Legal Framework for Global Philanthropy:
Barriers and Opportunities

Prepared by the 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 foundat ions 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 bil lion. 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,
Luxembour g, 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 bi llionaires 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, phi lanthropy 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 fo undations.

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

ICNL Report on Global Philanthropy 2 October 25, 2010
imposed by the “recipie nt” 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,” co nstraints include:

significant limitations on foreign grantmaking by tax -exempt entities;
advance governmental approval for cross -border giving;
limited, or no, tax incentives for international philanthropy;
burdensome procedural requirements for forei gn grants;
counter -terrorism measures; and
restrictions on financial transactions with sanctioned countries.

Recipient country, or “inflow,” constraints include:

advance government approval to receive foreign funding;
restrictions on the types of act ivities that can be supported with foreign funding;
mandatory routing of foreign funding through government channels;
post -receipt procedural burdens, such as burdensome notification and reporting
requirements;
the taxation of global philanthropy; and
foreign exchange requirements.

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

high minimum thresholds for members or assets;
burdensome registration procedures;
excessive government discretion in registration and termination decisions;
prohibitions on areas of activity;
invasive supervisory oversight; and
barriers to cross -border communication.

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
(MDGs), 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 leg al 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:

ICNL Report on Global Philanthropy 3 October 25, 2010

some philanthropists choose not to engage in global philanthropy because the
impediments are too daunting;
some philanthropists – such as corporate foundations with employee matching
programs – have chosen to end, or substantially limit, the international component
of their philanthropy program;
some philanthropists who do choose to engage in global philanthropy will, in the
context of giving to some countries, only be able to accomplish philanthropic giving
through complex tax planning; and
in some circumstances, philanthropists seeking to fund local recipients default to
funding internationa l organizations.

Recognizing these challenges, the Council on Foundations commissioned 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 pape r 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
illustrative examples from the U.S., Europe, a nd 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, ec onomic, 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 Foundatio ns 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.

Illustrative options include:

surveying philanthropists on legal barriers they confront;
developing an index of barriers to cross -border philanthropy;
expanding tools to help foundations navigate the legal environment for cross -border
philanthropy;
developing a more robust system to monitor and share information about legal
developments affecting cross -border philanthropy;
undertaking analytic work to he lp make the case to skeptical government officials
that global philanthropy is in the interest of both donor and recipient countries;
establishing principles for cross -border philanthropy;
undertaking or supporting initiatives to reform of laws affecting cross -border
philanthropy;

ICNL Report on Global Philanthropy 4 October 25, 2010
developing a treaty on cross -border philanthropy; and
“special initiatives” relating to disaster relief and the Millennium Development
Goals.

We at ICNL welcome feedback on the report, and stand ready to address any concerns tha t
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.

II. Barriers to Cross -Border Philanthropy

A. Donor Count ry Restrictions (Outflow of Philanthropy)

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 cou ntries. 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 ap proval 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 tr ansactions with sanctioned countries.

(1) Significant Limitations on Cross -Border Philanthropy by Tax -Exempt Entities

Some countries limit the ability of tax -exempt and/or charitable organizations to engage in
cross -border philanthropy. “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:

In India , tax -exempt entities must apply their income within India. More
specifically, if part of the income of the organizations is applied for a charitable
purpose outside India, that income would be liable to tax. Trust income, however,
may be spent outside India without being subject to income tax, if it is spent for a
charitable purpose to promote international welfare “in which India is interested.” 20
In Australia , a tax -exempt organization must, in order to maintain the exempt
status, meet the physical presence test, which requires that it pursue its objectives
and incur its expenditure principally (i.e., mainly or chiefly) in Australia. 21
In Brazil , Article 14 of the National Tax Code stipulates that to obtain tax exemption,
an educational or social assistance entity must, among oth er conditions, limit the
use of its resources to the Brazilian territory.” 22

ICNL Report on Global Philanthropy 5 October 25, 2010
(2) Advance Governmental Approval

While some countries seek to prevent certain kinds of organizations from engaging in
cross -border philanthropy, others require philanthropic organizations to receive
governmental approval to engage in cross -border giving. Moreover, governments often
have broad discretion in deciding whether or not to extend approval to entities seeking to
engage in cross -border activities. Examples include:

In Egypt , Article 17 of Law No. 84 (2002) prohibits domestic NGOs from sending
funds or other materials (except for scientific and technical books, magazines,
publications, and brochures) to foreign persons or organizations abroad without
advance approval by the Minister of Social Solidarity. 23
In the U.A.E. , Article 43 of the Federal Law No. 2 (2008) prohibits the distribution of
grants, gifts, donations, or other transfers to foreign entities without ministerial
approval.
In Malaysia , charitable organizati ons must conduct activities that “serve or benefit
Malaysians” and may carry out charitable activities outside Malaysia only “with the
prior consent of the Minister of Finance.” 24
In Indonesia , according to Regulation No. 38 of the Minister of Home Affairs (2008),
social organizations wishing to give aid to foreign recipients must obtain approval
from the Government. Aid can only be given to recipients in countries with
diplomatic relations with Indonesia and only where it is “intended for humanitarian
act ivities” and it does “not caus[e] negative impact on the domestic economy and
social life.” 25

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

Tax incentives, in the form of tax deductions, credits, or other preferences, are often
ava ilable 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 “land lock” 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 internati onalized society in which citizens move and
trade, and investment has gone global.” 27 As but a few examples of this global
phenomenon:

In Australia , “deductible gift recipients” – that is, recipients eligible to receive gifts
for which the donor may claim a deduction – must be in Australia. Recipients not in
Australia cannot be deductible gift recipients. For example, a fund set up and
operated in Australia that makes distributions for the construction of schools run by
a religious institution in Europe cannot be endorsed as a deductible gift recipient,
because the fund is not “in Australia.” 28

ICNL Report on Global Philanthropy 6 October 25, 2010
In India , in order to be eligible for a tax deduction, the donor must give to a
recipient organization that has been created “for charitable purposes in India.” 29
In Ireland , donors are eligible for tax relief only when donations are made to
charities with an Irish Charity number. 30 In other words, the Irish Revenue
Commissioners will only grant tax relief to a charity that is registered in its list of
bodies that are exempt from tax for charitable purposes. 31

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 Cour t 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 w as brought by M r. 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 re fused 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 organizations 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 be nefit 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 ar e 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 be nefit 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 organizat ions. For example:

ICNL Report on Global Philanthropy 7 October 25, 2010
In Austria , in order to claim tax benefits for a donation to a foreign -based recipient,
the recipient must be incorporated within the EU or EEA and must be comparable to
an Austrian nonprofit corporation or public corporation, and mus t be registered on
a list maintained by the fiscal authorities in Vienna. Foreign -based recipients must
comply with the same criteria as Austrian organizations in order to be included on
the list.
In Bulgaria , in order to claim a tax deduction, the dono r must prove that the foreign
recipient is identical or similar to Bulgarian public benefit organizations, which can
be accomplished by presenting to the National Revenue Agency an officially
notarized document, issued and verified by the relevant foreign state authorities,
which proves the status of the foreign recipient organization, alongside an official
Bulgarian translation.
In France , in order to benefit from tax relief, the foreign recipient must either be
accredited by the French authorities or be comparable to a French tax -exempt
organization. In the latter case, the donor must file evidence that the foreign
recipient organization is comparable to a French tax -exempt organization.
In Germany , in order to deduct charitable donations to EU or EEA based public
benefit organizations in cases where the recipient solely pursues public benefit
activities outside of Germany, the activities “either have to support individuals
which have their permanent residence in Germany or the activities could benefit
Germany’s reputation.”
In the Netherlands , donors may receive tax benefits for a donation to a foreign
recipient, provided that the Ministry of Finance has qualified it as an institution with
a general interest purpose (or “ANBI”). 37

In addition, in Nor th America, countries have concluded bilateral treaties, which address
cross -border giving. The scope of support for cross -border giving is, however, limited:

The U.S. -Canada tax treaty permits U.S. taxpayers to receive a tax deduction for
contributions to Canadian charities if certain requirements are met. Most
importantly, the deduction may not exceed the amount of the donor’s Canadian
source income. Canadians may treat donations to U.S. 501(c)(3) organizations just
as they treat contributions to Cana dian registered charities, with the condition that
gifts be limited to 70% of U.S. source income; the Canadian authorities interpret the
tax treaty to place the same percentage limitation on gifts by Canadian registered
charities to 501(c)(3) organizations .
The U.S. -Mexico Double Taxation Treaty also envisions the possibility that
contributions by a U.S. resident to a Mexican organization may constitute a
charitable contribution and be tax deductible, “if the Contracting States agree that a
provision of Mex ican law provides standards for organizations authorized to receive
deductible contributions that are essentially equivalent to the standards of United
States law for public charities.” 38 Such contributions are deductible only for U.S.
taxpayers with incom e from Mexican sources, and the extent of the deduction
depends on the magnitude of the Mexican source income. 39 The Double Taxation

ICNL Report on Global Philanthropy 8 October 25, 2010
Treaty provides similar rules with respect to income tax deductions under Mexican
law for Mexican residents who make contri butions to U.S. public charities.

