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501(c)(3) Organisations and Foreign grants

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  • 501(c)(3) Organisations and Foreign grants

    Hi there!

    I have been doing some research into a US 501(c)(3) charitable organisation, based in California. However, there are some cloudy specifics:

    - This organisation was set up by another Non-Profit Org in the UK (which works towards the same causes), and appears on the surface, to be a conduit for this UK based company.
    - From looking at previous 990 forms of the organisation over the last 6 years, every single year it receives in the hundreds of thousands of donations.
    - Every single year it sends this annual total of donations across to the UK in the form of a single grant to a deliberately unnnamed UK charitable organisation. The 990 forms state that this UK organisation works towards the same causes as the US charity.
    - Every year, the name of the UK charitable organisation is left blank on the 990.

    Now, I have some questions about the above I have not been able to find anyone to answer as yet:

    1) Is the US based charitable organisation required to specify which specific UK organisation is the recipient of this grant every year on their 990 form?
    2) Is there a chance that if it is revealed that this recipient is the exact same organisation receiving all the money, every year, can the US org really be said to be excercising 'control and discretion' in the release of these funds or could it possibly be seen as a conduit and therefore breaching tax laws that make donations to the org tax deductable?
    3) Can it be said that if all the annual donations for a 501(c)(3) organisation get given in a single grant to the same foreign company, then that foreign company is being 'de facto earmarked' as a receiver of the donations and thus again, these donations are incorrectly ruled as tax deductable?
    4) Is there any way possible to view which UK organisation is the recipient of this grant other than the 990 forms (which dont specify this)?
    5) and finally, would either of what I have described above fall under the ruling of conduits in rev ruling 63-252?

    Thank you very much for your help.

    I have been struggling for a long time to get any solid answers to these questions.

  • #2
    Re: 501(c)(3) Organisations and Foreign grants

    I do not think they have to name it specifically but of course one can lodge a complaint with the IRS and encourage an audit.

    If anything untoward is occurring the IRS will act quickly.

    Also the corporate records DO have to show the entity, and those records are subject to review by Board members, and by donation givers in some cases.

    Comment


    • #3
      Re: 501(c)(3) Organisations and Foreign grants

      I am sure there will be a few more comments on this issue here as well.

      Comment


      • #4
        Re: 501(c)(3) Organisations and Foreign grants

        I wish to inform you that there may be violation of Revenue Ruling 63-252 because all funds are being provided to a foreign non profit which is not registered with IRS. Revenue Ruling 63-252 may be applied if foreign non profit is not having tax exempt status and domestic non profit merely operates for collecting funds for that foreign non profit.

        AFF

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        • #5
          Re: 501(c)(3) Organisations and Foreign grants

          My experience is that you greatly increase the risk of an audit once you started sending funds abroad, no matter how beneficial the cause may be.

          Comment


          • #6
            Re: 501(c)(3) Organisations and Foreign grants

            Originally posted by kal9 View Post
            My experience is that you greatly increase the risk of an audit once you started sending funds abroad, no matter how beneficial the cause may be.
            I can tell you from experience that that is very true!!

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