An organization or corporation under tax-exempt status 501(c)(3) is authorized to advance its charitable goals and efforts through international activities and services abroad.
Tax-exemption Requirements Under 501(c)(3)
In order for a corporation or organization to be tax-exempt under section 501(c)(3) of the Internal Revenue Code, it must be organized and operated exclusively for exempt purposes set forth in the code. None of the earnings are authorized to be allocated to any private individual or shareholder. Furthermore, the organization may not make any attempt to influence legislation or partake in political lobbying as a substantial part of its activities. Organizations under 501(c)(3) are commonly referred to charitable organizations.
Registering U.S Non-Profit Organizations in Foreign Countries
Along with registering an organization in the United States, many, if not all countries require proper registration within their governmental agency as well. This not only allows foreign countries to have control over U.S organizations operating within their nation’s borders, it also helps keep track of activities and allows the enforcement of local laws. Therefore, a charitable organization must look to the laws and requirements of the foreign countries it wishes to provide services to.
Licensing and proper permits should be taken into consideration when working abroad, as well, depending on the activity or service the organization would like to provide. Operating without proper permits may result in harmful and serious consequences to the organization and its staff.
Reporting Foreign Financial Accounts
If a US non-profit chooses to maintain a foreign bank account, the organization must meet the annual filing requirement of the Report of Foreign Bank and Financial Accounts (FBAR). The report must be filed annually so long as the financial account in the foreign country exceeds an aggregate value of $10,000 anytime during each calendar year. The penalty that comes with failing to comply with these requirements may result in significant fines.
Partnering with Foreign Organizations
If a non-profit organization chooses to advance its charitable purposes in another country while partnering with another foreign-local and qualified non-profit group, it may do so as a collaborative effort memorialized in a memorandum or operating agreement of understanding of a formal joint venture or legal partnership.