(4) Procedural Requirements
In some countries, foundations must comply with various procedural requirements before
making a foreign grant. For example, in the United States , private foundations (including
company -sponsor ed private foundations) and donor -advised funds 40 utilize two basic
approaches when making grants to a foreign entity: “expenditure responsibility” and
“equivalency determination.” Under “expenditure responsibility,” the donor must exert
reasonabl e effort s and establish adequate procedures:
1. To see that the grant is spent only for the purpose for which it is made,
2. To obtain full and complete reports from the grantee organization on how the funds
are spent, and
3. To make full and detailed reports on the expend itures to the IRS. 41
“Equivalency determination” is a process designed to assess whether a potential non -U.S.
grantee organization is the equivalent of a U.S. public charity. It typically involves the
collection of extensive documentation, including the potential grantee’s governing
documents, financial information, and other information in order to make the equivalency
determination. If outside counsel is involved in the process, this process typically costs
between $5,000 and $10,000. 42
According to Ca nada ’s Income Tax Act, a registered charity can only use its resources in
two ways: on its own activities and on gifts to “qualified donees.” 43 The Income Tax Act
specifies that “qualified donees” are organizations that can issue official donation receipts
for gifts that individuals and corporations make to them. “Qualified donees” are almost
exclusively Canadian, including, among others, a registered charity, a registered Canadian
amateur athletic association, and a Canadian municipality.” 44
The Canadian Revenue Authority has just released new guidance called “Canadian
Registered Charities Carrying out Activities Outside Canada.” 45 This guidance document
deals with the relationship between a Canadian charity and any non -qualified donee,
whether in Canada or abroad; almost all organizations outside of Canada are non -qualified
donees. In order to transfer resources to non -qualified donees, a Canadian charity needs to
maintain “direction and control” over those resources. The guidance document helps a
Canad ian charity understand what is required for direction and control. Failure to
maintain direction and control can result in a 105% penalty of the amount transferred
and/or revocation of charitable status. A sample contractor agreement for a Canadian
regis tered charity conducting foreign activities is also available. 46
(5) Counter -Terrorism Measures

As part of counter -terrorism efforts, countries and international bodies, such as the United
Nations, have imposed rules and restrictions that, among other thi ngs, restrict giving –

ICNL Report on Global Philanthropy 9 October 25, 2010
often in the form of outright prohibitions – to designated individuals and entities. Recent
years have witnessed laws, regulations, and “voluntary” guidelines that impact cross –
border giving. Indeed, it has been suggested that “phil anthropic organizations are finding
themselves in an era when the regulatory paradigm is shifting from a tax -based regulatory
environment to a regulatory environment modeled on the fight against money laundering
and terrorism.” 47 Recognizing that a tremend ous amount of commentary and research has
already been produced to identify, explain and analyze counter -terrorism measures, we do
not seek to provide comprehensive treatment of the topic in this brief section, but rather to
highlight a few illustrative co untry examples:

The U.K. Terrorism (United Nations Measures) Order 2006 prohibits any U.K.
national or other person within the U.K. jurisdiction from knowingly “deal[ing] with
funds or economic resources” belonging to listed persons without prior
authoriz ation by the Treasury. Such lists include individuals related to al -Qaida and
the Taliban, as well as those related to a number of states, including Belarus,
Myanmar (Burma), DRC, Eritrea, Iran, Iraq, Cote d’Ivoire, Liberia, Somalia, Sudan,
and Zimbabwe. 48
In Canada , under the Charities Registration (Security Information) Act and the
Income Tax Act , a charity’s status may be revoked if it operates in a way that makes
its resources available, either directly or indirectly, to an entity that is a listed ent ity
as defined in subsection 83.01(1) of the Criminal Code ; or to any other entity
(person, group, trust, partnership, or fund, or an unincorporated association or
organization) that engages in terrorist activities or activities in support of them. 49
The Un ited States has a complex web of counter -terrorism measures, including the
Antiterrorism and Effective Death Penalty Act, which criminalizes “material
support” to designated entities; the International Emergency Economic Powers Act,
which prohibits transac tions with designated entities; Executive Order 13224,
which allows for the freezing of assets and other measures; and, the Patriot Act,
which expanded the “material support” prohibition to further bar “expert advice or
assistance” to terrorist organizatio ns, a provision that has been extended to
charities and was the subject of a recent Supreme Court case. 50
In addition, the U.S. Treasury Department issued the Anti -Terrorist Financing
Guidelines: Voluntary Best Practices for U.S. -based Charities in late 2 002. The
Guidelines included suggested steps for charitable and philanthropic organizations
to take when engaged in cross -border giving. These steps included the collection of
considerably more information about grantees than is often available, the vett ing of
grantees, extensive donor review of financial operations, and other requirements in
quite detailed terms. In response to criticism, the Treasury Department revised the
Guidelines in December 2005, but significant issues remain .51 As but one example ,
the Guidelines advise grantmakers to check federal terrorist lists; this vetting
process could be deemed necessary even where a corporation is providing small
amounts (e.g., $20) as part of an employee matching gift program. In such case, the
cost of ad ministering the cross -border transfer could exceed the amount of the
matching gift itself.

ICNL Report on Global Philanthropy 10 October 25, 2010
(6) Restrictions on Financial Transactions with Sanctioned Countries

In addition to restrictions emanating from counter -terrorism measures, countries and
interna tional bodies sometimes seek to prohibit financial transactions with, or exports to,
designated countries. Philanthropic giving is often impacted by such restrictions. For
example:

Through the Office of Foreign Assets Control (OFAC) at the Department of Treasury,
the U.S. Government imposes sanctions on several countries, from Belarus to
Zimbabwe. 52 As part of any given sanctions regime, philanthropic donations may be
subject to restrictions. For example, the U.S. permits donations of in -kind
humanitari an articles (e.g., food, clothing, and medicine) and gifts valued only up to
$100 or less to Iran. The export of gift parcels and humanitarian goods to Cuba is
subject to limitations and licensing requirement by the OFAC and Department of
Commerce.
Canada ’s Export and Import Permits Act allows the Government to control the
export of any goods to countries included on the Area Control List , a list of countries
that currently includes Belarus and Myanmar (Burma). Permits are required for
exports to these tw o countries. “Permits for humanitarian goods, including food,
clothing, medicines, medical supplies, information material, casual gifts and
personal effects belonging to persons leaving Canada for Belarus, will generally be
approved. Permits for other ite ms will generally be denied.” 53
The United Nations , on June 9, 2010, imposed additional sanctions against Iran
through Security Council Resolution SC/9948. Among other provisions, the
Resolution calls upon all States to “prevent the provision of financial services . . . or
the transfer to, through, or from their territory, or to or by their nationals or entities
organized under their laws (including branches abroad), or persons or financial
institutions in their territory, of any financial or other assets o r resources if they
have information that provides reasonable grounds to believe that such services,
assets or resources could contribute to Iran’s proliferation -sensitive nuclear
activities, or the development of nuclear weapon delivery systems …” 54
Sancti ons or other related measures have been frequently imposed by the
European Union (EU) in recent years, either on an autonomous EU basis or
implementing binding Resolutions of the Security Council of the United Nations. 55
On July 27, 2010, the EU imposed sa nctions on Iran that are considerably broader
and more stringent than UN sanctions. Specifically, m ember states of the EU are
required to exercise enhanced monitoring over activities of specific financial
institutions within their jurisdiction, including banks domiciled in Iran, and their EU
and non -EU based branches and subsidiaries. Funds being transferred to or from
Iran are subject to new reporting requirements:

o transfers of funds for foodstuffs, healthcare, or humanitarian purposes may
be carried ou t without prior authorization, but transfers above €10,000 must
be notified to the relevant competent authority of the member state;

ICNL Report on Global Philanthropy 11 October 25, 2010
o any other transfer under €40,000 may be carried out without prior
authorization, but must be notified to the relevant comp etent authority if
above €10,000;
o all transfers above €40,000 must be authorized prior to the transfer by the
relevant competent authority. Member States are required to inform other
Member States of any rejected authorizations;
o all relevant transfers of funds in respect of Iranian interests must be notified
to the relevant competent authority within five working days;
o all transactional records must be kept for five years. 56

Having considered the legal constraints imposed by donor countries on the outflo w of
philanthropic giving, we now turn to the recipient country barriers on the inflow of
philanthropy.

B. Recipient Country Restrictions (Inflow of Philanthropy)

This section will examine the legal barriers that recipient countries place on the inflow of
philanthropy – that is, the ability of CSOs to receive funding from outside their home
countries. Recipient country constraints may prevent CSOs from receiving philanthropic
contributions or otherwise burden the process of receiving philanthropic contribut ions.
The most common inflow legal barriers include: (1) the requirement of advance
government approval to receive funding from abroad; (2) restricted purposes and activities
that can be supported through foreign funding; (3) mandatory routing of funding through
government channels; (4) post -receipt procedural burdens, such as burdensome
notification and reporting requirements; (5) onerous tax treatment of foreign funding
received; and (6) foreign exchange requirements.

As a threshold matter, it is wo rth noting that the law or practice in some countries may
prohibit the receipt of foreign funding altogether, but this is rare. In Afghanistan, for
example, social organizations are legally banned from receiving foreign funds, although the
legal prohibiti on is not, in practice, enforced; moreover, another organizational form, so –
called “non -governmental organizations,” are permitted to receive foreign funding. The
converse is true in Saudi Arabia, where there is no de jure barrier to the receipt of foreig n
funding, but de facto , most Saudi CSOs are prevented from receiving any foreign funding.

(1) Advance Government Approval

The law in several countries requires advance government approval for the inflow of
philanthropic funding. In other words, org anizations are prohibited from receiving funding
from outside their home countries without their government’s prior approval. Such
requirements open the door for the exercise of governmental discretion and may result in
the denial of permission to receive funding from abroad.

ICNL Report on Global Philanthropy 12 October 25, 2010
a. Express approval required

An approval requirement is common in the Middle East/North Africa (MENA) region.
Egypt is perhaps the most prominent example. Egyptian law prohibits any association
from receiving foreign funds – wheth er from foreign individuals or from foreign authorities
(including their representatives inside Egypt) – without advance approval from the
Minister of Social Solidarity. Securing ministerial approval may require a two -month wait
during which time the Mini stry reviews the request for approval. And the failure to secure
approval can lead to dissolution. For example, on April 27, 2009, the Egyptian Organization
for Human Rights (EOHR) received a dissolution decree alleging that the EOHR received
foreign fun ding without authorization; the dissolution order reportedly came soon after
EOHR published its 2008 Annual Report, criticizing the Egyptian Government. 57

Additional illustrative examples from the MENA region include: 58

In Algeria , foreign donations mu st be pre -approved by the Ministry of the Interior.
The criteria under which the Ministry of the Interior can deny approval are not
specified, and an association that wishes to appeal an adverse decision has no
recourse with the courts. 59
In Jordan , foreign funding to societies is subject to the approval of the Council of
Ministers. The request for approval should include the source of funding, the
amount of funding, the means of transfer, and the objectives for which the funding
will be spent, in addition t o any special conditions 60

At the same time, the issue is not limited to the MENA region. In Eritrea , foreign
foundations may fund CSOs only if the Ministry of Labor and Human Welfare determines
that it cannot provide the service in question, a determina tion that is rarely made.
Otherwise, foreign foundations may only provide funding to the Government of Eritrea. In
Belarus , in order to receive foreign funds, organizations must register the transfer
agreement with a sub -department of the presidential ad ministration, which grants such
registrations only rarely. 61 In Uzbekistan , in order to receive a foreign grant, an NGO must
secure a special opinion from the Commission under the Cabinet of Ministers that the
project to be supported by the grant is indeed worthy of support. 62

b. Procedural requirements

In other countries, the receipt of foreign funding is impeded by burdensome procedural
requirements. For example, in China , the State Administration of Foreign Exchange
recently issued Notice 63 on Issues Concerning the Administration of Foreign Exchange
Donated to or by Domestic Institutions that, on paper, requires certain domestic nonprofit
organizations to comply with new and more complex rules for receiving and using foreign
donations. These requireme nts include an application attesting to the authority of the
domestic organization and the foreign donor; the domestic group’s business license; a
notarized donation agreement between the domestic group and the foreign donor

ICNL Report on Global Philanthropy 13 October 25, 2010
organization with the purpose o f the donation prescribed; and a registration certificate for
the foreign nonprofit group.

