the World Movement for Democracy, co-authored by ICNL and the World Movement for Democracy Secretariat at the National Endowment for Democracy, © World Movement for Democracy / ICNL 2008.

[92] For additional examples, please see Defending Civil Society.

[93] Indeed, from September 13-16, 2010, prosecutor’s offices in Moscow and in a number of other cities carried out a series of coordinated inspections of about 40 Russian NGOs working in the areas of human rights, public interest, and social and economic issues. Several Russian NGOs issued a joint statement, demanding an end to what they describe as a “campaign of intimidation.” See http://www.rightsinrussia.info/home/hro-org-in-english-1/ngos/statement.

[94] Hadeel Qazzaz, Palestine: West Bank and Gaza Strip, in Barbara Ibrahim et. al., From Charity to Social Change: Trends in Arab Philanthropy (American University in Cairo: 2008), p. 96.

[95] ICNL, Civic Freedom Monitor, Rwanda country report, July 30, 2010, http://www.icnl.org/knowledge/ngolawmonitor/rwanda.htm.

[96] The Central Repository project championed by The Council on Foundations will expedite the process for some grantees, but challenges will remain for grantees that are not included in the Central Repository.

[97] U.S. Internal Revenue Service, Disaster Relief: Assistance by Employer-Sponsored Private Foundation, http://www.irs.gov/charities/charitable/article/0,,id=149929,00.html.

[98] Association for India’s Development, FCRA waiver for Tsunami relief, http://survivors.aidindia.org/site/content/view/132/146/.

[99]See, e.g., Cyclone Relief - Distrust of Junta Deters Donors, http://ipsnews.net/news.asp?idnews=44410.

[100] CBC News, Ottawa matching Canadians’ Haiti donations, http://www.cbc.ca/canada/story/2010/01/14/haiti-canada-aid.html.

[102]International Grantmaking IV Highlights, (Foundation Center: 2008). Available at http://foundationcenter.org/gainknowledge/research/pdf/intlgmiv_highlights.pdf.

[103] Debebe Hailegebriel, Ethiopia: Restrictions on Foreign Funding of Civil Society, The International Journal for Not-for-Profit Law, Vol. 12, Issue 3, May 2010, http://www.icnl.org/knowledge/ijnl/vol12iss3/special_3.htm.

[105] The Herald, Government to Regulate HIV/Aids Organisations, March 23, 2010, http://allafrica.com/stories/201003230065.html.

[107] Faith Zaba, Decision on NGOs threatens Western aid, Zimbabwe Independent, July 29, 2010, http://www.theindependent.co.zw/local/27501-decision-on-ngos-threatens-western-aid.html.

[109] For more information, see http://www.oecd.org/document/18/0,3343,en_2649_3236398_35401554_1_1_1_1,00.html.

[110] We recognize that the Council on Foundations and other Task Force members are already engaged in reform efforts in their home countries. We defer to these groups on whether there is a role for other Task Force members to support these ongoing domestic initiatives.

[111] OECD/DAC stands for the Development Assistance Committee of the Organisation for Economic Cooperation and Development. See www.oecd.org/dac/.

[113] ICNL, International Investment Treaty Protection of Not-for-Profit Organizations, May 2008, available at: http://www.pdfdownload.org/pdf2html/view_online.php?url=http%3A%2F%2Fwww.icnl.org%2Fknowledge%2Fpubs%2FBITNPOProtection2.pdf.

[116] Research into the question of discrimination includes (1) the Nebolsine Report (1963) (“New efforts in the direction of fiscal assistance to donors and the extension of fiscal privileges to international charitable organizations are urgently needed.”); and (2) the 1969 International Fiscal Associations (IFA) Report (“… a critical examination of the criteria and arguments used for a restrictive application of tax concessions seems to provide a sufficient reason to stat that there is hardly an objection to a removal of such obstacles. It is necessary, however, to establish several rules to make a removal of the obstacles possible in practice.”). Ineke A. Koele, International Taxation of Philanthropy, IBFD © 2007, pages 12-14.

[117] Ineke A. Koele, International Taxation of Philanthropy, IBFD © 2007, page 9.

[120] Id., pages 6-8. The Model Tax Convention was first issued in 1958 and remains in use today; see http://www.oecdobserver.org/news/fullstory.php/aid/2742/.

[121] In the interest of brainstorming, we offer an additional idea for an initiative that would focus on creating “carrots” to encourage reform. Often the focus of international attention is on “naming and shaming.” This initiative, by contrast, would adopt a “naming and faming” approach and seek to reward those that are opening their borders to the outflow and/or inflow of philanthropic giving. More specifically, the initiative would seek to encourage the removal of legal barriers and the introduction of incentives to the legal environment by creating a contest or sense of competition among countries in a designated region or sub-region. Following the announcement of the contest, each country would be given a year (or more) to demonstrate progress in improved legislation and/or improved implementation. At the conclusion of the contest period, candidates would be nominated for consideration, and then measured based on objective, predetermined criteria. The winner (or winners) of the competition would then receive a large philanthropic award, which could be a one-time award or the commitment of increased philanthropic giving during the upcoming year(s). While we recognize issues relating to this approach, the key point is that we think it would useful to consider the development of new “carrots” to encourage countries to reform their legal framework for global philanthropy.

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