In Azerbaijan , the Law on Grants of 1998, as reinforced by Presidential Decree of 2004, 63
requires that non -commercial organizations (“NCOs”) register grant agreeme nts with the
Ministry of Justice. The failure to register a grant makes NCOs vulnerable, as the fines for
failure to register a grant agreement are so high that such penalties can result in severe
hardship or even termination of the organization. 64 The Ad ministrative Code provides
financial penalties for the failure to register a grant; in December 2008, fines were
increased from 50 AZN ($63) to an amount ranging from 1000 AZN ($1,250) to 2500 AZN
($3,125). Moreover, a presidential decree was issued in De cember 2009, which provides
that no transactions may be made with funds provided under grant agreements unless the
agreement is registered with the Ministry of Justice.

In addition, Indonesia requires social organizations 65 that seek to receive or provide
donations to or from foreign entities to engage in a detailed approval and reporting
process. Regulation No. 38 of 2008, issued by the Minister of Home Affairs, requires NGOs
to register with the government and seek Ministry of Home Affairs’ approval for foreign
funding. 66 More specifically:

social organizations must report “the aid receipt plan” 67 to the Minister of Home
Affairs (or governor);
the “aid receipt plan” must include information relating to the source, aim, nature,
and amount of aid, as wel l as the “aid utilization plan” and “availability of match
fund owned by social organizations and its use plan” 68;
the Minister of Home Affairs can approve the “aid receipt plan” after coordinating
with related departments 69; and
the Ministry may take up to 14 days to provide approval. 70

In India , the Foreign Contribution (Regulation) Act 1976 71 requires all nonprofit
organizations wishing to accept foreign contributions to (a) register with the central
government; (b) agree to accept contributions through de signated banks; and (c) maintain
separate books of accounts with regard to all receipts and disbursements of funds. 72

(2) Restricted Purposes and Activities

Other countries erect barriers to funding certain spheres of activity. For example, in
Zimbabw e existing law prohibits the use of foreign funds for voter -education projects
conducted by independent NGOs; instead, such funds may be contributed directly to the
Electoral Commission. 73 But it is Ethiopia that serves as the seminal example.

In Ethiopi a, where the Parliament enacted the highly controversial Proclamation to Provide
for the Registration and Regulation of Charities and Societies in February 2009, income from
foreign sources may amount to no more than 10% of the total organizational income used
by “Ethiopian” charities and societies. And it is only “Ethiopian” charities and societies that

ICNL Report on Global Philanthropy 14 October 25, 2010
are legally allowed to advance human rights, the rights of children and the disabled, gender
equality, nations and nationalities, good governance and conf lict resolution, as well as the
efficiency of the justice system . “Income from foreign sources” is defined as “a donation or
delivery or transfer made from foreign source of any article, currency or security. Foreign
sources include the government agency or company of any foreign country; international
agency or any person in a foreign country.” 74

“Th ere is no substantial indigenous funding that can compensate for the loss of resources
engendered by the restrictions. Consequently, the restrictions will l ikely create a severe
financial crisis for CSOs, which might result in their being crippled.” 75 Consequently, the
bottom line for many Ethiopian organizations is to choose between giving up almost all of
their funding, or giving up their work on human righ ts, gender equality, disability rights,
children’s rights, or other proscribed fields. “You are doomed either way,” says Kumlachew
Dagne, a lawyer and executive member of the Ethiopian Bar Association. 76

While the Ethiopian law is relatively specific in it s purpose/activity restrictions, many
other countries rely on vague statutory formulations to restrict purposes/activities that
civil society can pursue with the support of foreign funding. For example, in Indonesia , the
2008 regulation on the Receipt and Giving of Social Organization Aids from and to Foreign
Parties prohibits foreign assistance causing “social anxiety and disorder of national and
regional economy.” 77 In Bolivia , Supreme Decree No. 29308 bans foreign assistance that
carries “implied politi cal or ideological conditions.” Without defining these terms, the law
leaves enforcement of these restrictions to the full discretion of the state.

It should be noted that many other countries prohibit NGO participation in various
legitimate spheres of a ctivity, regardless of the source of funding. The examples in this
section were more narrowly concerned with limits on what activities may be supported
with foreign funding . The blanket prohibitions applicable more broadly to NGO activities
also, of cour se, directly impede the ability of international grantmakers and donors to
provide funding for such activities. Such activity restrictions are considered in section II.C
below.

(3) Mandatory Routing of Funding through Government Channels

In an effort to monitor and control the flow of foreign funding to a country’s civic sector,
some countries require that foreign funding be routed through a governmental body,
ministry, or government -controlled bank. In this way, governments can more easily
monitor a nd in some cases obstruct the flow of funding to CSOs. For example:

Eritrea ’s Proclamation No. 145/2005 requires that international NGOs engage in
activities only through “the Ministry or other concerned Government entity.” 78 As
noted above, this rule a llows NGOs to receive grant support only if the Ministry of
Labor and Human Welfare determines that it lacks capacity to address the area of
concern directly.

ICNL Report on Global Philanthropy 15 October 25, 2010
In Sierra Leone , assets transferred to build the capacity of local NGOs should be
routed through the Sierra Leone Association of Non -Governmental Organizations
and the Ministry of Finance and Economic Development. (It is unclear how this will
be implemented in practice.)
Sri Lanka appears to be prepared to follow the same model. In March 2009, Sri
Lankan Defense Spokesman Minister Keheliya Rambukwella said, “The aid or grants
coming from other foreign countries should not directly go to the INGOs or NGOs
and should be channeled through the government’s management and the
administration.” 79 The Soci al Services Ministry expects to get the “necessary”
legislation approved soon for an NGO law under which all INGOs and NGOs would
have to be registered with a central Agency. 80
In Venezuela , a draft Law on International Cooperation was introduced and passed
its first reading within the National Assembly in 2006 and was then shelved until
March 2009, when the National Assembly announced that it will renew
consideration of the draft Law. 81 If enacted, the Law would give the President and
Cabinet of Venezuela unprecedented authority to organize, control, direct, and
coordinate all “activities of international cooperation,” including transfers of assets,
technology, and other forms of material support. Under the draft law, all foreign
funds would have to be rout ed through a “Fund for International Cooperation and
Assistance,” allowing the government discretion to determine which local
organizations could receive financing.

(4) Burdensome Notification and Reporting Requirements

After the receipt of funding from abroad, recipients may be subject to additional
requirements – such as the obligation to notify the government or comply with
burdensome reporting rules – which, while less intrusive than securing advance
governmental approval, may nonetheless act as dete rrents to the receipt of philanthropic
funding. Certainly, such procedural burdens impede the smooth flow of funding to
potential recipient organizations. For example:

On June 18, 2010, President Martinelli of Panama issued Executive Decree No. 57,
whi ch requires every Panamanian not -for -profit association to publish online
extensive information about all donations received, including the donor’s contact
information and the size of the donation.
In Turkey , the law imposes notification requirements rel ating to the receipt of
foreign funding. Foundations must notify public authorities within one month after
receiving the funding, while associations must notify the Government before using
the funding. 82
In Uzbekistan , a fter receiving approval to receive g rant funding, the NGO must
provide several reports to a special government body operating under the Ministry
of Finance. The reports can be divided into two groups: (a) monthly reports; and (b)
transactional reports, which are required following each finan cial transaction
relating to the use of the grant funding, no how matter how small the transaction.

ICNL Report on Global Philanthropy 16 October 25, 2010
For example, if an NGO buys a pen or a desk with grant funding, then it needs to
submit a report on the next business day .83
In India , the Foreign Contrib ution (Regulation) Act 1976 requires that all nonprofit
organizations must report to the central government all foreign contributions
received within 30 days of the receipt of the contribution, and must file annual
reports with the Home Ministry. The enti ty must report the amount of the foreign
contribution, its source, the manner in which it was received, the purpose for which
it was intended, and the manner in which it was used. 84
Following the receipt of grants (defined as “revenue … in the form of mon ey or in
kind, including experts and trainings that do not need to be returned”), social
organizations operating at the national level in Indonesia must submit a copy of the
grant agreement to the Minister of Home Affairs, while those operating at the
prov incial and district levels must submit documentation to the governors and
mayors, respectively. 85 In addition, recipients of foreign funding must publicize
foreign -funded activities through the media, no later than 14 working days after the
date of activit y implementation. 86

(5) Onerous Tax Treatment of Recipient 87

As a general rule, voluntary contributions to CSOs, including donations, gifts, and grants,
are treated as tax -exempt income, if they are considered to be income at all. The source of
the cont ribution is normally not a relevant consideration; in other words, the receipt of
donations or grants will typically be tax -free, regardless of whether the donor or grantor is
domestic or international. Only in exceptional cases are such categories of inc ome subject
to taxation for the recipient.

In several countries of the former Soviet Union, income from foreign grantmakers is subject
to taxation unless the foreign grantmaker is included on a government -approved list. Such
lists have been in place, at varying times, in Belarus, Kazakhstan, and Turkmenistan. In
Russia , grants can be extended from foreign or international organizations to Russian
citizens or CSOs on a tax -exempt basis only if the grant -giver is included on a list of
organizations approve d by the Russian Government and the grant is made for an approved
public benefit purpose. The government list is tightly controlled and the number of
approved organizations was reduced in 2008 by Decree #485 to an insignificant number.
Prior to the issua nce of Decree #485, approximately 100 organizations were on the list,
including several private foundations. The decree reduced the number of approved
organizations to a mere 12 and eliminated all private foundations. As a result, grants from
private foun dations are potentially liable to a 24% tax. 88

(6) Foreign Exchange Restrictions

Foreign exchange rates, where the value of foreign currencies is set at official rates far
below the parallel market rates, may serve as a legal barrier to cross -border giv ing, as
recipients must exchange funding received at highly unfavorable rates. For example:

ICNL Report on Global Philanthropy 17 October 25, 2010
Prior to the introduction of the multiple currency system in Zimbabwe in February
2009, all transactions within Zimbabwe had to be concluded in Zimbabwe dollars,
and all foreign funds were pegged at official rates that were set far below the
parallel market rates. This resulted in substantial losses for recipients receiving
cross -border grants, as recipients had to convert the grants, according to official
exchan ge rates, into Zimbabwe dollars in order to engage in programming activity. 89
In Venezuela , foreign exchange controls have been in place since 2003. Currently,
only transactions through the Central Bank of Venezuela (BCV) are approved, and
only at the of ficial rate of 4.3 Venezuelan Bolivar (VEB) per 1 USD. This has a
deleterious financial impact on recipients of foreign funding, as the actual rate of
exchange is closer to a rate of 8 VEB per 1 USD. Moreover, anyone receiving funds
outside the BCV chann el is subject to severe penalties, including imprisonment,
according to the 2005 Law on Unlawful Exchanges.

C. Legal Barriers to the Nonprofit Beneficiaries of Philanthropy

This section will explore legal barriers that impede the development of indigenou s CSOs
that might receive global philanthropy. Without a pool of eligible beneficiaries operating in
any given country, the very basis for international philanthropic efforts is undermined.
Indeed, one of the Task Force members supported ICNL engagement in Kosovo after the
1999 transition, specifically because there were so few CSOs active in the territory, which
therefore limited local capacity to implement programs supported by private
philanthropy. 90 Barriers have been comprehensively surveyed in other reports 91, so this
section addresses only three illustrative barriers, namely constraints on their formation
and operational activity, as well as international contact and communication with these
organizations.

(1) Barriers to Formation of Organizatio ns

In some countries, the law is used to discourage, burden, and even prevent the formation of
CSOs. Barriers include burdensome registration or incorporation requirements, vague
grounds for denial, or limitations on permissible program activity. As bu t a few
examples 92:

Limited right to associate. In Saudi Arabia , only organizations established by royal
decree are allowed.
Restrictions on founders. In Turkmenistan , national -level associations can only be
established with a minimum of 500 founders.
High minimum capital requirements. In Eritrea , Proclamation No. 145/2005
provides as follows: “Local NGOs may be authorized to engage in relief and/or
rehabilitation work if … they establish that they have at their disposal in Eritrea one
million US dolla rs or its equivalent in convertible currency …” (Article 8(1))
Burdensome registration procedures. In China , registration procedures are complex
and cumbersome, with extensive documentation and approval requirements.
Organizations are required to operate u nder a system of “dual management” in

ICNL Report on Global Philanthropy 18 October 25, 2010
which they must generally first obtain the sponsorship of a “professional leading
agency” such as a government ministry or provincial government agency, then seek
registration and approval from the Ministry of Civil Af fairs in Beijing or a local civil
affairs bureau, and remain under the dual control of both agencies throughout their
organizational life.
Vague grounds for denial. In Bahrain , the government can refuse registration of an
application association if “socie ty does not need its services or if there are other
associations that fulfill society’s needs in the [same] field of activity.”

(2) Barriers to Operational Activity

Once formed, CSOs may struggle to operate effectively. Legal burdens may come through
direct prohibitions on certain areas of activity, invasive supervisory oversight, and
arbitrary termination and dissolution, among other constraints. For example:

Direct prohibitions on spheres of activity. Eritrea limits the activities of every
NGO to “r elief and/or rehabilitation works,” thereby preventing NGO
engagement in human rights and other issues that may be of interest to the
foundation community (Proclamation No. 145/2005). In Afghanistan , the Law
on NGOs prohibits participation in construction projects and contracts (Law on
Non -Governmental Organizations, Article 8).
Advance notification and approval. In Cambodia , local NGOs that wish to conduct
activities in a province other than where they are registered must inform the
local authority five da ys in advance according to Ministry of Interior guidelines;
in some provinces the guidelines are interpreted as directives that require
approval by provincial authorities.
Invasive supervisory oversight. In Russia , the law allows governmental
representati ves to attend all of the organization’s events, without restriction,
including internal strategy sessions. A more commonly used supervisory tool is
the power to conduct audits and demand documents dealing with the details of
an organization’s governance, including day -to -day policy decisions, supervision
of the organization’s management, and oversight of its finances. 93 In Senegal ,
the Law on Foundations (Law No. 95 -11 of 1995) authorizes the State to
designate representatives who sit on the foundation cou ncils (internal governing
bodies) with a deliberative vote. These representatives are accountable to the
administrative authority that named them.
Termination and dissolution. In Argentina , the law permits the termination of an
NGO when it is “necessar y” or “in the best interests of the public.” In Paraguay ,
the Civil Code grants similarly broad discretion to dissolve and liquidate
foundations in cases where the objectives of the organization become
impossible, or where the organization’s activities wo uld [negatively] impact the
public interest. In Palestine , since the split between Hamas and Fatah in 2006,
government authorities have been routinely ignoring the provisions of the law
governing charitable associations and community organizations. Hamas has

ICNL Report on Global Philanthropy 19 October 25, 2010
reportedly shut down most independent CSOs in the Gaza Strip, while Fatah has
unilaterally dissolved more than 100 CSOs. 94

(3 ) Barriers to International Contact and Communication

Closely related to the cross -border flow of philanthropic funding i s the flow of ideas and
network building that takes place both through in -person meetings, workshops and
conferences, and through virtual communication, including through new media.

Barriers to international contact. Egypt ’s Law 84/2002 restricts the righ t of NGO to
join with non -Egyptian NGOs, and “to communicate with non -governmental or inter –
governmental organizations.” Moreover the law threatens NGOs that interact with
foreign organizations with dissolution. In Kenya , the NGO Coordination Act
Regulat ions provide that no NGO can become a branch of or affiliated to or
connected with any organization or group of a political nature established outside
Kenya, except with the prior consent in writing of the NGO Coordination Board,
obtained upon written appl ication addressed to the Director and signed by three
officers of the NGO.
Barriers to communication. In Uzbekistan , NGOs seeking to conduct a conference
and to invite international participants to the conference must secure advance
approval from the Min istry of Justice. In practice, NGOs submit a letter to the
Ministry of Justice, describing a proposed conference (goals, date, participants, etc.).
If the Ministry grants permission for the conference, the NGO can move forward
with planning; if the Minist ry refuses permission, then there will be no conference.

We focus here on the pool of eligible beneficiaries, since this issue has been raised as an
issue of concern by members of the Task Force. We are also aware, however, that many of
these restricti ons also apply to the formation and operation of grantmaking organizations.
For example, in Eritrea the US $1 million capitalization requirement applies to NGOs,
presumably including grantmaking organizations – a nearly impossible threshold in that
countr y. In addition, legal constraints on the establishment of foreign NGOs may impede
international philanthropy. For example, i n Rwanda , foreign organizations are required to
submit a long list of documentation and information, including the implementation
schedule and its various stages of planning, detailed costs estimates with data, the
contemplated successors for the launched activities, and “all information relating to its
geographical establishment throughout the world.” 95

ICNL Report on Global Philanthropy 20 October 25, 2010
D. Legal Barriers Affect ing Disaster Relief and Millennium Development Goals

In this section, we illustrate how the barriers discussed above affect two areas of concern
prioritized by the Council on Foundations: (1) disaster relief and (2) the Millennium
Development Goals (“MDGs ”).

(1) Disaster Relief

Cross -border philanthropy in the aftermath of a disaster is affected by donor country
constraints, recipient country constraints, and restrictions on the development of domestic
nonprofit organizations.

As discussed in Section II (A), donor country constraints include:

advance governmental approval for cross -border giving;
limited, or no, tax incentives for international philanthropy;
burdensome procedural requirements for foreign grants; and
counter -terrorism measures.

Making this concrete, CSOs in the United Arab Emirates (UAE) are not allowed to collect
money and send it abroad for foreign disaster relief. Instead, CSOs in the UAE that wish to
send money abroad must collect and send the money through the only authorized
inst itution, which is the Red Crescent Society of the UAE.

In addition, as discussed above, few countries offer incentives for international
philanthropy. Accordingly, foreigner taxpayers generally received no tax benefits for
direction contributions to Ha itian, Chilean, Chinese, or Pakistani organizations engaged in
local disaster relief efforts.

Rules and procedures also impede disaster relief. As discussed in Section II(A)(4), US
private foundations (as well as donor -advised funds) must comply with “eq uivalency
determination” or “expenditure responsibility” requirements in order to make an
international grant. The equivalency determination process often takes time, 96 thus
impeding swift assistance when disaster strikes. Of course, a private foundation could
undertake expenditure responsibility, but this requires the foundation to comply with
complex rules, including detailed reporting requirements on how a grant is spent. These
rules impede private foundations interested in supporting disaster relief e fforts.

In the United States , complexities also arise for companies seeking to provide assistance to
employees affected by a disaster. Company -sponsored private foundations are generally
prohibited from making grants to employees . Of course, the compan y could also give an
employee money to cover emergency food and shelter, but this could constitute taxable
income for the employee. The rules change, however, if a “qualified disaster” is declared.
In this situation, a company is allowed to make qualifie d disaster relief payments to
employees, and these payments are generally exempt from tax. In addition, company –

ICNL Report on Global Philanthropy 21 October 25, 2010
sponsored private foundations are allowed to make grants to employees, provided specific
requirements are met. For example:

• the class of be neficiaries must be large or indefinite,
• the recipients must be selected based on objective determinations of need, and
• the selection must be made using either an independent selection committee or
adequate substitute procedures to ensure that any benefit to the employer is
incidental and tenuous. 97

These are but a few of the complexities that arise under US law when a corporation seeks
to provide assistance to employees affected by a disaster. There are also special rules on
scholarships given to employees and complex rules on the cost basis of inventory that a
corporation may deduct on in -kind contributions.

Counter -terrorism measures, discussed in Section II(A)(5) of this report, may also impede
disaster relief. Specifically, a number of grantmakers e ngage in “list checking” and other
counter -terrorism measures. The burden is magnified when a donor is making a large
number of relatively small grants – for example, subsistence funds to a large number of
people in a community affected by a natural disas ter. Counter -terrorism concerns have
also posed challenges for private foundations seeking to support flood relief efforts in
Pakistan.

At the same time, recipient country restrictions can be similarly problematic. As discussed
in Section III(B) of this report, some countries require advance government approval
before a grantee can receive a foreign grant, even for disaster relief. This is true in Egypt ,
for example. Foreign funding requirements also caused concern immediately after the
tsunami in India , leading the Ministry of Home Affairs to waive elements of the Foreign
Contribution (Regulation) Act on December 30, 2004. 98

Disaster relief is also impeded by restrictions impeding the development of domestic CSOs.
As illustrated by the challenges con fronting the United States after Hurricane Katrina and
the Chinese government after the Sichuan earthquake, disasters often exceed the capacity
of even large, well -resourced governments. Domestic CSOs therefore have a vital role in
supplementing other dis aster relief efforts and in providing absorptive capacity for funding
by the international community. But in countries such as Burma , donors have been
reticent to provide funding for disaster relief because of governmental control over the
process and con straints imposed on independent CSOs. 99

In summary, the three types of barriers presented above – donor country constraints,
recipient country constraints, and impediments to the development of domestic CSOs –
affect the ability of the international gran tmaking community to engage in disaster relief.

At the same time, some countries have taken measures to promote global philanthropy
after a disaster. The Canadian Government created donor country incentives when it
recently earmarked C$50 million to ma tch donations to Canadian charities aiding relief
efforts in Haiti. 100 Over the years, the US Government has also created donor country

ICNL Report on Global Philanthropy 22 October 25, 2010
incentives. For example, after the earthquakes in Haiti and Chile in 2010, the U.S. Congress
passed legislation enabling taxpayers to claim certain donations made in 2010 on their
2009 tax returns.

The foregoing is only a brief survey of issues relating to disaster response. For a more
complete discussion of this topic, please see the Council on Foundation’s Legal Guide lines
for Corporate Grantmakers Providing Disaster Relief , which is accessible at:
https://www.cof.org/files/Bamboo/progra msandservices/legalinfo/documents/Corporate
-Grantmakers -Disaster -Relief -2010.pdf ”

(2) Millennium Development Goals (MDGs)

Progress toward achieving the MDGs is frustrated by donor country impediments, recipient
country impediments, and constraints affec ting domestic nonprofit organizations.

Donor country impediments to philanthropic giving in support of the MDGs could,
potentially, include all of the constraints listed above. For example, an NGO in Egypt must
secure advance governmental approval in o rder to send funds abroad, even where those
funds are intended to further progress toward the MDGs. Charitable organizations in
Malaysia and social organizations in Indonesia are similarly restricted from sending funds
abroad, without governmental approva l, to address issues such as poverty alleviation,
primary education and environmental sustainability.

Donors making direct cross -border contributions to CSOs working toward the MDGs
receive, in many countries, no tax relief for those donations. The lack of tax incentives in
many countries may deter more substantial grantmaking by corporate foundations, in
particular.

As in the case of disaster relief, counter -terrorism measures often impede international
grantmak ing, even where funding is intended for c auses supported by the MDGs. 101
Specifically, in Kenya , the Kibera Community Self Help Programme was unable to receive
an anticipated grant from the U.S. -based Islamic American Relief Agency (IARA) to help
fund a home for children, including orphans living with HIV/AIDS, due to the U.S. Treasury
seizing IARA’s assets. The regulatory procedures of the Treasury’s Office of Foreign Assets
Control (OFAC) and the Department of Commerce create delays of six to nine months for
groups wanting to become licensed to provide psychosocial training to public school
teachers in Gaza ; during that time teachers are unable to identify, counsel, or direct
children devastated by the violence to the necessary medical or psychosocial services that
they may require. According to a 2008 survey, nearly three -fifths of U.S. grantmakers
agreed that “the more demanding post -9/11 regulatory environment discourages giving to
non -U.S. –based organizations.” 102

Recipient country impediments relating to advance governmental approval to recei ve
foreign funding, mandatory routing of foreign funding through government channels, and
post -receipt procedural burdens may all serve to deter foreign funding to address MDG –
related issues in relevant countries.

ICNL Report on Global Philanthropy 23 October 25, 2010

Notably, restrictions on the types of activities that can be supported with foreign funding
make progress toward certain MDGs particularly challenging in Ethiopia , in light of the
2009 Ethiopian Proclamation to Provide for the Registration and Regulation of Charities and
Societies. The Procl amation effectively prevents foreign funding from flowing to an
Ethiopian charity promoting gender equality or seeking to reduce child mortality (i.e., local
charity pursuing these causes can receive no more than 10% of its income from foreign
sources). M oreover, the Ethiopian Government has shown itself willing to terminate NGOs.
In 2009, 42 community -based organizations (CBOs) were shut down and banks instructed
to freeze their assets; among other reasons provided for the closure, the NGOs were alleged
to have been engaged in promoting harmful traditional practices and in mobilizing
communities against the use of fertilizers 103 – that is, seeking to ensure environmental
sustainability.

Restrictions affecting the pool of nonprofit beneficiaries also underm ine philanthropic
giving to address the MDGs. For example, in a move that undermines efforts to eradicate
extreme poverty and hunger, the Government of Zimbabwe , in February 2010, banned all
food handouts by NGOs, despite forecasts that more than 2 millio n people require food
aid. 104 In addition, in March 2010, the Ministry of Health and Child Welfare in Zimbabwe
reportedly announced the Government’s intention to promulgate a legal instrument to
regulate all organizations that are involved in combating HIV/ AIDs in order to effectively
coordinate the national response to the epidemic through a legally binding obligation on all
such CSOs to report to the National Aids Council (a state entity). 105

In summary, the three types of barriers presented above – donor country constraints,
recipient country constraints, and impediments to the development of domestic CSOs –
affect the ability of the international grantmaking community to effectively address the
MDGs.

III. Next Steps

This section will present and consi der a range of options or “next steps” for reducing legal
barriers to global philanthropy. The ideas outlined below are potential options to advance
the Task Force’s deliberations and are not intended to be recommendations. The focus of
this section is o n collective action by Task Force members versus individual actions by
members in their home countries. We are cognizant that important work relating to some
of these “next steps” is already underway; the Ease of Global Giving Project, led by the
Mercator Fund is but one example. An illustrative list of related initiatives follows each
proposed initiative.

A. Initiatives Focused on Existing Law

First we consider initiatives addressing the existing state of law affecting global philanthropy.
Listed below are four illustrative initiatives. They include a survey of philanthropists; an
indexing of existing barriers to cross -border philanthropy; expanding tools to help

ICNL Report on Global Philanthropy 24 October 25, 2010
philanthropists navigate the existing legal environment for cross -border philanthropy; and
monitoring legal developments affecting cross -border philanthropy.

(1) Survey of Philanthropists

An initial option is to survey foundations and other philanthropists on legal barriers to cross –
border philanthropy.

Description of Concept: This initiative wou ld collect data on the problems global
philanthropists confront while engaged in cross -border giving and would assess priorities
for response.

There are a number of existing reports and publications that examine general legal barriers
to philanthropy an d civil society. USAID annually publishes the NGO Sustainability Index,
which examines a range of factors including the legal framework and financial viability of
nongovernmental organizations. Another annual publication is Freedom House’s Freedom
in the World, which examines restrictions on fundamental freedoms, including the freedom
of association. ICNL makes country reports available through its NGO Law Monitor project,
with a focus on barriers to civil society. And of course, this paper categorizes barriers to
the outflow and inflow of global philanthropy.

To supplement these legal analyses, it would seem useful to survey international
grantmakers to collect data on the actual problems they confront. This sort of survey
would provide valuable inf ormation not only on existing legal barriers, but also on the
geographic and thematic priorities of the global philanthropic community.

Potential Challenges: Careful thought would need to be given target audience and the
disaggregation of data. For ex ample, a small family foundation with only occasional foreign
grants would likely face different challenges than a large foundation with in -house legal
counsel skilled at international grantmaking. Similarly, U.S. foundations face procedural
requirements that do not exist in many other countries. Accordingly, the survey would
have to be carefully designed to enable appropriate collection and disaggregation of data,
but this challenge could likely be overcome.

In addition, ensuring an adequate response rate is often a challenge. To help address this
issue, it would seem useful to have the Council on Foundations, EFC, and WINGS directly
associated with the administration of the survey in order to promote responses from their
members.

(2) Indexing of Exist ing Barriers to Cross -Border Philanthropy

A related option is an index of existing legal barriers to cross -border philanthropy.

Description of Concept: This option seek s to build upon the initial work of the Mercator
Fund in advancing the “Ease of Globa l Giving Index.” As part of its commitment to the GPLI,
Mercator has handed over this index through the EFC for use in GPLI work. We are

ICNL Report on Global Philanthropy 25 October 25, 2010
encouraging the Task Force to consider building upon this index of existing legal barriers to
cross -border philanthro py. The index would be made available online, updated on a
regular basis, serving as an informational resource for the philanthropic community,
government policy makers, civil society practitioners, lawyers, and academics.

Potential Challenges: A key i ssue is that the ease of giving often depends on the nature of
the grantmaker and the activities it seeks to support. For example, a foundation seeking to
support human rights work would face nearly insurmountable barriers in Ethiopia, while a
donor seeki ng to work with the government on food aid would likely encounter more
manageable challenges . Similarly, in China, a large foreign foundation with offices in
Beijing and close relations with the Chinese government would likely face fewer challenges
than a small grantmaker without connections to the Chinese Government and seeking to
support grassroots advocacy organizations in the countryside. As another example, US
grantmakers seeking to fund organizations in Venezuela confront challenges that do not
aris e for grantmakers located in, for example, Brazil. While not insurmountable, careful
thought is required on if/how these sorts of variations would be reflected in an Index. We
note that ICNL has been involved in discussions about the creation of a civil society index
akin to the World Bank’s “Doing Business” Index, and the disaggregation issue remains a
perplexing challenge.

Finally, one must consider the likely impact that such an indexing system would have. As
an informational resource for those predo minantly engaged in cross -border giving, it could
be tremendously valuable. As a reform tool, however, the impact would likely be
substantially more uncertain, particularly among the countries least friendly to
philanthropic inflows. Transparency Interna tional’s Corruptions Perceptions Index 106 has
a “name and shame” value, as no country relishes being labeled corrupt. The low -ranking
countries in an “ease of giving” index, by contrast, would likely not be disturbed by a low
ranking. As stated recently by the Minister for Regional Integration and International
Cooperation in Zimbabwe, donors must coordinate with the host government and follow
their national development plans and cannot be allowed to “run around and do their own
thing.” 107 Even more develope d democratic countries may not find great shame in
receiving a low ranking on an index measuring the ease of giving “aid” to their country.

Related Initiatives:

Mercator Fund: https://www.mercatorfund.net/modules/innovative_philanthropy
CIVICUS Civil Society Index: https://www.civicus.org/csi
USAID NGO Sustainability Index:
https://www.usaid.gov/locations/europe_eurasia/dem_gov/ngoindex/
Freedom House: Freedom in the World:
https://www.freedomhouse.org/template.cfm?page=15
ICNL NGO Law Monito r (funded by the MacArthur Foundation):
https://www.icnl.org/knowledge/ngolawmonitor/index.htm
Salzburg Global Seminar: http: //www.salzburgglobal.org/2009/phil.cfm

ICNL Report on Global Philanthropy 26 October 25, 2010
John D. Gerhart Center for Philanthropy and Civic Engagement, American University
in Cairo: https://www.aucegypt.edu/research/gerhart/Pages/d efault.aspx

(3) Expanding Tools to Help Foundations Navigate the Legal Environment for Cross -Border
Philanthropy

A third option is to help foundations navigate existing legal requirements relating to global
philanthropy.

Description of Concept: The purp ose of this initiative would be to help philanthropists
better understand the legal rules affecting global philanthropy. With the appropriate
navigational tool in hand, global philanthropists would be better able to determine
whether, where, and how to pu rsue cross -border giving.

Some information on the requirements of cross -border philanthropy is already available.
For example, the Council of Foundations has established the United States International
Grantmaking Project ( www.usig.org ). Resources on the website help U.S. private
foundations better understand IRS rules and procedures governing foreign grantmaking.
Similarly, the King Baudouin Foundation (KBF) maintains a web -based resource called
“Giving in Europe,” 108 a cross -border giving database that provides information, best
practices and solutions concerning cross -border giving, with focus on EU member states.
In addition, the King Baudouin Foundation has a special section on its website dedicated to
transatlant ic giving.

While these are significant initiatives, they have limited scope. It might be interesting, for
example, to expand the “Giving in Europe” model to other regions, such as Asia, Africa,
Latin America, or elsewhere. A complementary approach would be to facilitate learning
networks that focus on recipient countries. For example, donors to activities in places such
as China, India, or Russia could form ad hoc information sharing networks. Through such
learning networks, donors could share informati on about navigating through the legal
landscape of recipient countries. It is conceivable that a centralized Outreach Coordinator
(discussed below) could serve as the focal point for such information sharing.

In addition, corporations are sometimes unfa miliar with legal requirements for
international grantmaking. The Task Force might consider developing tools and training
opportunities to help corporations navigate the legal framework for global philanthropy.

Potential Challenges: As we know from the USIG project and other initiatives, it is labor –
intensive to keep this sort of information accurate and up -to -date. Also, for legal reasons, it
would be important that this initiative be presented as providing general background
information and not legal advice. Finally, some groups may be reluctant to share
information on how they navigate through complex legal environments in various
countries.

ICNL Report on Global Philanthropy 27 October 25, 2010
Related Initiatives:

United States International Grantmaking: http ://www.usig.org/
Giving in Europe:
https://www.givingineurope.org/site/index.cfm?tid=1&mid=1&homep=1&bid=1&si
d=1&lg=2
Mercator Fund: https://www.mercatorfund.net/modules/innovative_philanthropy

(4) Monitoring Legal Developments Affecting Cross -Border Philanthropy

While monitoring may be implicit in some of the prior activities, we mak e it an explicit
activity here to emphasize its potential as a stand -alone activity or as a natural complement
to other initiatives.

Description of Concept: This initiative would seek to monitor legal challenges to cross –
border philanthropy on a routine b asis through a global network of organizations,
philanthropists, and lawyers. When newly emerging challenges are identified, alerts can be
issued to the task force (or some other pre -defined list of philanthropic organizations,
donor organizations, and go vernments). Initially, the reach of the initiative could be
limited to a select group of countries and subsequently expanded to embrace other
countries, depending on interest and resources.

Potential Challenges: It is challenging to keep this informati on timely and accurate. It can
also be burdensome to identify appropriate contacts and to maintain up -to -date contact
lists.

Related Initiatives:

ICNL NGO Law Monitor:
https://www.ic nl.org/knowledge/ngolawmonitor/index.htm .
Civil Society Law Alert System (in development; by ICNL)
CIVICUS Civil Society Watch: https://www.civicus.org/csw
Mercator Fund: https://www.mercatorfund.net/modules/innovative_philanthropy

B. Initiatives Intended to Advance Law Reform

While some of the prior initiatives could, arguably, influence reform – for example, the index
has potential “nam e and shame” value – the primary goal of each is instead to map out,
understand, and provide information about the existing legal frameworks and their impact on
global philanthropy. A complementary option is to undertake activities that will lead to
refor m of the restrictive legal provisions, such as those presented in the “barriers” section of
this paper.

Listed below are four illustrative initiatives. They include efforts to engage in research to
strengthen the chances for long -term reform; to reform l aw and policy affecting global

ICNL Report on Global Philanthropy 28 October 25, 2010
philanthropy; to develop good principles to support global philanthropy; and to seek a treaty
or other international agreement on cross -border philanthropy.

(5) Expanding the Analytic Base for Reform

An important prerequisite t o reform is developing the intellectual base necessary to support
reform and persuade skeptics of its importance.

Description of Concept: This initiative would seek to expand, through research, the
intellectual basis for the reform of laws affecting cross -border philanthropy.

For example, one particularly complex issue impeding cross -border giving is the desire of
many governments to control the flow of all foreign funding into their respective countries
– and to ensure that the foreign funding is used s olely to finance governmental priorities.
Philanthropy is welcome, the argument goes, provided that donors follow the government’s
rules and finance activities that are consistent with the government’s development plan. In
some countries, such as Bolivia , Nicaragua, and Sierra Leone, governments have justified
mandatory coordination of foreign financial flows and civil society activity through reliance
on the Paris Declaration on Aid Effectiveness and the Accra Agenda for Action. 109

In light of this, the challenge is to make the case for pluralistic philanthropy. Are there
persuasive reasons for governments to allow private donors to fund initiatives and
organizations within a country but outside of the governmental development plan? The
question is controversial not only among governmental leaders, but also among some civil
society leaders. A clear articulation of how pluralism in cross -border giving can actually
strengthen the recipient country would be an important contribution to the field.

Similarly, it would be useful to present compelling reasons relating to why donor
governments should welcome the export of global philanthropy. While many support the
importance of giving beyond one’s borders, others may tend toward isolationist thinking
an d the argument that “charity begins at home,” especially in times of economic downturn
Research supporting global philanthropy could help challenge such positions.

Potential Challenges: It will likely prove complex to present a cogent “case for global
phi lanthropy,” so serious thought would have to go into the design and implementation of
this initiative. In addition, in some countries the goal is the preservation of power, so even
well reasoned positions may go unheeded.

(6) Good Principles/Protocol for Cr oss -Border Philanthropy

Another option is to support the development of principles relating to cross -border
philanthropy.

Description of Concept: This option would seek to develop and promulgate principles for a
country’s treatment of philanthropic orga nizations and cross -border philanthropy.
Properly drafted, the principles could serve as an important guide or measuring stick for

ICNL Report on Global Philanthropy 29 October 25, 2010
law drafters and policy makers seeking to improve the legal environment for global
philanthropy. We understand that the Mer cator Fund is considering a similar initiative,
although we are not privy to current details.

Potential Challenges: The two most significant challenges in relation to developing
principles on global philanthropy relate to substance and impact. First, dev eloping a
consensus on the substance of the principles themselves is likely to be a significant
obstacle. This arises in part because the legal impediments to global philanthropy do not
spring from one law, but rather are rooted in multiple sources, inclu ding laws governing
civil society organizations, tax laws, counter -terrorism measures, etc. While it is
conceivable that donors could agree on some principles, it would seem quite complex to
move beyond rhetoric and reach consensus on meaningful, actionab le principles on
counter -terrorism, for example.

Second, even if grantmakers could reach consensus on the content of good principles for
cross -border philanthropy, it may prove quite challenging to get a broad range of
governments to support these princip les.

Related Initiatives:

Council of Europe, Recommendation CM/Rec(2007)14 of the Committee of
Ministers on the legal status of non -governmental organizations in Europe:
https://www.coe.int/ t/ngo/Legal_standards_en.asp .
European Foundation Centre, Fundamental Legal and Fiscal Principles for Public
Benefit Foundations: https://www.efc.be/Legal/Pages/principles_model_law.a spx .
European Foundation Statute:
https://www.efc.be/EuropeanFoundationStatute/Pages/LatestnewsabouttheEurop
eanFoundationStatute.aspx
Merca tor Fund: https://www.mercatorfund.net/modules/innovative_philanthropy
Salzburg Global Seminar: https://www.salzburgglob al.org/2009/phil.cfm
Defending Civil Society (which contains principles relating to the legal framework
for civil society writ large , including foreign funding issues):
https://www.icnl.org/k nowledge/news/2008/3 -21.htm

(7) Reform of Laws and Policies Affecting Cross -Border Philanthropy

To address the barriers impeding philanthropy, efforts to reform the laws and policies of the
donor country and/or recipient country may be necessary. Recogniz ing, however, that some
foundations may be reluctant to pursue reform directly, consideration might be given to
working through umbrella groups or connecting with other initiatives already engaged in
ancillary initiatives.

Description of Concept: This op tion would seek to determine if there is a role for the Task
Force, or a subset of Task Force members, to address some of the barriers identified in the
first part of this paper. Depending on Task Force interest, a stand -alone initiative might be

ICNL Report on Global Philanthropy 30 October 25, 2010
possible , but at a minimum, it might make sense to appoint an Outreach Coordinator to
make contact with other groups that are already working on related issues. 110

For example, the OECD/DAC 111 is active in facilitating an ongoing discussion around aid
effectiveness a nd coordination; this discussion has clear and direct relevance to the legal
and policy framework for foreign funding (and therefore philanthropic giving). As another
example, the International Committee of the Red Cross 112 has launched an initiative to
dev elop a model law for disaster relief, which is of major concern to a number of
international donors. Active outreach to such initiatives could be critical to help monitor
developments and to ensure that concerns of international grantmakers are addressed
appropriately. In addition, ICNL is currently working on civil society legal reform in every
region.

Furthermore, the Working Group on Enabling and Protecting Civil Society was established
under the auspices of the Community of Democracies. Chaired by t he Canadian
Government, a number of other governments, including from the US and Europe, are
members of this group – as are ICNL, CIVICUS, the World Movement for Democracy, UNDP,
and others. There may be benefits in liaising with the Working Group in orde r to ensure
that issues of concern specific to global philanthropy are not lost in the broader discussion
on civil society and law. Furthermore, the UN Special Rapporteur (SR) on Human Rights
Defenders 113 addresses issues of foreign funding in the context o f human rights work.
Outreach to the SR could provide an important opportunity to communicate the concerns
of the global philanthropic community and could help ensure greater attention to these
issues by the SR.

Strategic outreach to other pivotal pla yers could be instrumental in influencing law and
policy at the national level in various countries. For example:

Trade officials . A recent study indicated that bilateral investment treaties often
apply to the cross -border flow of capital not only with in the for -profit sector, but
also within the not -for -profit sector. 114 It could be useful, therefore, to reach out to
trade officials and support their continuing attention to this issue in order to protect
global philanthropy within the realm of trade agr eements.
The UN Development Progamme (UNDP). UNDP has recognized the importance of
civil society and, in many countries, has supported law reform initiatives. Moreover,
UNDP is able to play more of a neutral, convening role than many private
organizatio ns. Recognizing UNDP’s particular position, the Outreach Coordinator
could seek to leverage UNDP’s influence and encourage UNDP to include
information on cross -border philanthropy into development materials.
International financial institutions . Simila rly, outreach to the International
Monetary Fund (IMF) and/or the World Bank could be useful in supporting
initiatives to promote global philanthropy.

Potential Challenges: Key issues include the willingness of countries to undertake reform to
promote glo bal philanthropy. In addition, we recognize that some foundations are

ICNL Report on Global Philanthropy 31 October 25, 2010
reluctant to support advocacy efforts for a variety of legal and mission -related reasons.
Nonetheless, some foundations have played a leadership role in this field, as have groups
such as the Council on Foundations and the European Foundation Centre. As with all
initiatives, there is also a question of resources, but linking with existing initiatives (versus
creating a new stand -alone initiative) could help ameliorate this issue.

Rela ted Initiatives:

ICNL: www.icnl.org
European Foundation Centre: www.efc.be
The World Movement for Democracy: www.wmd.org
Council on Foundations (on US laws and policies): www.cof.org
ICRC: https://www.icrc.org/web/eng/siteeng0.nsf/html/57JR62
The Arab Foundations Forum:
https://www.arabfoundationsforum.org/en/node/158

(8) Treaty on Cross -Border Philanthropy

Another option is the preparation of a treaty – be it global, regional or sub -regional – to help
promote global philanthropy.

Description of Concept: This initiative would seek to prepare a global treaty on cross -border
philanthropy. Possibilities include a “status treaty” to facilitate the international
operations of the foundation community or a tax treaty to extend tax incent ives to foreign
philanthropy.

A status treaty might follow the model of the European Convention on the Recognition of
the Legal Personality of International NGOs 115 or the Model Law for Public Benefit
Foundations in Europe. 116 The goal would be to facilita te the ability of foundations to work
internationally. The goal of the tax treaty would be to extend tax benefits for contributions
to entities resident in another country.

Recognizing the obvious challenge of securing political will for such a treaty, it may be
prudent to aim for a regional treaty as an initial step. For example, in the European Union,
we are seeing a wave of reform in the wake of the ECJ’s Persche judgment. Similarly, it may
be possible to generate interest in promoting cross -border philanthropy in other regions or
sub -regions, such as within the Caribbean Community (CARICOM) or other regional bodies.
A less ambitious but potentially viable approach would be to promote the adoption of
bilateral treaties to ease cross -border giving be tween two countries (perhaps two donor
countries to reduce concerns about revenue loss).

Potential Challenges: Securing political will for such an initiative would be a formidable
challenge. Among other reasons, a “status treaty” would be difficult bec ause of the
different legal regimes governing foundations across countries (consider, for example, the
different systems governing foundations in the United States and Mexico, or the United

ICNL Report on Global Philanthropy 32 October 25, 2010
States and France). In terms of a tax treaty, officials will like ly be concerned about losses to
the tax base, particularly considering the current economic climate. In addition, concerns
about counter -terrorism, national security, and foreign interference may limit political will
for such a treaty.

Numerous studies have focused on the issue of non -discrimination in the tax treatment of
philanthropic contributions to foreign recipients. 117 And several initiatives have emerged
seeking to break the “landlock” or discriminatory approach in providing tax relief. Notably,
however:

During nearly 60 years of history, several attempts have been made for progress in
this area. Although an important number of international institutions have
supported these calls for solutions, all initiatives in this direction came to naught.
One explanation for this lack of success has been the assertion that the initiatives
were too ambitious and too idealistic. 118

Related Initiatives: A brief review of some past and present initiatives relating to the issue
of non -discrimination in tax b enefits is instructive:

The International Standing Conference on Philanthropy (INTERPHIL) was formed in
1969 and developed a Draft European Convention on the Tax Treatment in respect
of certain Nonprofit Organizations (1971). The Draft Convention sought to allow
states to extend tax relief to foreign organizations, to domestic organizations
operating abroad, and to foreign residents contributing to domestic organizations.
The Convention was ultimately not enforced, however, due in part to the fact that
registration with the Council of Europe was envisioned to trigger the non –
discrimination principles. 119
The European Foundation Centre issued the “Fundamental Legal and Fiscal
Principles for Public Benefit Foundations” in 2003, and subsequently developed a
Dr aft European Statute for Foundations, which remains an active initiative. Part of
the rationale for the European Statute is to facilitate the giving and receiving of gifts
across borders. 120
The OECD Model Tax Convention, in Article 24(1), establishes that for tax purposes,
discrimination on the grounds of nationality is forbidden and that, subject to
reciprocity, the nationals of one contracting state may not be less favorably treated
in another contracting state than the nationals of the latter state in th e same
circumstances. That said, the OECD Commentary on Article 24(1) states that these
provisions do not oblige a state that extends tax benefits to not -for -profit
organizations for public benefit purposes to extend the same benefits to similar
organizat ions whose activities are not for its benefit. In short, the presumption of
the Tax Convention is that not -for -profits are designed for the public benefit of their
state of origin. 121

ICNL Report on Global Philanthropy 33 October 25, 2010

C. Special Initiatives

In this final section, we offer stand -alone “sp ecial initiatives” for the consideration of the Task
Force, relating to disaster relief and the Millennium Development Goals. 122

(1) Enabling Global Philanthropy for Improved Disaster Relief

Interest in the legal framework for global philanthropy surges i mmediately following
natural disasters, such as the 2004 tsunami and the 2010 earthquake in Haiti. The
importance of an enabling legal framework to allow quick and effective flows of
philanthropic giving in the wake of disaster is inarguable. In recognit ion of the interest in
disaster relief and the crucial support that law provides to disaster relief, the Task Force
could consider launching a comprehensive project in this field, examining both constraints
and good practices relating to global philanthrop y and disaster response; raising
awareness of the need to anticipate disasters and confront legal barriers now; and support
legal reform in willing countries.

(2) Enabling Global Philanthropy for the Millennium Development Goals (MDGs)

In September 2010, the U.N. reviewed progress on the MDGs. In the words of UN Secretary
General Ban Ki -moon, “Time is short. We must seize this historic moment to
act responsibly and decisively for the common good.” 123 In light of the interest and concern
among public dono rs and the foundation community in addressing the MDGs, it may be
strategically opportune to implement a comprehensive initiative built around the MDGs,
with the goal of eliminating barriers to global philanthropy targeting the 8 MDGs (at a
minimum). Conc rete objectives might include examining the current constraints and good
practices relating to global philanthropy and the MDGs; raising awareness of the
connection between an enabling legal framework and achieving the MDGs; and supporting
legal reform in willing countries. Using achievement of the MDGs as the leverage point, the
Task Force would likely be able to collaborate more broadly with stakeholders from
diverse fields and sectors. Consideration could be given to a private -public partnership
involv ing the philanthropic community as well as a range of governments (including
governments from the Global South, where the distance to achieving the MDGs is greatest).

ICNL Report on Global Philanthropy 34 October 25, 2010

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 co mplete 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, ava ilable at
https://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, https://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 5 1% in
2009 , The Financial Express, June 24, 2010, https://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
https://www.chinadaily.com.cn/world/2010 -08/16/co ntent_11157803.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 cros s-border charitable donations to charity.” CAF briefing paper, International
comparisons of charitable giving (November 2006), available at
www.efc.be/ftp/p ublic/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 “Philanthro py 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 -bord er giving” and
“philanthropic giving” interchangeably. 15 Salzburg Global Seminar: https://www.salzburgglobal.org/2009/phil.cfm . 16 Council on Foundations, We Were There: The Role of Foundation s in National Disasters ,
https://classic.cof.org/files/Documents/Publications/WeWereThere.pdf . 17 United Nations Development Programme, Division for Foundation Affairs,
https://www.undp.org/partners/foundations/Foundations -and -UNDP.pdf . 18 The World Bank, Foundations and the World Bank: Partners for Development Innovation ,
https://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/FOUNDATIONSEXT/0,,menuPK:60000436~pageP
K:60000431~piPK:60000435~theSitePK:267976, 00.html . 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 ,
https://www.ato.gov.au/nonprofit/content.asp?doc=/content/34269.htm&page=15&H15 . 22 Council on Foundations, United States International Grantmaking, Brazil country note, March 2010,
https://www.usig.org/countryinfo/brazil.asp . 23 ICNL, NGO Law Monitor , Egypt country report, July 30, 2010,
https://www.icnl.org/knowledge/ngolawmo nitor/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:
https://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 Parti es, Article 33. Regulation No. 38 springs from Government Regulation No. 18/1986

ICNL Report on Global Philanthropy 35 October 25, 2010

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 co rporation 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 dedu ction. 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 ,
https://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 https://www.ausaid.gov.au/ngos/tax.cfm . In brief, t he
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 orga nization 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 fi rst 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 organizati on 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,
https://www.usig.org/countryinfo/india.asp . 30 European Foundation Centre, Legal and Fiscal Comparative Charts,
https://www.efc.be/Legal/Documents/Founda tionLawsEU.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 quali fy, the body must be legally established in the EEA or EFTA state with its centre 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 char ity 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 htt p://curia.europa.eu/jurisp/cgibin/
form.pl?lang=en&newform=newform&alljur=alljur&jurcdj=jurcdj&jurtpi=jurtpi&jurtfp=jurtfp&al
ldocrec=alldocrec&docj=docj&docor=docor&docop=docop&docav=docav&docsom=docsom&docinf
=docinf&alldocnorec=alldocnorec&docnoj=docnoj &docnoor=docnoor&typeord=ALL&docnodecision
=docnodecision&allcommjo=allcommjo&affint=affint&affclose=affclose&numaff=C –
318%2F07&ddatefs=&mdatefs=&ydatefs=&ddatefe=&mdatefe=&ydatefe=&nomusuel=&domaine=&
mots=&resmax=100&Submit=Submit . 33 Curia, Judgmen t of the Court of Justice in Case C -318/07, Hein Persche v Finanzamt Ludenscheid , Press
Release No. 05/09, January 27, 2009,
https://curia.europa.eu/en/actu/communiques/cp09/a ff/cp090005en.pdf . 34 European Foundation Centre, ECJ rules in favour of cross -border giving , EFC briefing, January 27, 2009,
https://www.efc.be/EUAdvocacy/EU%20Commun iqus%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,
https://curia.europa.eu/en/actu/communiques/cp09/aff/cp 090005en.pdf .

ICNL Report on Global Philanthropy 36 October 25, 2010
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,
https://www.usig.org/countryinfo/mexico.asp 40 For additional information on the legal issues relating to international grantmaking and donor -advised
funds, please see the following article: Internat ional Grantmaking from Donor -Advised Funds: New
Requirements and Changing Practices after the Pension Protection Act of 2006, available at
https://www.cof.org/files/Bamboo/programsandservices/legalinfo/images/International%20Grants%20fro
m%20DAFs.pdf . 41 U.S. Internal Revenue Service, Expenditure Responsibility ,
https://www.irs.gov/charities/foundations/article/0,,id=137613,00.html . 42 Techsoup Global, What Is Equivalency Determination? , https://www.techsoupglobal.org/ngosource/ED . 43 Canada R evenue Agency, Guidance: Canadian Registered Charities Carrying Out Activities Outside Canada,
July 8, 2010, section 1, https://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 distr ibuting 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 exc lusively 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 https://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. 45 For more information, see
https://www.globalphilanthr opy.ca/index.php/articles/new_guidance_for_canadian_registered_charities_carr
ying_out_foreign_activit/ . 46 The sample contractor agreement is available at https://ow.ly/29hM4 . 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 funder s, 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. 48 The Terrorism (United Nations Measure s) Order 2006, https://www.hm –
treasury.gov.uk/d/si_2657_terrorism_un_measures_order_2006_121006.pdf . 49 Canada Revenue Agency, Guidance: Canadian Registered Charities Carrying Out Activities Outside Canada,
July 8, 2010, section 4.3, https://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). 51 https://www.icnl.org/knowledge/ijnl/vol10iss3/special_2.htm 52 U.S. Department of Treasury, Office of Fo reign Assets Control,
https://www.ustreas.gov/offices/enforcement/ofac/ . 53 Foreign Affairs and International Trade Canada, Export Controls to Belarus,
https://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 Sanction s on Iran, June 9, 2010,
https://www.un.org/News/Press/docs/2010/sc9948.doc.htm . 55 European Commission, Sanctions or restrictive measures,
https://ec.europa.eu/external_relations/cfsp/sanctions/index_en.htm .

ICNL Report on Global Philanthropy 37 October 25, 2010
56 Clyde & Co., EU sanctions against Iran , July 28, 2010, https://www.ifw –
net.com/freightpubs/ifw/features/eu -sanctions -against -iran/20017796472.htm . 57 It should be noted, however, that an Egyptian administrative court found in a prior case involving another
association that dissolution of an organiza tion 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, w as 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 l egislature 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 requir es 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 potential ly 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
twen ty 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 certa in types of
organizations that may rely heavily on foreign funding could potentially be starved of resources, essentially
extinguishing their rights to associate. 59 ICNL, NGO Law Monitor, Algeria country report, April 26, 2010,
https://www.icnl.org/knowledge/ngolawmonitor/algeria.htm 60 ICNL, NGO Law Monitor, Jordan country report, July 30, 2010,
https://www.icnl.org/kn owledge/ngolawmonitor/jordan.htm 61 Presidential Decree No. 8 of March 12, 2001, para. 1(2). 62 ICNL, NGO Law Monitor, Uzbekistan country report, July 28, 2010,
https://www.icnl.org/k nowledge/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 loc al 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, https://www.usig.org/countryinfo/indonesia.asp . 66 2008 Regulation on the Receipt and Givin g 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.htm l. 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., Artic le 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,
htt p://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.

ICNL Report on Global Philanthropy 38 October 25, 2010
75 Debebe Hailegebriel, Ethiopia: Restrictions on Fore ign Funding of Civil Society , The International Journal for
Not -for -Profit Law, Vol. 12, Issue 3, May 2010, https://www.icnl.org/knowledge/ijnl/vol12iss3/special_3.htm . 76 https://www.theglobeandmail.com:80/news/world/new -law -cripples -ngos/article1367330/ 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:
https://www.unhcr.org/refworld/docid/493507c92.html 79 Sunil Jayasiri, “All foreign aid should go through Govt.: Minister Keheliya Rambukwella ” (9 March 2009),
https://www.lankamission. org/content/view/1723/9/ ; see also “Sri Lanka government expects transparency
from NGOs” ColomboPage (6 March 2009)
https://www.colombopage.com/archive_09/March6160421RA.html ; althou gh 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),
https://www.dailymirror.lk/DM_BLOG/Sections/frmNewsDetailView.aspx?ARTID=44613 . 81 Asamblea Nacional anunció agenda legislativa de 2009 (10 March 2009),
https://www.asambleanacional.gob.ve/index.php?option=com_content&task=view&id=21299&Itemid=27 . 82 ICNL, NGO Law Monitor, Turkey country report, July 12, 2010,
https://www.icnl.org/knowledge/ngolawmonitor/turkey.htm 83 ICNL, NGO Law Monitor, Uzbekistan country report, July 28, 2010,
https:// www.icnl.org/knowledge/ngolawmonitor/uzbekistan.htm 84 Council on Foundations, United States International Grantmaking, India country note, May 2010,
https://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 organizati ons 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 t o 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 co untries 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 Def ending 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 s ocial and economic issues. Several Russian NGOs issued a joint statement,
demanding an end to what they describe as a “campaign of intimidation.” See
https://www.rights inrussia.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.

ICNL Report on Global Philanthropy 39 October 25, 2010
95 ICNL, NGO Law Monitor, Rwanda country report, July 30, 2010,
https://www.icnl.org/knowledge/ngolawmonitor/rwanda.htm . 96 The Central Repository project championed by The Council on Foundations w ill 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 ,
https://www.irs.gov/charities/charitable/article/0,,id=149929,00.html . 98 Association for India’s Development, FCRA waiver for Tsunami relief,
https://survivors.aidindia.org/site/content/view/132/146/ . 99 See, e.g. , Cyclone Relief – Distrust of Junta Deters Donors , https://ipsnews.net/news.asp?idnews=44410 . 100 CBC N ews, Ottawa matching Canadians’ Haiti donations ,
https://www.cbc.ca/canada/story/2010/01/14/haiti -canada -aid.html . 101 Examples in this paragraph are drawn from the following so urce:
https://www.charityandsecurity.org/background/The_Impact_of_Counterterrorism_Measures_on_Charities_a
nd_Don ors_After_9/11#_edn19 . 102 International Grantmaking IV Highlights , (Foundation Center: 2008). Available at
https://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, https://www.icnl.org/knowledge/ijnl/vol12iss3/special_3.htm . 104 Zimbabwe govt. bans food aid , Feb. 14, 2010, https://greatindaba.com/issue/f ebruary -2010 -vol –
34/article/zim -govt -bans -food -aid . 105 The Herald, Government to Regulate HIV/Aids Organisations , March 23, 2010,
https://allafrica.com/stories/201003230065.html . 106 See https://www.transparency.org/policy_research/surveys_indices/cpi/2009 . 107 Faith Zaba, Decision on NGOs threatens Western aid , Zimbabwe Independent, July 29, 2010,
https://www.theindependent.co.zw/local/27501 -decision -on -ngos -threatens -western -aid.html . 108 See https://www.givingineurope.org/site/index.cfm?tid=1&mid=1&homep=1&bid=1&sid=1&lg=2 . 109 For more information, see
https://www.oecd.org/doc ument/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/ . 112 The ICRC stands for the International Conference of the Red Cross and Red Crescent. 113 See https://www2.ohchr.org/english/issues/defenders/index.htm . 114 ICNL, International Inve stment Treaty Protection of Not -for -Profit Organizations , May 2008, available at:
https://www.pdfdownload.org/pdf2h tml/view_online.php?url=http%3A%2F%2Fwww.icnl.org%2Fknowledg
e%2Fpubs%2FBITNPOProtection2.pdf . 115 See https://conventions.coe.int/treaty/en/Treaties/Html/124.htm . 116 See https://www.efc.be/Legal/Pages/principles_model_law.aspx . 117 Research into the question of discrimination includes (1) the Nebolsine Report (1963) (“New efforts in the
direction of fiscal assista nce 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 restr ictive 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 practi ce.”).
Ineke A. Koele, International Taxation of Philanthropy , IBFD © 2007, pages 12 -14. 118 Ineke A. Koele, International Taxation of Philanthropy , IBFD © 2007, page 9. 119 Id., page 15. See also http ://www.non -gov.org/profile/interphil . 120 Id., pages 17 -18. See also
https://www.efc.be/EuropeanFoundationStatute/Pages/EuropeanFoundationStatute.aspx . 121 Id. , pages 6 -8. The Model Tax Convention was first issued in 1958 and remains in use today; see
https://www.oecdobserver.org/news/fullstory.php/aid/2742/ .

ICNL Report on Global Philanthropy 40 October 25, 2010
122 In the interest of brainsto rming, 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” approac h and seek to reward those who 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
environm ent 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 fo r consideration, and then measured based on objective, pre –
determined 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. 123 https://www.un.org/millenniumgoals/sept_2010_more.shtml